Unilever sales growth slows as challenging conditions continue

Consumer goods giant Unilever has warned that 2017 will be another challenging year for the company, as it reported mixed full-year results showing a concerning slowdown in Q4 sales growth.

The FTSE 100 firm reported lower than expected underlying sales in Q4, which rose 2.2% compared to the 2.8% that had been forecast by analysts prior to Thursday's release. Unilever attributed the decline to Brazil's economic slowdown and India's demonetisation policy. 

For the year, sales grew 3.7%, with prices increasing 3.8% and volume increasing 0.7%. At constant currency exchange rates sales grew 4.3%, but in current exchange rates sales declined 1%.

The Group reported EPS up 7% at €1.88 a share and has said it will pay a €0.32 dividend in march.

Whitman Howard said on Tuesday that it was forecasting revenue to fall to €52.3bn, (ahead of Bloomberg's consensus (€52.2bn)) but Thursday's results show Unilever came out marginally ahead of expectations at €52.7bn. 

Unilever also beat Whitman on EPS:

"With FY2015 being a tough comparison, we forecast EPS to be €1.82 compared with €1.85 consensus."

CEO Paul Polman said it had been a good all round performance in the year despite "severe economic disruptions" particularly in India and Brazil.

"This ... demonstrates the progress we have made in transforming Unilever into a more resilient business. We have again grown ahead of our markets, driven by strong innovations that support our category strategies. At the same time, we have accelerated our margin expansion even after absorbing the higher restructuring costs associated with the implementation of 'Connected 4 Growth', the next stage in our transformation."

Mr Polman said it was a time of "unprecedented" global change and reiterated the Company's view that its 'Connected 4 Growth' strategy will help Unilever deliver "simpler, faster and more connected" service to its consumers and customers.

"We are also making further progress in reshaping our portfolio, adding businesses in fast-growing segments with the acquisitions of Dollar Shave Club, Blue Air, Seventh Generation and Living Proof."  

Looking toward 2017, he said the firm's priorities would be to continue to beat its markets in volume growth and improve its operating margin and cash flow. He finished by warning investors that 2017 would be as challenging as 2016 and to expect a slow start with growth improving throughout the year.

Unilever shares fell 4% as the markets opened on Thursday.