The Anglo-Dutch food and consumer goods giant blamed a slowdown in emerging markets and the ongoing weak economic situation in Europe as it posted underlying sales growth of 2.1% in the third quarter – missing analyst expectations of 3.7%, and at their lowest since Q4 2009. Turnover fell 2% in the quarter to €12.2bn.
CEO Paul Polman said in a statement: “We expect markets to remain tough for at least the remainder of the year.”
Although the company saw a 1% improvement in sales in North America, it reported a “sharp slow-down” in China, where retailers have reacted to slower economic growth by destocking. This resulted in about 20% of the decline in the company’s underlying sales.
Sales growth in emerging markets, which account for about two-thirds of the company’s revenues, slowed to 5.6%, compared to 6.6% during Q2.
There was no improvement in developed markets either, which shrank in the quarter by 2.5%.
In particular, ice cream sales suffered in Europe due to poor summer weather compared with last year, and growth in dressings and savoury products was not enough to offset the continued decline of the spreads market.
“We gained significant market share in margarine but this was not sufficient to offset the overall decline of the category,” the company said. “We continued to launch products with a blend of vegetable oils and butter such as Gold from Flora with more than 10 product introductions completed in Europe in less than twelve months.”
Polman added: “We have further accelerated our initiatives to remove unnecessary cost, simplify the business and ensure that Unilever is both agile and resilient.
“We are confident that we will achieve another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.”