Despite a 10 increase in net profits, Unilever failed to convince analysts and investors. Brand new CEO Alan Jope has got his work cut out for him.
Turnover growth inadequate
The manufacturer of brands like Axe, Cornetto, Dove, Magnum and Sunlight saw its turnover grow 'just' 2.9 %, considerably less than the + 3.5 % analysts were hoping for. Discounting last summer's sale of the spreads division (like Becel), the underlying turnover growth was 3.1 %. The annual turnover for 2018 was 51 billion euros, while net profits did have a strong increase of 9.8 billion euros.
CEO Jope expects the challenging circumstances on the market to continue in 2019, partly due to the waning consumer trust in rising markets, particularly Latin America. Major countries such as Brazil have been hit by recessions and, in Argentina's case, hyperinflation. Unilever did experience strong growth in China, specifically in the provincial cities. In the Western markets, the biggest success was in ice creams thanks to the hot summer, although rising competition challenged Unilever in the United States.
These rather tame results and Unilever's cautious outlook do little to enthuse investors, who sent the stock 2.5 % lower in Amsterdam.