Unilever suffers dip in emerging markets sales growth

• In China, sales growth within bricks-and-mortar retailers slowed to 1pc from 2pc a year earlier.
• Unilever reported a 5.8pc rise in turnover to 13.3 billion euros, ahead of analyst estimates.
• Nestle also reported flat growth in China and said it has been unable to raise prices in competitive markets globally.

LONDON: A slowdown in India and China put a brake on Unilever's quarterly sales growth, highlighting the challenges facing Chief Executive Alan Jope as he tries to boost the consumer goods giant's business in emerging markets.

Since taking the reins in January, Jope has promised accelerated growth through investment in the likes of Vietnam and Bangladesh, where growing populations and an emerging middle class are driving demand for household products.

Yet two of the Dove soap and Ben & Jerry's ice cream maker's biggest emerging markets show signs of slowing growth, with the impact of trade wars hitting domestic consumption in China and irregular monsoons curbing rural spending in India.

"There have definitely been signs of slowing markets in India and China ... In India, we are going from very high rates of market growth to growth rates in the mid-single digits of growth," Unilever finance chief Graeme Pitkethly told Reuters.

In China, sales growth within bricks-and-mortar retailers slowed to 1pc from 2pc a year earlier, he added.

In Argentina, another of its big emerging markets, hyperinflation has kept shoppers away from stores and led to a 4pc drop in volumes.

These factors contributed to a sharp slowdown in emerging market sales, which were up 5.1pc in the third quarter but a far cry from the 7.4pc growth in the previous quarter. Emerging markets contribute 60pc to the company's overall sales.

COMPETITIVE MARKETS

Growth in developed markets also stalled, falling 0.1pc as shoppers shift to more niche products and Europe faces tougher comparisons with last year, when a warm summer boosted ice cream sales in the region.

Overall, underlying sales growth rose to 2.9pc in the quarter, missing an average forecast of 3pc, according to a company supplied analyst consensus. That lagged rival Nestle , which reported 3.7pc sales growth for the period.

Nestle also reported flat growth in China and said it has been unable to raise prices in competitive markets globally.

Still, Unilever reported a 5.8pc rise in turnover to 13.3 billion euros, ahead of analyst estimates, helped by acquisitions and a weaker pound.

It also stuck to its full-year target for underlying sales growth in the lower half of a 3pc to 5pc range and a 20pc operating margin in 2020.

Shares in the Anglo-Dutch company were up 1.7pc at 46.89 pounds in morning trade and were the third-biggest gainer on the blue-chip FTSE 100 index. The stock is up 11.2pc this year.

Nestle shares were down 0.5pc at 105.54 Swiss francs.