Unilever reported third-quarter sales growth that fell well short of estimates as poor weather in Europe and hurricanes in the Americas cut demand for ice cream.
Underlying revenue rose 2.6 percent, the Anglo-Dutch maker of Magnum and Ben & Jerry’s said Thursday, compared with the 4 percent median estimate of analysts surveyed by Bloomberg. Growth slowed from the second quarter’s 3 percent increase as volume decelerated for the fourth straight period.
Developed Market Challenges
“The developed markets were extremely challenging,” with retailers canceling orders after hurricanes hit Florida and Texas, Unilever’s second- and third-largest states for revenue in the U.S., Chief Financial Officer Graeme Pitkethly said on a call. In Europe, ice cream was the main source of volume decline, London- and Rotterdam-based Unilever said in a statement.
Unilever’s refreshment business, which includes ice cream and tea, accounts for about one-fifth of overall sales. The company has maintained its commitment to spend 1 billion euros to 3 billion euros ($1.2 billion to $3.5 billion) annually on fast-growing businesses such as teamaker Pukka Herbs and Sir Kensington’s condiments, even after Kraft Heinz Co.’s unsuccessful $143 billion takeover bid in February.
Legal Structure
A review of the dual-headed legal structure is “progressing well,” Unilever said. The Anglo-Dutch company has been taking steps to simplify its corporate structure with predators circling the food industry, and it has put its underperforming spreads business up for sale.
In addition to the hurricanes, increased competition hurt the ice cream business, Unilever said. Underlying sales in North America were down 2.9 percent, while the company said China and India showed signs of improvement.
To pursue growth in the emerging world, which accounts for almost two-thirds of sales, Unilever last month agreed to acquire cosmetics maker Carver Korea for $2.7 billion.
The company maintained its forecast for full-year underlying sales growth of 3 percent to 5 percent.
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
