20th Jan 2015 08:36
LONDON (Alliance News) - Anglo-Dutch consumer goods giant Unilever PLC Tuesday reported higher revenue and sales growth in the final quarter of 2014, though short of market expectations due to a steep fall in sales in China and further weakness in Europe, while the group highlighted a cautious outlook for 2015.
Unilever, the maker of consumer products including Lipton tea and Vaseline beauty products, said it faced "significant economic headwinds and weak markets" in the year just ended, yet managed to deliver sales growth and margin expansion. However in 2015, the group said it expects similar market conditions and competitive pressure.
"We do not plan on a significant improvement in market conditions in 2015. Against this background, we expect our full-year performance to be similar to 2014 with the first quarter being softer but growth improving during the year. We remain focused on competitive, profitable, consistent and responsible growth," said Chief Executive Paul Polman in a statement.
For the fourth quarter, Unilever reported underlying sales growth of 2.1%, short of analyst expectations, which were looking for growth of 2.7%. Volume was down 0.4%, hit particularly by weakness in China, but pricing was up 2.5% in the quarter.
Unilever reported pretax profit of EUR7.98 billion for 2014, up 7% at current exchange rates from EUR7.11 billion the year before. The group's net profit was EUR5.52 billion, up 5% year-on-year.
Although revenue declined by 2.7% for the year to EUR48.4 billion from EUR49.8 billion, underlying sales growth was up 2.9%, buoyed by volume and price increases, up 1% and 1.9%, respectively. If exchange rates had stayed the same, Unilever said revenue for the year would have risen by 2%.
"Growth was weak in emerging markets as economic pressures impacted consumer demand. Developed markets were flat, with a modest pick-up in North America partly offsetting market contraction in Europe. Globally, our markets grew by around 2.5% with flat volumes," the group said.
Back in October, Unilever reported a further weakening in trading during the third quarter, as market growth continued to slow in emerging markets, particularly in China, and its European markets continued to be hit by volume and price declines. At the time it said spreads and ice cream were the key culprits behind weaker trading in China, overshadowing some better trading news in North America.
Just six weeks later, the group announced that it would be spinning-off its struggling spreads business later this year. The spreads business, which includes the Flora and Bertolli brands, has been dragging down growth elsewhere in the group, such as in home care.
Unilever said Tuesday that in the fourth quarter, volume remained weak, while trade de-stocking in China led to a sales decline of around 20%.
"This particularly impacted Personal Care and Home Care. In many regions, competitive intensity remains high in all categories, and notably in Personal Care and Home Care," the group said, highlighting weakness in China, Thailand, Africa, and its weakest region Europe.
For the full year, the group's core operating margin improved by 40 basis points to 14.5% at current exchange rates, although its gross margin declined by 20 basis points to 41.4%, stating that pricing, savings and margin-accretive product innovation helped to partly offset currency related cost increases in emerging markets.
"In 2014 we grew ahead of our markets, both in volume and value. With weaker consumer demand, underlying sales growth in emerging markets slowed to 5.7% whilst developed markets declined by 0.8%. Home Care, Personal Care and Refreshment all grew but Foods was adversely impacted by spreads," the group said.
Unilever said it will pay in March a quarterly of EUR0.285, which compares to EUR0.269 a year before.
Unilever shares were down 1.1% at 2,699.00 pence Tuesday morning, one of the worst performing stocks in the FTSE 100 index.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Unilever