Unilever Faces Squeeze in North America -- Update

By Peter Stiff 

LONDON -- Unilever PLC reported weaker-than-expected revenue growth in the fourth quarter and warned of a challenging year ahead, partly as the maker of Hellmann's mayonnaise and Dove soap faces tough competition in North America.

In the first earnings under new Chief Executive Alan Jope, the company said Thursday its closely watched underlying sales growth rose 2.9% in the last three months of 2018, below the 3.5% level expected by analysts.

For 2019, it forecast underlying growth at the lower half of its long-term guidance of 3% to 5%, citing uncertainty in several countries.

The consumer-goods company's shares fell 2.5% in early trading.

Unilever, like others in the industry, is grappling with increased competition from new brands, rising commodity costs, volatile emerging markets, and fierce competition from Amazon.com Inc. and discount chains that are increasingly launching own-label products.

Over 2018, competition was particularly tough in North America, where underlying sales growth was 1%, excluding its recently sold spreads business. The company said categories such as ice cream, tea and dressings were challenging.

Unilever cheered investors when updating on the third quarter last year when it said it had been able to raise prices. However, on Thursday the company said it had to dial that back in the fourth quarter, reflecting an intense promotional environment.

One particularly competitive area is mayonnaise, where Unilever is engaged in a promotional battle with Kraft Heinz Co.

Unilever said its performance was strong in Europe, driven by sales growth in ice cream, but challenging in struggling economies such as Argentina.

Overall, Unilever reported a fall of 5.1% in full-year revenue to EUR50.98 billion ($58.54 billion), which it attributed to the sale of its spreads business and currency headwinds. Net profit jumped to EUR9.39 billion from EUR6.05 billion, boosted by the sale.

--Carlo Martuscelli contributed to this article.

Write to Peter Stiff at [e-mail]

(END) Dow Jones Newswires

January 31, 2019 04:52 ET (09:52 GMT)

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