LONDON — It hasn’t been an easy year for Unilever.
In fiscal 2019, turnover at the parent of brands including Vaseline, Dove and Pond’s edged up 2 percent to 52 billion euros. Growth was hit in the fourth quarter by a slowdown in South Asia, one of Unilever’s largest markets, as well difficult trading conditions in West Africa.
Unilever had warned last month that annual sales growth would fall short of projections, and that underlying sales growth for 2019 would be “slightly below” the lower end of its 3 to 5 percent, multiyear forecast. Underlying growth in the 12 months to Dec. 31 was 2.9 percent.
Year-end profit took a hit, too, falling 38.4 percent to 6 billion euros due comparisons with the prior year when Unilever banked 4.3 billion euros from the disposal of its spreads business. Underlying net profit growth was 8.1 percent, boosted in part by currency gains.
In its year-end results released Thursday, Unilever pointed to a “significant slowdown” in South Asia and “some market softening” in China. The consumer giant said while parts of Latin America have been volatile, there have been signs of improvement in Brazil.
“South East Asian markets maintained good growth while developed markets, in particular Europe, remained challenging,” Unilever said.
Alan Jope, who took over as Unilever’s chief executive officer one year ago, said the 2.9 percent underlying growth came both from price rises and sales volumes, and touted a year of “good margin and earnings progression, and strong free cash flow.”
He said the overall growth was slightly below the company’s guided range for the year “due to the slowdown we saw in the fourth quarter.”
The company now plans to step up its growth drive, he added, by “improving brand awareness and availability; implementing a more impactful innovation program; improving our performance in faster growing channels; driving purpose into all our brands, and fueling growth through cost savings.”
Following the disposal of its spreads business in 2018, Unilever said it was considering other sales, and has initiated a strategic review of its global tea business, which includes brands such as Lipton and PG Tips.
Jope added that in fiscal 2020, underlying sales growth is expected to remain in the “lower half” of the multiyear 3 to 5 percent range, and will be weighted to the second half.
“While we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first-half underlying sales growth will be below 3 percent. The impact of the coronavirus outbreak is unknown at this time. As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals,” Jope said.
In beauty and personal care, Unilever’s largest division, underlying sales grew 2.6 percent to 21.9 billion euros, bolstered by sales of Dove’s microbiome-friendly skin-care innovations. Growth was weak in hair care, due partly to intense competition from local brands and startups in the U.S. and China. Pond’s and Vaseline continued to perform well, the company said.
Unilever’s prestige beauty brands continued to deliver double-digit growth, with strong performances from brands such as Dermalogica, Hourglass and Living Proof. As reported, the company in 2019 purchased Garancia, a French derma-cosmetic brand, and Tatcha, a modern skin-care brand rooted in classical Kyoto rituals.