Unilever expects to achieve goals

Consumer goods group Unilever is on track to meet its performance goals this year after strong sales in emerging markets led to a better-than-expected start to 2019.

The maker of Dove soap and Ben & Jerry’s ice cream said it still expects underlying sales growth in the lower half of a 3 to 5 per cent range this year. It also stood by its 2020 targets, which include reaching an underlying operating margin of 20 per cent.

First quarter underlying sales, excluding acquisitions, disposals and currency moves, rose 3.1 per cent. Analysts on average were expecting a 2.8 per cent rise, according to a company-supplied consensus. Growth was balanced, with a 1.9 per cent contribution from higher prices, which is less than analysts expected, and 1.2 per cent from volume gains, which is more than expected.

Emerging markets, where Unilever generates 58 per cent of its sales, grew 5 per cent in the quarter, offsetting a mere 0.3 per cent gain in developed markets, which were hurt by economic uncertainty and intense price competition in Europe, particularly in Germany and France.

Rival Nestle also reported better-than-expected first-quarter sales on Thursday, with 6.3 per cent growth in emerging markets far outpacing other regions.

Both companies highlighted strength in Brazil, saying that overall in emerging markets, they were able to raise prices and still sell more products. In developed markets, price increases often lead to slower volumes.

Lorenzo Re, senior analyst at Moody’s, said results from both companies showed the benefits of scale and diversification.

“Large globally diversified fast-moving consumer goods companies will continue to outperform regional players in Western Europe, where a weakening economy is hampering growth,” he said.

Reuters