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Unilever Posts First Profit Warning In A Decade

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Getting crushed by a rampant dollar. Very good. B)

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10346167/Unilever-shares-slide-after-profit-warning.html

Unilever shares slide after profit warning

Unilever shares slid on Tuesday after the consumer goods giant surprised the market with its first profit warning in a decade.

By Szu Ping Chan 9:44AM BST 01 Oct 2013

The shares fell almost 4pc on Tuesday morning, to 2,345p, after the company behind Persil, PG Tips and Dove warned after markets closed on Monday that a slowdown in emerging markets, where it generates almost 60pc of sales, accelerated in the third quarter.

Unilever said it expected underlying sales growth of between 3pc and 3.5pc in the period, compared with a weaker-than-expected 5pc rise in the second quarter. The announcement was Unilever's first profit warning since 2004.

Paul Polman, Unilever's chief executive, sought to allay fears that the recent downturn in emerging markets had become entrenched.

Mr Polman said underlying sales growth would improve in the final quarter, despite the downturn, which he blamed on "significant currency weakening".

Brazil, where Unilever generates around 7pc of sales, saw the real tumble 4pc in the third quarter, while the Indian rupee fell 9pc and the Indonesian rupiah fell by almost 20pc against the euro.

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A strategy issue? or is growth unrealistic?

However, some analysts suggested the issues lay closer to the boardroom door rather than on the currency markets, heaping pressure on chief executive Paul Polman, who explains himself to analysts and investors tomorrow. Brokers Panmure Gordon said: "The fact that we have had yet another period of disappointing growth in developed markets really should, in our view, prompt a re-evaluation of Unilever's strategy."

http://www.independent.co.uk/news/business/news/city-sends-unilever-into-3bn-dive-on-profit-woes-8851471.html

edited to add link :blink:

Edited by neontetra

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A strategy issue? or is growth unrealistic?

Their growth is reliant on asia, their western business must be suffering from discounters selling lower margin brands and competing brands. Look at the Aldi results, massive growth in turnover and profits, and a lot of common sense around the real reason they are dong so well, identifying the polarisation of the market (widening wealth gap) and persistent high inflation driving their sales. Brands will suffer under that environment - mass consumerism is based on mass consumption, easy thing to knock on the head is brand loyalty.

http://www.thecourier.co.uk/business/news/aldi-looks-to-expand-as-profits-soar-124-1.137018

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Their growth is reliant on asia, their western business must be suffering from discounters selling lower margin brands and competing brands. Look at the Aldi results, massive growth in turnover and profits, and a lot of common sense around the real reason they are dong so well, identifying the polarisation of the market (widening wealth gap) and persistent high inflation driving their sales. Brands will suffer under that environment - mass consumerism is based on mass consumption, easy thing to knock on the head is brand loyalty.

http://www.thecourie...ar-124-1.137018

I noticed this post as I have seen most of Unilever brands I know, at heavily discounted prices recently and was wondering what the wider consequences would be - the discounting must be the same world wide. Brand loyalty now only reserved for very few items. We only have Lidl in NI. They do sell some branded items,but relatively few. Past 3-4 years have seen a huge increase in the amount of shoppers using their stores (and BMW's in the car parks).

.http://www.ft.com/cm...l#ixzz2gToUa16u

The analysts said emerging markets had slowed from between 10-12 per cent to 8-10 per cent. "With emerging markets broadly 50 per cent of revenue, that is a material hit to their [consumer staples'] revenue," Credit Suisse said.

However, Paul Polman, Unilever chief executive, said he expected sales growth to improve in the final quarter. "For 2013, we are on course to deliver against our priorities of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow," he said.

The group has a pipeline of innovations for the final quarter which it expects will boost sales.

I take it Polman is talking about new innovations for India, Thailand, Mexico, Brazil, Russia and Egypt, rather than Western countries? Or just saving face?

.

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Companies that watch their overheads, that give people what they want and ask for make money simples....brands are dead in the water...branding does not mean better, more often than not it means less for more expense.....you buy a brand you pay for their advertising, your choice. ;)

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Caterpillar gave a similar warning 12 months ago, but extended out to 2015. Bellwether of global construction.

http://www.cnbc.com/id/49164734

Not sure how that's turning out.

I actually think cutting out a great chunk of Unilever's products would increase the quality of life, so maybe this is good news. A list of their brands: http://en.wikipedia.org/wiki/List_of_Unilever_brands

edit: add link

Edited by okaycuckoo

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Guest eight

Their growth is reliant on asia, their western business must be suffering from discounters selling lower margin brands and competing brands. Look at the Aldi results, massive growth in turnover and profits, and a lot of common sense around the real reason they are dong so well, identifying the polarisation of the market (widening wealth gap) and persistent high inflation driving their sales. Brands will suffer under that environment - mass consumerism is based on mass consumption, easy thing to knock on the head is brand loyalty.

I find most "well known brand" products to be of inferior or disappointing quality, especially when compared to the no name stuff from Lidl. It makes sense really, if they were that good they wouldn't need a strong brand and heaps of advertising in order to sell them in the first place.

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I only buy Unilever and other branded fmcg products when they are 50% off in my local big Sainsburys.

I know that I'm not the only one and fortunately there's always at least one on offer.

:)

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