Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Unilever plc (ADR) (UL): Decline in European Sales Hits The Stock

Unilever plc (ADR) (NYSE:UL)Unilever plc (ADR) (NYSE:UL) disappointed shareholders with its first-quarter results, sending the shares down more than 2% in early trade this morning as it became the latest FTSE 100 member to reveal lower-than-anticipated underlying sales growth in Europe, falling by 3.1%.

Total underlying sales growth across the consumer goods company rose 4.9%, with underlying volume growth up 2.2%, pricing increasing by 2.6%, and turnover coming in at 12.2 billion euros, a 0.2% lift on the same period last year.

But it’s the developed markets that investors would have been keeping a close eye on, and management stated that Europe’s Q1 performance “reflected continued difficult markets and the strong prior year comparator” and that “Southern Europe remains particularly difficult and consumer confidence in northern Europe continues to be eroded by fiscal tightening and the continuing impact of the financial crisis”.

Emerging markets did see an increase in sales of 10.4%, though, despite the continuing macroeconomic headwinds, while Latin America delivered double-digit growth at 12.3%, driven by strong performances in Brazil and Argentina, and Australia returned to growth despite tough markets.

The quarter also saw Unilever plc (ADR) (NYSE:UL) dispose of its Skippy peanut butter brand in North America, which contributed to reducing turnover by (1.1)% alongside the disposal of its U.S. frozen food business. As a region, North America increased growth by 0.3%, remaining stable, with “major innovations” such as Magnum, Clear, and Simple continuing to make good progress.

CEO Paul Polman commented:

We maintained good growth momentum in the first quarter despite challenging economies and the tough competitive environment. This performance is further evidence that Unilever is becoming fit to win and capable of delivering consistent growth ahead of our markets. Our strategy is working.

The Unilever plc (ADR) (NYSE:UL) Sustainable Living Plan is becoming embedded across the business and increasingly driving our day-to-day decisions and actions, helping to drive increased sales while reducing costs and risks. Brands like Lifebuoy, Dove, Domestos, Knorr and Signal that have made sustainability central to their brand proposition continue to perform well. At the same time we have focused on eco-efficiencies in our factories. By reducing our usage of energy, water and materials, and by driving down waste, we release funds to invest in our brands and further drive growth.

We remain focused on achieving another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.

Management were keen to state that, stripping out the “sluggish” performance of developed markets momentarily, it was another quarter of good growth, with emerging markets delivering an eight successive quarter of double-digit growth and had “a good balance between volume and price.”

Unilever plc (ADR) (NYSE:UL) also stated that it would be lifting its quarterly dividend by 10.7% to 0.2690 euros per share, which puts the company on a consensus yield of a little more than 3%. If it can return Europe to growth in the near future, then the shares at their current price might just represent a decent buying opportunity.

The article Decline in European Sales Hits Unilever originally appeared on and is written by Sam Robson.

Sam Robson has no position in any stocks mentioned. The Motley Fool recommends Unilever.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.