LONDON — Underlying sales growth in North America for fiscal year 2018 disappointed the top executive of Unilever P.L.C.
“I think we should be restlessly dissatisfied with 1% growth in North America,” said Alan W. Jope, chief executive officer, in a Jan. 31 earnings call. “We should be looking at getting that into the 1% to 2% range, and that seems to be consistent with what the market is doing, and if we can make sure that our growth is competitive, then we’ll be in good shape.”
Promotional intensity, particularly in the United States, held back sales of Hellmann’s. Unilever experienced competitive pressure in both tea and dressings.
“In foods, we saw stronger performance in savory,” Graeme D. Pitkethly, chief financial officer and executive director, said of North America. “Dressings continues to face strong price and promotional competition. Our growth in foods was low single digit, but this is competitive versus other North American food players in what is a very heavy promotional market.”
Underlying sales growth in the Americas region overall was 0.9%. Underlying sales in Latin America declined by 1% as volume fell by 10% in Argentina.
Revenues were €16,020 million ($18,333 million) in the Americas region, down 9% from €17,525 million in the previous fiscal year. Exchange rates had a negative impact of more than 9% while divestments had a negative impact of 2.8%, which more than offset 3.8% growth from acquisitions.
Globally, London-based Unilever had revenues of €50,982 million ($58,342 million), down 5% from €53,715 million in the previous fiscal year. Excluding a spreads business that Unilever sold in July 2018, revenues were €49.6 billion, down 2.3%. An adverse currency impact of 6.7% affected revenues, too. Underlying sales growth of 2.9% just missed Unilever’s multiyear goal of 3% to 5%. Excluding the selling of the spreads business, underlying sales growth was 3.1%. Unilever excluded price growth in Argentina from underlying sales growth from July because of hyperinflationary status.
Global revenues in food and refreshment were €20,227 million, down 10% from €22,444 million in the previous fiscal year, with underlying sales growth at 2%. Excluding the spreads business, revenues were €18.8 billion with underlying sales growth of 2.3%. Ice cream globally had a strong year with 5% growth across Europe and Asia, Mr. Pitkethly said. Ben & Jerry’s non-dairy and low-calorie products fit into the health and wellness trend, he said.
In the fourth quarter, Unilever posted revenues of €12,150 million, down 5.3% from €12,824 million in the previous year’s fourth quarter, and underlying sales growth of 2.9%. In fiscal year 2019, Unilever expects underlying sales growth in the lower half of its multiyear range of 3% to 5%.
Unilever is building stocks in anticipation of Brexit, a breakup between Great Britain and the European Union, Mr. Pitkethly said. He spoke about the global trade situation as well.
“The news, of course, continues to be dominated by economic and geopolitical uncertainty, whether that’s coming from real or threatened trade wars, uncertainty in government or popular protests,” he said. “This is the new normal, and the impact on consumers requires a rapid and effective local response from our brands. We have more than enough experience and knowledge in our local operations to manage this for the long term, but there will undoubtedly be some bumps such as we saw with the Brazil transport strike of 2018 or the trip into hyperinflation for Argentina in the second half.”