Anglo-Dutch consumer goods giant Unilever has blamed economic turmoil in Latin America and rising commodity costs after reporting reduced annual turnover and low sales growth.
Unilever’s new chief executive officer, Alan Jope, told analysts in his first post-results call as CEO the results are “solid” but admitted increasing the speed of growth is crucial for the business.
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For 2018, Unilever reported turnover of EUR49.6bn (US$57.05bn), down 5.1% year-on-year, while underlying sales, excluding the now disposed spreads business, were up 3.1%. The underlying sales from Unilever’s food and refreshment division, excluding spreads, grew 2.3% with 1.6% from volume.
Jope said: “Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.
“We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions.”
But he said he expects market conditions to remain challenging in 2019.
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By GlobalData“We anticipate underlying sales growth will be in the lower half of our multi-year 3-5% range,” he said.
“Market conditions have been challenging throughout the year, particularly in the second half where currency devaluations and rising commodity costs put pressure on consumer demand. The economic crisis in Argentina led to the economy being classified as hyper-inflationary.”
He added: “For us to move up into the top half of our guidance range we would need to see a sustained recovery in Latin America and the continuation of the progress we are seeing in south-east Asia.”
Unilever admitted during the call it is stockpiling some products because of fears of a no-deal Brexit.
Chief financial officer Graeme Pitkethly said there had been a EUR500,000 increase in inventory.
“We are building stocks for Brexit, obviously, and assuming the worst case scenario there,” he said.
Jope said it is holding a few weeks’ extra stock of products such as Ben and Jerry’s ice cream and Magnum bars ahead of the UK’s planned departure from the European Union on 29 March.
Unilever’s ice creams are produced on the Continent.
“We have built inventory on either side of the Channel,” Jope said. “It’s weeks of inventory – not months or days.”
