* Q3 sales up 3.2 percent vs 5 percent in Q2
* Emerging market sales up 5.9 pct vs 10.3 percent
* Turnover down 6.5 percent to 12.5 billion euros
* Shares up 0.7 percent
By Martinne Geller
LONDON, Oct 24 Unilever Plc
reported slower sales growth after demand for its consumer goods
was hit by the devaluation of a handful of emerging market
currencies and other factors such as rising onion prices in
"This is a soft quarter without a shadow of a doubt," Chief
Financial Officer Jean Marc Huet told Reuters in an interview On
The Anglo-Dutch maker of Ben & Jerry's ice cream, Lipton tea
and Dove soap posted a 3.2 percent sales increase in the third
quarter, down from 5 percent in the second.
It had already warned in September that a slowdown in
markets such as Indonesia, Brazil and India had accelerated and
it expected quarterly underlying sales growth of only 3 percent
to 3.5 percent.
Unilever generates more than half its annual sales from
developing and emerging markets, where sales rose 5.9 percent in
the quarter - down from 10.3 percent in the previous three
months but still stronger than the slight decline seen in
Turnover fell 6.5 percent to 12.5 billion euros ($17.2
billion), hurt by an 8.5 percent hit from foreign exchange
"The reality is that the global economy is not in as good
shape as some would like to make out," Chief Executive Paul
Polman said on a conference call. "I believe we have to
calibrate our expectations a little more as we navigate these
Polman added that in three decades operating in emerging
markets, he had never seen such large declines in so many
currencies at the same time.
"Whilst we normally can deal with one or another and
compensate for that globally, this really came as a shock to the
global economy in total," he said.
Uncertainty over when the U.S. Federal Reserve will scale
back its bond-buying stimulus led to sharp falls in currencies
such as the Indian rupee and the Brazilian real between May and
The drops were compounded, Polman said, by other factors
including a government abolition of fuel subsidies in Indonesia
and a more than trebling in the price of onions in India - a
staple cooking ingredient - that further weighed on consumers'
Unilever's performance looks relatively weak compared with
peers such as Nestle, the world's biggest foods group,
which said last week competitive pricing helped it lift sales
growth in spite of tough conditions in emerging markets and
Reckitt Benckiser earlier this week reported
higher-than-expected sales and raised its outlook.
Huet said Unilever's business crosses so many categories,
including basics like shampoo and food used by people at all
levels of the economy, while Reckitt's goods - like dishwasher
detergent and headache tablets - appealed to higher-income
consumers more immune to economic volatility.
Unilever's currency hedges typically give it a window of
three to six months, during which time it can work to raise
prices in local markets hurt by devaluations. Selective
increases are expected to help in the coming quarters, it said.
For the full year, currency should hurt sales by about 6
percent and profit by about 7 percent, Huet said.
In North America, third-quarter sales volume fell due to a
decision to stop selling some low-margin ice cream products and
continued weakness of the company's margarine business.
Also, Unilever's market share in the high-margin personal
care business was hurt by promotions by rival Procter & Gamble
, whose Pantene and Herbal Essences shampoos compete with
The company said it expects sales growth to improve in the
fourth quarter, helped by new products such as Vaseline body
sprays in Europe and Tony & Guy hair products in the United
States. Still, Polman said developed markets like the United
States were not recovering as fast as expected.
Following the divestiture of some less-profitable brands
including Skippy peanut butter and Wishbone salad dressings,
Polman said there were some small businesses left to sell but he
declined to name them.
"It's better to announce the sale than to preannounce the
intention," Polman said.
Unilever shares were up 0.7 percent in London at 1045 GMT.