UNILEVER, THE world’s second-largest consumer goods maker, reported the weakest volume growth in almost three years as higher prices deterred consumers, and said it expected “gloomy” economic conditions to persist this year.
The quantity of goods sold rose 0.1 per cent in the fourth quarter, the company said, the least since the first quarter of 2009.
“Unilever have missed this morning on a closely watched metric that is at the heart of the company’s aspirations,” Martin Deboo, an analyst at Investec in London, said in a note.
Unilever dropped the most in about 18 months in Amsterdam trading.
Volume growth has been affected by price increases made necessary by soaring costs of commodities such as edible oils, costs that Unilever and competitors like Procter and Gamble and Nestle say should dissipate this year.
Prices increased 6.5 per cent in the quarter, the company said, the steepest rise since the first quarter of 2009. The shares fell 4.3 per cent to €24.78 as of the 5:30pm close, the steepest intraday drop since August 5th, 2010.
“We expect investors might be slightly disappointed with these results,” Andrew Wood, an analyst at Sanford Bernstein, said in a note to clients. Still, “broadly flat volume is a fairly good performance given the elevated pricing.”
Unilever said volume was hurt by a software system installation in North America that shifted sales into the third quarter. Excluding that, growth would have been 1 per cent.
Price increases fuelled a 6.6 per cent increase in so-called underlying sales, which exclude acquisitions and currency fluctuations, in the three months through December.
For all of last year, net income was little changed at €4.25 billion. “We cannot recollect a more challenging year as 2011,” said chief financial officer Jean-Marc Huet. “The global economy is still in poor shape, and we expect it to continue.”
Underlying sales for the year rose 6.5 per cent, led by growth in the home care and personal care categories, Unilever said.
Personal care brands such as Dove and Axe now account for more than one-third of total sales, Mr Huet said. – (Bloomberg)
