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Unilever results The ship ploughs on, but investors wanted more sparkle, says Nils Pratley

January 22, 2014

As the International Monetary Fund upgraded its global growth forecasts for 2014, it was hard to spot a reciprocal cheery note in the full-year numbers from Unilever, a decent proxy for the global consumer. "We anticipate ongoing volatility in the external environment," said Paul Polman . He means the going is hard in the business of selling shampoo around the world. On the plus side, Unilever did not hit its shareholders with another shocker in emerging markets. The third quarter's 5.9% rise in sales in developing countries - outside the traditional 8%-10% - was the source of a mild profits warning in September. Against that, the 8.4% increase for the fourth-quarter was reassuring, thus the 2% rise in Unilever's share price. In truth, though, it's more like a par score. But Europe and the US are still sub-par. "Developed markets remained weak despite the positive macro-economic indicators in recent months," said the company. You bet. Unilever's underlying sales growth in developed markets swung from plus 1.6% in 2012 to minus 1.3% in 2013. The company seems to have hit a few bum notes on "price piano", to use Polman's phrase, as western consumers simultaneously veered towards discount brands and up-market labels. At an overall level, though, the ship ploughs on. Net profits rose 9% to euros 5.3bn (pounds 4.3bn) and earnings per share were up 3%. Unilever remains a strong company with healthy profit margins that generates a lot of cash. But the market was expecting more sparkle in 2013's numbers. Unilever, and its markets, are growing less strongly than thought and it's not precisely clear why.

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Source: Guardian (UK)

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