Unilever Posts Revenue Decline -- Update
January 26 2017 - 4:48AM
Dow Jones News
By Saabira Chaudhuri
LONDON-- Unilever PLC disappointed investors on Thursday,
warning of a difficult start to the year while reporting lower
sales for 2016, driven by slowdowns in refreshments and home
care.
Unilever, whose brands include Hellmann's mayonnaise, Dove soap
and Ben & Jerry's ice cream, reported a 5.5% rise in net profit
from a year earlier to EUR5.5 billion ($5.91 billion) in 2016. But
revenue fell 1% to EUR52.7 billion, hit by a negative currency
impact of 5.1%.
The company has turned to driving sales growth through price
increases in recent quarters, a strategy generally seen as less
healthy by investors than boosting volumes since it depends on
trading customers up to more expensive products rather than
attracting new ones.
Unilever's shares were down 4.4% in Thursday morning trading in
London.
Liberum analyst Robert Waldschmidt offered a bearish view on the
company, saying Unilever will have to move to shore up volumes by
cutting prices in emerging markets despite higher raw-materials
costs.
The Anglo-Dutch company, which makes most of its sales from
emerging markets, blamed Brazil's economic crisis and the recent
demonetization in India for hindering its performance. It logged
growth of 6.5% in emerging markets. But it also turned in a
lackluster performance in developed markets, where it reported flat
underlying sales growth.
Bernstein analysts described the performance by Unilever's
personal-care, refreshments and home-care arms as "quite
disappointing" in the fourth quarter, noting that only
foods--typically a slow-growing business for the consumer goods
giant--beat expectations.
For 2016, the personal-care arm reported 4.2% underlying sales
growth, roughly flat with the 4.1% reported for 2015. In home care,
Unilever reported 4.9% growth, compared with 5.9% last year. In
refreshments--made up of tea and ice cream--Unilever reported
underlying growth of 3.5%, compared with 5.4% last year. The food
arm logged growth of 2.1%, up from 1.5% in 2015.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
January 26, 2017 04:33 ET (09:33 GMT)
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