Unilever sales disappoint as competition and natural disasters bite big brands

Earnings


Pitkethly said the quarter came up about 150 million euros, or about one day’s worth of sales, short of internal hopes.

“We’re not happy with that in aggregate. In fact, we feel we left some runs in the field,” Pitkethly said. Hurricanes caused about a week’s worth of lost sales in Texas and Florida, its biggest U.S. markets, he said.

Unilever’s ice cream business, which also includes Ben & Jerry’s and Wall’s, saw double-digit declines in Europe, hurt by poor weather, and suffered market share losses in the United States at the hands of a new brand, Halo Top.

Unilever had reduced its advertising and marketing spending by 130 basis points in the first half of the year, in an effort to cut costs in the wake of Kraft’s bid, and one analyst said that may have hurt its sales now.

“In our view, the seeds of Q3’s poor performance versus expectations were planted with the reduction in advertising and promotional spend in the first half,” said RBC Capital Markets analyst James Edwardes Jones.

“While natural disasters doubtless played a part, the fact is that Unilever’s Q3 performance came in below expectations in all geographies.”

Turnover fell by 1.6 percent, hurt by a 5.1 percent hit from foreign exchange rates, the company said.

Excluding its up-for-sale margarine and spreads business, for which tentative takeover bids are due on Thursday, sales rose 2.8 percent.

The company stood by its full-year forecast for sales growth of 3 to 5 percent, an improvement in underlying operating margin of at least 100 basis points and strong cash flow.



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