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Unilever to stick to emerging markets' growth strategy
Unilever to stick to emerging markets' growth strategy

Unilever to stick to emerging markets' growth strategy

FMCG SUPPLIER NEWS - Feb 4th 2014, 08:35

Unilever said it would stick to its emerging markets growth strategy, as a fourth-quarter recovery in sales in the region boosted the consumer goods maker’s 2013 results and reassured investors who had been worried about consumer demand there.

We’ll stick with emerging markets as sales rebound - Unilever

Unilever generates more than half of its sales in emerging and developing markets, so was hurt by economic weakness last year in countries such as Indonesia and the devaluation of currencies including the Brazilian real and Indian rupee.

However, the Anglo-Dutch firm, which makes a vast array of products from Ben & Jerry’s ice cream and Lipton tea to Dove soap and Vaseline, said that sales in emerging markets rose 8.4 per cent in the fourth quarter, up from a 5.9 per cent rise in the third quarter.

“Make no mistake,” said Chief Executive Officer, Paul Polman. “Growth here remains well above that in the developed world and will continue to do so. We are therefore accelerating our investments in emerging markets and there is no change in our strategy.”

Aside from Unilever’s own slowing sales, news that rivals L’Oreal and Revlon had pulled some brands out of China amid a slowdown had stoked the market’s unease.

“Investors appear to be breathing a sigh of relief,” said Hargreaves Lansdown Stockbrokers analyst, Keith Bowman. “Importantly, sales in the emerging markets have seen a rebound, with Russia, Turkey, China and Indonesia notable performers.”

Chief Financial Officer, Jean-Marc Huet, cited strength in Latin America and Southeast Asia, as well as the increased contribution from Hindustan Unilever, a venture in which Unilever recently increased its stake.

The company’s capital expenditures for 2014 will be between 4 and 4.5 per cent of sales, higher than its historic average, with most of the investment going into the personal care and emerging markets businesses. CEO Polman said the company would be investing more in Africa as the region stabilises.

“From where we were in September, we’re pleased with the performance of emerging markets,” Huet said in an interview with Reuters. “The good news is that a big proportion is just good volume growth - we’re selling more products.”

Underlying sales grew 4.1 per cent for the fourth quarter, topping analysts’ estimates of 3.9 per cent, according to a company-supplied consensus. That was up from 3.2 in the third quarter.

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