Unilever Q3 Sales Down; Warns On Tough Markets; Stock Dips

(RTTNews) - Unilever Plc's (UN, UL, ULVR.L) shares declined around 4 percent in the early morning trading in London after the Anglo-Dutch consumer goods giant reported Thursday lower sales in its third quarter, mainly reflecting negative currency and weak performance in foods segment and European region.

Underlying sales, however, grew 2.1 percent with volume growth of 0.3 percent and pricing growth of 1.8 percent.

Looking ahead, the company expects markets to remain tough for at least the remainder of the year. Despite this, it is confident to achieve another year of profitable volume growth ahead of markets, steady and sustainable core operating margin improvement and strong cash flow. Unilever's turnover for the third quarter dropped 2 percent to 12.24 billion euros from last year's 12.49 billion euros. The results reflected negative currency impact of 2.6 percent, and negative impact from acquisitions & disposals of 1.5 percent.

Underlying sales growth in emerging markets slowed to 5.6 percent. In China, underlying sales declined around 20 percent as the impact of the sharp market slow-down led to trade de-stocking across the distribution channels. Developed markets showed 2.5 percent decline. According to the firm, market growth continued to slow in the quarter as macro-economic pressures affected consumer demand. In Foods, sales declined 8.6 percent, as growth in savoury and dressings was insufficient to offset the continued decline in spreads, hurt by the decline of the margarine market and price deflation in a weak commodity costs environment.

Refreshment sales dropped 3.7 percent as ice cream was held back by poorer European summer weather.

Geographically, Asia/AMET/RUB recorded 3.1 percent rise in underlying sales, despite weaker markets and the impact of the decline in China.

North America grew 0.6 percent driven by volume growth. The company said it is now seeing early signs of improvement in North America as the impact of the economic recovery starts to be felt by consumers.

In Europe, sales were hurt by price deflation in many markets such as France, Germany and the United Kingdom, along with the impact of the poor summer weather on the ice cream category.

Further, the boards have declared a quarterly interim dividend for the third quarter of 0.2850 euros per Unilever N.V. ordinary share, and 0.2252 pounds per Unilever Plc ordinary share.

Going ahead, Unilever said it expects the trade de-stocking in China to be largely complete by the end of 2014. According to the firm, full-year core earnings per share will be underpinned by the actions it is taking to drive core operating margin and by actions taken to strengthen the financial items below operating profit.

In London, Unilever shares were losing 99.52 pence or 3.93 percent at 2,434.48 pence.