Gloomy outlook at Unilever

Consumer goods group Unilever said 2012 will be a difficult year as growth in emerging markets — which accounts for more than half its business — slows and demand in Europe and North America stays flat at best.

The gloomy outlook sent shares in the Anglo-Dutch group sharply lower yesterday, as chief executive Paul Polman cautioned emerging markets had slowed around 1% over the past year, after the group matched 2011 sales growth forecasts.

At a results briefing, he warned Unilever faced another tough year in 2012 with Europe set for a slow and long recovery, while input cost headwinds will persist although to a lesser extent than in 2011.

Unilever, which pushed up the prices of brands such as Dove, Hellmann’s, and Knorr to offset higher commodity costs, said growth in emerging markets had slowed due to these price rises and weak consumer confidence.

Finance director Jean-Marc Huet said growth in emerging markets such as Africa, Asia and Latin America stayed strong but the company needed to do better in Russia and eastern Europe where performance was sluggish.

Huet added the global economy was in poor shape and so there will not be many price rises this year, as the group needs to take into account the fragile nature of consumer confidence after its fourth-quarter growth relied heavily on price hikes.

The world’s third-biggest consumer goods group reported underlying sales in 2011 rose 6.5% in line with forecasts of 6.4%, with four-quarter growth of 6.6%, compared to rival Procter & Gamble which saw a 4% rise.

The group reported 2011 core earnings per share rose 4% to €1.41, below forecasts of €1.46.

— Reuters