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Brexit shock not good for anybody: Unilever CEO

The markets show sluggish growth: Unilever CEO

The head of consumer goods giant Unilever has told CNBC that the U.K.'s decision to leave the European Union (EU) would affect the running of his business.

"We have to assess the situation. Article 50 (which formally triggers the Brexit process) has not yet been filed but all the things we've been talking about (such as uncertainty) you can see it in the market," CEO Paul Polman told CNBC on Thursday. "When the environment is uncertain people don't invest."

"The shock that we have to go through is certainly not good, it's not good for anybody," he added. "It's not putting Unilever in a position that is less advantageous than others but it's another element on top of all the things we've talked about that doesn't make it easier to run a business."

Asked how it would affect the running of the business, Polman said the logistical issues raised by a Brexit needed to be examined closely. He added that it was "too early" to say whether jobs would shift from the U.K. to Europe, however.

"In times of uncertainty you have another factor to deal with when you make decisions. We are an Anglo-Dutch company so we are heavily intertwined with Europe, our supply systems are intertwined and our research centers here depend heavily on foreign people as well as U.K. nationals so we have to assess the flexibility we have to run this business in the long-term."

Polman said that politicians had "failed terribly" in explaining to the public what leaving the EU actually entails.

Unilever on Thursday reported underlying first-half sales growth of 4.7 percent amid what the company called "challenging markets."

The figure excludes any change in turnover resulting from acquisitions, disposals and changes in currency growth.

The Anglo-Dutch maker of food, home and personal care products said that turnover for the first half of the year fell 2.6 percent to 26.3 billion euros, just missing analyst expectations in a poll supplied by the company of 26.5 billion euros.

While emerging markets saw 8 percent underlying sales growth driven by good volume growth in Asia and price growth in Latin America, developed markets grew a meager 0.2 percent in the first half. Sales growth in Europe was 0.1 percent.

"We are showing that we can grow 8 percent (in emerging markets) despite a very tough environment there. I am certainly not advocating that we can continue to grow at these levels but if the company innovates well and stays focused we can grow," he said.

"The reality is in Europe is that there's deflation in the markets and in the U.S., although there is some growth, it's not evenly distributed....But we are happy with the overall growth."

SeongJoon Cho | Bloomberg | Getty Images

In its earnings statement, the company said its first half results "further demonstrate the progress we have made in the transformation of Unilever to deliver consistent, competitive, profitable and responsible growth. Despite a challenging environment with slower global economic growth and intensifying geopolitical instability, we have again grown profitably in our markets, competitively and driven by strong innovations."

Nonetheless, it said it had been preparing itself for tougher market conditions in 2016 and did not see any sign of an improving global economy."

In April, Unilever reported underlying sales growth of 4.7 percent in the first quarter from the same period last year although turnover had declined 2 percent to 12.5 billion euros.

The maker of Dove soaps and Lipton teas also warned then that "consumer demand remained fragile" and that volume growth slowed further in "the markets in which we operate, with market growth weak in emerging markets, negligible in North America and negative in Europe."

At the start of the year, Unilever delivered its full year results for 2015 which showed a better-than-expected 4 percent rise in underlying full-year sales. It warned back then that it was prepared for tougher market conditions and high volatility in 2016. It said it was reviewing its cost and budgeting structure to protect margins amid slowing global growth.

Still, adverse trading conditions have not put the company off acquisitions. On Wednesday, the company announced that it had acquired male grooming brand Dollar Shave Club, expanding its position in the male grooming section of the market. The company reportedly paid $1 billion for the start-up but Polman refused to confirm that figure.

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