Unilever Sales Rise on Ice Cream, Emerging-Market Demand -- 2nd Update
October 15 2015 - 1:38PM
Dow Jones News
By Saabira Chaudhuri
LONDON-- Unilever PLC on Thursday said its third-quarter revenue
rose sharply as sales of ice cream jumped and the company logged
strong growth in emerging markets.
The maker of Magnum ice cream and Dove shampoo reported sales
growth on an underlying basis--which strips out the impact of
acquisitions, disposals and exchange-rate changes--of 5.7% in the
three months ended in September, up sharply from 2.1% growth in the
same period a year earlier.
Shares closed up 3.6% in London at GBP28.90 ($44.36) as Unilever
said it expects underlying sales growth for the year toward the
upper end of the 2%-to-4% range it had previously disclosed.
Unilever said results were helped by an easy comparison with a
year-earlier quarter in which revenue in China was hit when the
company had to reduce the volume of products it supplied to big
retailers there after overestimating demand. Better weather and a
recall in the U.S. by Blue Bell Creameries after its ice cream was
linked to a listeria outbreak helped drive strong growth in demand
for ice cream.
Sales in Latin America were helped by advanced purchases before
announced price increases in Brazil, but Unilever warned volume
would decline in the fourth quarter.
Despite the strong results, Chief Executive Paul Polman struck a
cautious tone, saying in a statement: "We continue to see soft
global markets with no immediate sign of getting help from an
improving global economy."
"We would not take the improved numbers as a sign of green
shoots," said Susquehanna analyst Pablo Zuanic, adding that
consumer-goods companies face continued challenges outside of North
America.
Unilever's exposure to emerging markets--where the Anglo-Dutch
consumer-products company makes the bulk of its sales--has held it
in good stead for years but recently a slowdown in markets like
Brazil, China and Russia has kept a lid on growth.
The group's third quarter showed a partial reversal of that
trend, with China's results helped by the easy comparison with the
year earlier. The company also logged stronger growth in Russia and
better volumes in India as well as in Latin America where volume
growth accelerated "despite challenging macroeconomic conditions
and consumer incomes being squeezed by currency devaluation."
On an underlying basis, sales growth in emerging markets
strengthened to 8.4% from 5.6% a year earlier.
In developed markets, underlying sales growth was 2.1%, compared
with a 2.5% decline a year earlier. North America returned to
growth driven by both volume and price, while Unilever saw good
growth in the U.K., Germany and Central and Eastern Europe.
Overall revenue climbed 9.4% to EUR13.4 billion, including a
positive currency impact of 2.9%. Profit figures weren't
disclosed.
The company has been pushing deeper into personal-care products
like shampoo and deodorants with appeal across different markets,
and away from slower-growing food brands. Personal-care revenue
climbed 6.2% on an underlying basis, while revenue from foods rose
1.6% on this basis.
Unilever last year created a prestige division, which sells
high-end cosmetics and personal-care products and makes about
EUR400 million in annual sales. Chief Financial Officer Graeme
Pitkethly is targeting raising the unit's sales to EUR1 billion,
recently saying Unilever sees a large opportunity in the fragmented
EUR33 billion market for skin and hair care.
In refreshments--essentially the tea and ice cream
businesses--underlying sales jumped 8.5% while in home-care they
rose 6.6%.
Mr. Polman said the company's ice-cream unit performed
particularly well in the quarter. Unilever has muscled deeper into
the ice-cream business of late, earlier this month saying it had
bought Italian artisan ice-cream maker Grom.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 15, 2015 13:23 ET (17:23 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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