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Unilever has today announced that its underlying sales growth for 2019 will be below current expectations due to “challenges” in some of its regions.
The consumer giant said full year underlying sales growth for the year to 31 December will be “slightly below” its guidance of the lower half of its 3-5% multi-year range.
It said this is a result of challenges in the current fourth quarter in some markets, including the economic slowdown in South Asia, one of Unilever’s largest markets, and trading conditions in West Africa remaining difficult.
It added that the trading environment in developed markets continues to be “challenging” and while there are early signs of improving performance in North America, “a full recovery there will take time”.
Earnings, margin and cash are not expected to be impacted.
CEO Alan Jope commented: “Due to challenges in certain markets, we expect a slight miss to our full year underlying sales growth delivery.
“Looking ahead to 2020, growth will be second-half weighted. While we expect improvement in H1 2020 versus this quarter, we expect that first half growth will be below 3%. Our full year underlying sales growth is expected to be in the lower half of the multi-year range.
“Growth remains our top priority and we are confident we have the right strategy and investment in place to step up our performance.”
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown commented: ”Unilever is the home of household staples, which tend to weather tough conditions more easily than discretionary products. To that end, news of sluggish sales is disappointing, especially when the group had already warned earlier this year growth would be at the lower end of guidance.
“However, the longer-term attractions of Unilever still exist. A huge chunk of the world’s population uses a Unilever product every single day, and margins aren’t in jeopardy following today’s announcement. While it’s a shame growth won’t be stellar for a while, this is just a bump in the road and not an outright stalling of the engine.”
Unilever shares sunk 5.4% in early trading back to 4,378.5p on the news.
Morning update
Cranswick (CWK) has announced the acquisition of premium outdoor pig farming business Packington Pork from the Mercer family.
Packington Pork comprises pig farming and rearing operations and specialises in the production of British free range and outdoor bred pigs, operating predominantly from a range of sites across Staffordshire, Nottinghamshire and Lincolnshire.
The deal increases Cranswick’s self-sufficiency in UK pigs processed to over 25%.
Cranswick said the deal “secures direct control over a significant part of its supply chain for premium pigs, reinforcing our commitment to developing a sustainable and traceable farm to fork operation”.
The transaction does not include the Packington Free Range business, which will be retained by the Mercer family as a standalone business operating under the Packington brand.
CEO Adam Couch commented: ” This acquisition strengthens our existing farming operations and reinforces our commitment to supporting and growing the British pig farming industry. It also aligns to our strategy of enhanced transparency and provenance of our food from farm to fork.
“We have worked closely with the business for over 14 years. We welcome the existing farm management team and look forward to investing in and developing the business over the coming years.”
On the markets this morning, the FTSE 100 has opened down 0.1% to 7,513.5pts while the pound has fallen back to $1.31 from $1.33 on renewed worries over a ‘no deal’ Brexit.
Unilever has sunk 5.4% today to 4,378.5p, while Cranswick is down 1.2% to 3,282p.
Early risers include Coca-Cola HBC (CCH), up 1.1% to 2,525p, Compass Group (CPG), up 0.9% to 1,878.5p and British American Tobacco (BATS), up 0.7% to 3,195.5p.
Fallers include Marks & Spencer (MKS), down 5.3% to 216.8p, Associated British Foods (ABF), down 2.7% to 2,559p and Greencore (GNC), down 2.5% to 274.9p.
Yesterday in the City
The FTSE 100 surged by another 2.3% to 7,519pts yesterday following Thursday night’s decisive election victory for the Conservatives.
Buoyed by the expectation of improved consumer sentiment in the UK – as well as better than expected results yesterday from retailer Sports Direct – a number of UK high street names were amongst the biggest risers.
Greggs (GRG) jumped 3.3% to 2,244p, Morrisons (MRW) was up 3.2% to 202.1p, Tesco (TSCO) up 3% to 258.9p, Sainsbury’s (SBRY) up 2.8% to 229.5p, B&M European Value Retail (BME), up 2.7% to 420.9p, WH Smith (SMWH), up 2.6% to 2,574p and Marks & Spencer (MKS) up 2.4% to 228.9p.
Other risers yesterday included Greencore (GNC), up 2.8% to 281.8p, British American Tobacco (BATS), up 4.4% to 3,172p, McBride (MCB), up 4.1% to 84.4p and Reckitt Benckiser (RB), up 2.3% to 6,178p.
Yesterday’s fallers included Mitchells & Butlers (MAB), down 4% to 447.5p, Kerry Group (KYGA), down 2.6% to €110.10, McColl’s (MCLS), down 2.4% to 39.2p, C&C Group (CCR), down 1.4% to 399.5p and Premier Foods (PFD), down 1.3% to 37.2p.
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