Economy

Emerging markets drive growth as Unilever looks to build profits

April 20, 2019 15:25·
Dove brand owned by Unilever

Dove brand owned by Unilever

Chief Financial Officer Graeme Pitkethly told Reuters that numerous price increases were taken in emerging markets, where it is often easier to hold onto sales volume despite price increases.

Global consumer products group, Unilever, has reported stronger than expected sales growth in its first quarter trading update.

"We have delivered a solid start that keeps us on track for our full-year expectations", Unilever's new chief Alan Jope added in a statement.

The Americas grew underlying sales by 0.4% while Europe edged up 0.6%.

The maker of Dove soap and Ben & Jerry's ice cream said on Thursday it still expects underlying sales growth in the lower half of a 3 to 5pc range this year.

Sales in South East Asia and Brazil led an improvement in the company's performance in emerging markets, where sales rose 5pc but high inflation restricted growth in the volume of units sold.

The group said that underlying sales were up 3.1%, driven by a 1.2% increase in volume, and a 1.9% price contribution.

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'Accelerating growth is our number one priority.

We saw good performance in key growth channels including out of home and e-commerce and benefited from stronger global innovations and faster and more relevant local innovation. The company said that growth remained weak in the developed markets.

Tom Stevenson, investment director at Fidelity Personal Investing's share dealing service, said: "Even the best buy and hold stocks like Unilever pause for breath from time to time. The post-Polman era is getting off to a predictably slow start".

However, Jope - who took over from long-serving Paul Polman towards the end of past year - said the business remains on track to hit its 2020 target with an improved operating margin and healthy cash flow.

Overall revenue for the period came in at €12.4billion with sales in emerging markets contributing the significant factor in that growth.

"The dividend is in line with the market while the potential for its slightly sub-par profit margin to catch up with peers is the kicker".

In January, Unilever Chief Executive Alan Jope revealed the company was stockpiling "weeks of inventory" in the United Kingdom, anticipating supply-chain disruption from Brexit.

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