Unilever reported lower-than-expected fourth-quarter sales yesterday, hurt by troubles in Latin America and weak growth in developed markets, showing the challenges facing new Chief Executive. Alan Jope.
The maker of Dove soap and Ben & Jerry’s ice cream said fourth-quarter underlying sales rose 2.9 percent. Analysts, on average, were expecting 3.5 percent, a consensus forecast supplied by the company showed.
Jope, who has been with the company for more than three decades, took charge at the start of the year.
He succeeded Paul Polman, who retired after a decade as CEO during which he drove Unilever toward a vision of a company that valued sustainability as well as profits. The end of his tenure was marred by a dispute with shareholders over a botched attempt to shift the company’s main headquarters to the Netherlands.
Jope appeared focused for the moment on improving business trends at the Anglo-Dutch group, whose sales are at the bottom end of its medium-term targets, due to issues such as hyperinflation in Argentina, intense competition in North America and weak retail environments in France and Germany.
“Let me state that accelerating quality growth will be my number one priority,” Jope told analysts.
Unilever shares fell nearly 3 percent as the sales miss overshadowed full-year earnings that were ahead of expectations.
“With growth weak but H2 margins strong, we expect this to fuel the ongoing debate on Unilever’s top line versus bottom line algorithm,” Jefferies analysts said.
Unilever reported full-year sales growth of 3.1 percent, in line with its forecast for growth at the bottom end of its 3 to 5 percent forecast range.
Looking ahead, it said it expects 2019 market conditions to remain challenging and forecast underlying sales growth again in the lower half of a 3 to 5 percent range, with continued improvement in underlying operating margin and another year of strong free cash flow.
For the forecast to come up to the top half of the range, Jope said he would want to see a sustained turnaround in Latin America and continued improvement in Southeast Asia.