Unilever Faces Squeeze in North America -- Update
January 31 2019 - 5:07AM
Dow Jones News
By Peter Stiff
LONDON -- Unilever PLC reported weaker-than-expected revenue
growth in the fourth quarter and warned of a challenging year
ahead, partly as the maker of Hellmann's mayonnaise and Dove soap
faces tough competition in North America.
In the first earnings under new Chief Executive Alan Jope, the
company said Thursday its closely watched underlying sales growth
rose 2.9% in the last three months of 2018, below the 3.5% level
expected by analysts.
For 2019, it forecast underlying growth at the lower half of its
long-term guidance of 3% to 5%, citing uncertainty in several
countries.
The consumer-goods company's shares fell 2.5% in early
trading.
Unilever, like others in the industry, is grappling with
increased competition from new brands, rising commodity costs,
volatile emerging markets, and fierce competition from Amazon.com
Inc. and discount chains that are increasingly launching own-label
products.
Over 2018, competition was particularly tough in North America,
where underlying sales growth was 1%, excluding its recently sold
spreads business. The company said categories such as ice cream,
tea and dressings were challenging.
Unilever cheered investors when updating on the third quarter
last year when it said it had been able to raise prices. However,
on Thursday the company said it had to dial that back in the fourth
quarter, reflecting an intense promotional environment.
One particularly competitive area is mayonnaise, where Unilever
is engaged in a promotional battle with Kraft Heinz Co.
Unilever said its performance was strong in Europe, driven by
sales growth in ice cream, but challenging in struggling economies
such as Argentina.
Overall, Unilever reported a fall of 5.1% in full-year revenue
to EUR50.98 billion ($58.54 billion), which it attributed to the
sale of its spreads business and currency headwinds. Net profit
jumped to EUR9.39 billion from EUR6.05 billion, boosted by the
sale.
--Carlo Martuscelli contributed to this article.
Write to Peter Stiff at peter.stiff@wsj.com
(END) Dow Jones Newswires
January 31, 2019 04:52 ET (09:52 GMT)
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