Argentina’s inflation to blame for Unilever’s missed sales targets
Unilever says it expects 2019 market conditions to remain difficult, and has forecast underlying sales growth in the lower half of a 3%-5% range
London — Unilever reported lower-than-expected fourth-quarter sales on Thursday, hurt by inflation in Argentina and flat volume growth in developed markets, in its first set of results since new CEO Alan Jope took charge.
The maker of Dove soap and Ben & Jerry's ice cream said fourth-quarter underlying sales rose 2.9%. Analysts, on average, were expecting 3.5%, a consensus forecast supplied by the company showed.
The Anglo-Dutch group, which is working to move on from last year's botched plan to shift its main headquarters to the Netherlands, had said full-year sales growth would be at the bottom end of its 3%-5% forecast range.
Looking ahead, it said it expected 2019 market conditions to remain challenging and forecast underlying sales growth again in the lower half of a 3%-5% range, with continued improvement in underlying operating margin and another year of strong free cash flow.
It said it remained on track for its 2020 goals.
In the fourth quarter, Unilever blamed Argentina, which makes up 2.5% of its overall business, for hyperinflation that led prices to spike more than 50% and therefore volume to fall more than 20% in the quarter.
But more broadly, sales volume in the Americas was flat, as pricing growth was offset by volume declines. The same happened in Europe, though the company eked out 0.8% sales growth in the region. Overall, underlying sales in developed markets grew only 0.4% in the quarter.
The company blamed declines in France and competitive pressures in North America, particular in ice cream and mayonnaise.
For the full year, Unilever reported turnover of €49.6bn excluding its divested spreads business, with underlying sales up 3.1%, in line with expectations.
Its full-year earnings were €3.48 per share.