Unilever plc Drops As Emerging Markets Continue To Slow

Unilever (LSE: ULVR) (NYSE: UL.US) is currently down 1.5%, following release of a trading statement for the first quarter of 2014 in which it was revealed that turnover had decreased 6.3%, to €11.4bn, despite underlying sales growth of 3.6% and underlying volume growth of 1.9%, with pricing up 1.6%.

And while underlying sales in emerging markets grew by 6.6%, the company reported that growth in emerging markets still continued to slow, particularly in South Asia and South East Asia. Unilever also said that developed markets “remained weak”, although it saw further signs of recovery in southern Europe.

unileverThe company said that its Personal Care business grew ahead of its markets, driven by “a strong innovation programme”, and Home Care saw a 7.4% increase in underlying sales growth. Its Rr=efreshment business reported “strong growth”, driven by ice cream sales in Brazil and Australia, together with “a very good start” to the European ice cream season.  

But there was a decline in Unilever’s Foods operation, where underlying sales were down 1.7%, with the fall being attributed to the lateness of Easter in 2014.  It also commented that the decline of the margarine market remains a drag on the growth of its spreads products.

The board has recommended a  first quarterly interim dividend of 23.38 pence per share.

Commenting on the statement, Chief Executive Officer Paul Polman said:

We delivered good growth in the first quarter despite slowing markets and a tough competitive environment, further evidence that Unilever is now delivering consistently ahead of our markets. 

“We continue to deliver strong, margin-accretive innovations whilst embedding operational discipline across our markets. At the same time we are increasing our distribution reach and enhancing the capabilities of our people to ensure that we have a strong foundation from which to deliver sustained growth. Emerging markets are currently passing through a period of slower demand and economic volatility but our strategy remains unchanged.

“We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.

 At 2,595p Unilever’s share price is down 8.4% on this time last year, compared to a 4.3% rise in the FTSE 100 over the same period. But over five years, Unilever has outstripped the index, with a 102% gain, versus 62% for the FTSE 100.

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Jon doesn't own shares in Unilever. The Motley Fool owns shares in Unilever.