* Q2 underlying sales up 5.0 pct vs 5.5 pct consensus
* Says emerging markets slowing
* Little sign of recovery in North America or Europe
* Shares down 2.1 percent
By Paul Sandle
LONDON, July 25 Unilever has
become more cautious about prospects for emerging markets, a big
growth driver for the consumer goods company, which reported
underlying second-quarter sales growth shy of market
The Anglo-Dutch maker of Ben & Jerry's ice cream and Dove
skincare products said on Thursday emerging markets' growth was
slowing as a result of broader economic weakness that was having
an impact on consumers.
Chief Financial Officer Jean-Marc Huet said Unilever was
still seeing double-digit growth in emerging markets, but it
would not be immune to wider economic trends.
"We don't want to give the impression that this (level of
growth) can continue forever if the (general macro) slowdown
continues," he said in an interview on Thursday.
Unilever's gloomier assessment of emerging markets'
resilience adds to uncertainty about the ability of these
countries, including China and Brazil, to sustain their
high-growth levels and compensate for weakness in mature markets
in Europe and the United States.
Huet said he saw no signs of recovery in southern Europe.
"We are sharper on cost than we've ever been, we innovate on
cheaper products more than we have before and we are much more
careful with the portfolio," he said.
The company's caution on emerging markets contrasted with an
update from fragrance and flavour maker Givaudan which
has benefited from emerging market consumer demand.
Unilever's sales slowdown in emerging markets quarter on
quarter was only 0.1 percentage points, with growth of 10.3
percent in the three months to end June.
The group reported underlying sales growth overall of 5
percent compared with a consensus of 5.5 percent.
Keith Bowman, equity analyst at Hargreaves Lansdown, said
Unilever was still seen as a barometer for global economic
health, so today's news was somewhat disappointing.
"Europe and in particular Southern Europe remain difficult,
while China remains squarely in focus," he said.
Shares in Unilever were trading down 2.1 percent at a
three-week low of 2,661 pence at 1013GMT, underperforming a 1
percent weaker FTSE 100 index.
Unilever, which also makes Flora spread and Hellmann's
mayonnaise, said it was currently still seeing healthy volume
growth led by Indonesia, Vietnam, Pakistan and China.
The group said Latin America posted an eighth quarter of
double-digit growth, while North America declined by 2 percent.
In Europe, underlying sales were down 0.8 percent, dragged
lower by price cuts.
In terms of product groups, its home care and personal care
divisions performed best, with underlying sales up by 10.2
percent and 7.7 percent respectively.
Huet said innovations such as better liquid detergent and
more package sizes were proving popular with consumers.
"That's also how we've driven the margins in laundry, still
at a low level but up 170 basis points which is no mean feat,"
In consumer care, Unilever also performed better than
cosmetics group L'Oreal, which reported a
smaller-than-expected 5.2 percent rise in second-quarter
underlying sales earlier this month.
But Unilever's foods sales were held back by a poor
performance in its spreads business, with underlying growth of 1
percent, and adverse weather earlier this year in Europe hit ice
The company, which reported before rivals Procter & Gamble
and Nestle, said it had made progress on
improving its core operating margin, which rose 40 points in the
first half to 14.0 percent.