UN Unilever NV

By Saabira Chaudhuri 

LONDON-- Unilever PLC Thursday reported a slowdown in third-quarter revenue growth, as the world's second-largest consumer goods company struggled with fierce competition in its deodorants and hair-care business and difficult trading in Latin America.

The maker of Magnum ice cream and Dove shampoo posted third-quarter sales growth on an underlying basis--which strips out the impact of acquisitions, disposals and exchange-rate changes--of 3.2%, down from 5.7% growth in the same period a year earlier.

Revenue climbed 3.4% at constant currency as the company offset volume declines with higher prices. But including a negative currency impact of 3.4%, revenue was flat at EUR13.4 billion ($14.8 billion). Profit figures weren't disclosed.

The results come as the Anglo-Dutch consumer goods giant has been grappling with a slump in the pound following Britain's vote to leave the European Union. Unilever's products were unavailable on British grocer Tesco PLC's website as of Wednesday after Unilever demanded Tesco raise prices and the grocer refused, according to a person familiar with the standoff.

Unilever Chief Executive Paul Polman described global markets as "soft and volatile," calling out currency devaluation in Latin America as having squeezed disposable income. Unilever has adopted so-called "zero-base budgeting" or justifying each year's expenses from scratch to rein in costs as it works to mitigate the impact of a turbulent macroeconomic environment.

On an underlying basis, Unilever reported sales growth in emerging markets weakened to 5.6% from 8.4% a year earlier. In developed markets, underlying sales growth was flat compared with 2.1% rise a year earlier.

The company has made a string of U.S.-focused acquisitions in recent months that pit it squarely against rival Procter & Gamble. Last month it agreed to buy Seventh Generation Inc., a maker of plant-based detergents and household cleaners, and in July it said it was buying Dollar Shave Club, an e-commerce business that sells disposable razors and other grooming products.

Unilever has also been pushing deeper into personal-care products such as shampoos and deodorants that appeal globally, and away from slower-growing food brands.

But on Thursday the company said "intense competition" in many of its markets had squeezed growth in its personal-care arm. Revenue climbed 3.1% on an underlying basis, which is half the growth level reported a year earlier.

The home-care and refreshments divisions performed better, logging underlying sales growth of 3.9% and 4.5% respectively.

The food arm reported 1.7% growth, helped by cooking products in emerging markets and organic dressings. But Unilever's spreads business--which mainly consists of margarine--continued to decline in both North America and Europe. The company has faced pressure from analysts and investors to sell the declining business but has so far refused, saying it hasn't received an acceptable offer.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

October 13, 2016 03:07 ET (07:07 GMT)

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