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LONDON — Adding to the gloom among consumers and markets on both sides of the Atlantic, Unilever’s bosses said Thursday the economic recovery in developed markets will be “long and drawn out,” and that the growth story belonged to emerging markets.
This story first appeared in the August 5, 2011 issue of WWD. Subscribe Today.
Chief executive Paul Polman and chief financial officer Jean Marc Huet said in a 90-minute conference call Thursday the consumer outlook for developed countries was bleak.
“In many European countries and in North America, the austerity cuts will impact for years to come,” said Polman. “There will be a long and drawn-out recovery in developed markets. Fortunately, in the emerging markets, the growth is more robust.”
Earlier in the day, the owner of brands including Dove, Vaseline and Alberto Culver reported an 8.9 percent rise in profits to 2.41 billion euros, or $3.44 billion, in the six months to June 30.
Turnover in the period rose 4.1 percent to 22.79 billion euros, or $32.59 billion, fueled by growth in emerging markets, new acquisitions, including the American hair care brand Alberto Culver, and price hikes in the second quarter.
All figures have been converted at average exchange rates for the six-month period.
Despite a strong second-quarter performance in Western Europe, Unilever said market conditions remain “sluggish” in the developed countries and the West in particular remains challenging. Sales volumes in the region were broadly stable, and got a boost from the late Easter.
In North America, underlying sales growth was “low single-digit” in the half-year, reflecting the impact of price increases and competitive dynamics, the company said. Meanwhile, China and India both delivered double-digit underlying sales growth, driven by strong volume growth. The company said Southeast Asia also delivered “broad-based strong growth” in the period.
Unilever said the integration of Alberto Culver — whose purchase was completed in May — was “progressing rapidly,” and that it had added 104 million euros, or $148.7 million, to turnover in the six-month period, and a loss of 8 million euros, or $11.4 million, to the first-half bottom line.
Unilever added that the earthquake and tsunami in Japan earlier this year caused “serious disruption” to the local personal care business, but that the brands were coming “back on stream.”