Unilever experienced a rugged fourth quarter, with results below the market's expectations despite underlying growth. This was only achieved through price hikes, because volumes are dropping.
Difficult fourth quarter
Unilever's fourth quarter turnover reached 13 billion euro, 166 million euro lower than what analysts had expected. Underlying growth was also lower than expected, up 2.2 % (compared to 2.8 %). To achieve that growth, Unilever was forced to increase its prices 2.6 %, because its volumes dropped 0.4 % according to the group's financial results.
The British-Dutch company, which owns brands like Dove, Rexona, Cif and Knorr, was not able to follow its third quarter performance, which was in "challenging market conditions" but still generated a 3.2 % turnover growth. Particularly is Refreshments division, including Magnum ice, suffered in the fourth quarter, with a 3.2 % turnover drop.
“We have delivered another good all-round performance despite severe economic disruptions, particularly in India and Brazil, two of our largest markets", CEO Paul Polman said despite a weak European performance. Volumes dropped 2.5 % here, something the price increases were barely able to counter.
Annual turnover down 1 %
Unilever's full-year turnover was 52.7 billion euro, down 1 % compared to 2015. Operating income grew 3.8 % to 7.8 billion euro (which is better than the overall market, according to Unilever), but the bulk of the increase is thanks to price increases (+ 2.8 %). The company's full-year net profit reached 5.5 billion euro, up 5.5 %.
" The tough market conditions which made the end of the year particularly challenging are likely to continue in the first half of 2017. Against this background, we expect a slow start with growth improving as the year progresses", Polman concluded.