Unilever ends the year with sales growth below estimates

Reuters with CNBC.com
Demonetization in India is a problem: Unilever CEO

Unilever reported lower-than-expected fourth-quarter sales on Thursday, hurt by demonetization in India and an economic slowdown in Brazil.

The maker of Dove soap, Knorr soup and Marmite spread said underlying sales rose 2.2 percent in the quarter. That compared with analysts' average expectation of 2.8 percent, according to a consensus compiled by the company, and growth of 3.2 percent in the third quarter and 4.7 percent in the first half of the year.

Paul Polman, chief executive officer of Unilever, told CNBC on Thursday that the tough economic environment is likely to continue.

"This is the eighth year in a row that we have competitive and profitable growth," Polman said. "Unfortunately, we've seen economic conditions deteriorate over the last four, five years."

Despite improved economic forecasts, there is too much volatility impacting the economy, he added.

"Now for the first time the IMF (International Monetary Fund) is actually forecasting a slight uptick for next year, so we need to see if that materializes. The reality is the geopolitical conflicts that we deal with in the world, the effects of climate change, if you want to throw that in, and very tough underlying economic environment will continue to make this a difficult turning environment," Polman said.

For the full year, sales growth was 3.7 percent, below the 3.9 percent analysts were expecting.

Unilever Chief Financial Officer Graeme Pitkethly told Reuters the company was targeting growth in the range of 3 to 5 percent for 2017, but that the first quarter would be below that, due to the issues in Brazil and India, and the timing of Easter.