(Reuters) - Unilever Plc (ULVR.L) will miss its underlying sales target this year, the consumer goods giant warned on Tuesday, sending shares in the maker of Dove soap and Ben & Jerry’s ice cream into their steepest fall in six months.
In an unscheduled trading update, Anglo-Dutch Unilever also struck a downbeat tone on its prospects for meeting its mid-term target for sales growth of 3-5% next year.
“Looking ahead to 2020, growth will be second-half weighted. While we expect improvement in H1 2020 versus this quarter, we expect that first half growth will be below 3%,” Chief Executive Alan Jope said in a statement.
“Our full-year underlying sales growth is expected to be in the lower half of the multi-year range,” added Jope, who took on the top job earlier this year.
Shares in Unilever were down 5.1% at 1025 GMT, while rival Nestle slipped 1.2%.
Unilever’s forecast implies it suffered its lowest fourth-quarter sales growth in more than a decade, RBC analysts said.
Earnings, margins and cash are not expected to be impacted by the slower sales growth, the company said.
Developed economies have been a drag for Unilever for several quarters, where growing numbers of consumers are turning to fresher foods, niche brands or cutting back on spending.
Growth in South Asia - India, Bangladesh, Pakistan, Sri Lanka and Nepal - slowed to 5% this year, Jope said on a media call, marking a “significant deceleration” from last year’s 10% rise.
Much of this was caused by a sharp slowdown in consumption in rural India, where growth for the first time is underperforming urban markets, Jope said.
India is Unilever’s second-biggest market after the United States, contributing nearly 10% of its group revenue.
“When India takes a slowdown, we definitely feel it ...but this is more turbulent than normal,” Jope said, adding that he expects the market to recover in the second half of 2020.
Reporting by Siddharth Cavale in Bengaluru; editing by Saumyadeb Chakrabarty and Jason Neely