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Unilever plc Warns Of Slowing Growth

The shares of Unilever (LSE: ULVR) (NYSE: UL.US) slid 95p to 2,344p during early trade this morning after the group warned of slowing sales growth.

The consumer goods group, which counts Flora margarine and Persil washing powder among its leading brands, admitted after the market had closed yesterday that it had experienced “weakening in the market growth of many emerging countries in quarter three“.

The blue chip now expects underlying sales growth of between 3% and 3.5% for July August and September. The group added the slowdown had accelerated as a result of “significant currency weakening“.

Paul Polman, Unilever’s chief executive, said:

We continue to grow ahead of our markets and expect underlying sales growth to improve in quarter four. For 2013 we are still on course to deliver against our priorities of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow“.

Emerging markets had been a substantial support to Unilever’s recent progress. Earlier this year, Unilever’s first- and second-quarter results showed underlying sales growth of around 5%, with emerging-market sales up about 10%.

During 2012, emerging-market sales advanced an underlying 7%.

Prior to today, City brokers were expecting Unilever to report earnings of about 135p per share for 2013. They had also projected a 91p per share dividend.

Based on those estimates, Unilever’s share may trade at 17 times possible profits and offer a 3.9% potential income.

Of course, whether that valuation, yesterday's sales alert and the general prospects for margarine and washing powder all currently combine to make Unilever a 'buy' right now is something only you can decide.

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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended shares in Unilever.