Unilever Reports Weak Sales Growth on Price Declines, Strikes in Brazil
19 Luglio 2018 - 09:54AM
Dow Jones News
By Saabira Chaudhuri
LONDON--Unilever PLC (ULVR.LN) on Thursday reported anemic sales
growth for the first-half of the year as results were capped by
strikes in Brazil and prices declines in Europe and North
America.
The Anglo-Dutch company, whose brands include Dove soap and
Magnum ice cream, reported net profit of 3.04 billion euros ($3.54
billion) for the six months to June 30, down from EUR3.11 billion a
year earlier. Revenue declined to EUR26.4 billion from EUR27.7
billion, it said.
For the first half, Unilever reported underlying sales growth of
2.5%, driven almost entirely by volume. The company in June warned
first-half sales would be below its full-year target of 3% to 5%
due to the truck driver's strike in Brazil.
"We think Unilever's sales performance is disappointing,
particularly in light of hot weather in the Northern hemisphere
which ought to have boosted ice-cream sales," said RBC analyst
James Edwardes Jones.
Volumes grew just 1% in North America and declined in the second
quarter, which Chief Financial Officer Graeme Pitkethly said was
down to fewer innovations being launched compared to the same
period a year earlier.
Mr. Pitkethly said Unilever was continuing to battle a heavily
promotional environment in mayonnaise against Kraft Heinz Co.
(KHC), leading to the lowest average retail price in North America
in seven years.
"We're going toe to toe in a battle to provide consumer value,"
he said. The company is also fighting Procter & Gamble Co.
(PG), which has followed Unilever to launch its own dry-spray
deodorants. That innovation, designed for customers who complained
about the wet feeling that accompanied traditional sprays,
benefited Unilever sales for a string of quarters.
Overall, prices in North America fell by 0.3% in the first
half.
Unilever, which currently operates as two separately listed
companies--Unilever PLC and Unilever NV--is in the process of
working to unify its dual British-Dutch legal structure. On
Thursday, Mr. Pitkethly said a shareholder vote was slated for
October and, despite opposition from "a small number of investors"
he is "very confident" that Unilever will be able to move entirely
to Rotterdam.
Unilever, like other consumer-goods companies, has long relied
on selling new or improved versions of products at higher prices to
boost growth. That practice has recently been challenged by weak
inflation, Amazon.com Inc.'s (AMZN) rising prowess in selling more
household staples, and a decline in brand loyalty as consumers use
the internet to shop around. A shift to discount retailers, from
dollar stores to Germany's Aldi, are further pushing down
prices.
For the first half, Unilever reported underlying price growth of
just 0.2% while volumes climbed 2.2%. Prices dropped in its
beauty-and-personal-care division, but climbed slightly in
food-and-refreshments and homecare.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
July 19, 2018 03:39 ET (07:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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