Earnings

Unilever second-quarter sales miss estimates, hurt by rain in Europe

Reuters with CNBC.com
Key Points
  • "We have just posted a set of results that, again, falls within our guided range for top and bottom line — a nice balance," Alan Jope, CEO of Unilever, told CNBC's Willem Marx on Thursday.
  • Underlying sales in emerging markets rose 7.4% in the quarter, while they fell 1.6% in developed markets.
  • Emerging markets contribute 60% to Unilever's overall sales.
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Unilever's inherent strength is its position in emerging markets, CEO says

Consumer goods giant Unilever Plc reported slightly weaker-than-expected quarterly underlying sales growth on Thursday, hit by wet weather in Europe, but kept its full-year sales targets intact.

The company said it continues to expect full-year underlying sales growth to be in the lower half of its multi-year 3% to 5% target range and operating margin to reach 20% in 2020.

The maker of Dove soap and Ben & Jerry's ice cream said underlying sales rose 3.5% in the second quarter, but that missed analysts' average estimates of a 3.7% rise, according to a company-supplied consensus.

"We have just posted a set of results that, again, falls within our guided range for top and bottom line — a nice balance," Alan Jope, CEO of Unilever, told CNBC's Willem Marx on Thursday.

An employee arranges Unilever's margarine brands Becel, Blue Band, Bona and Zeeuws Meisje in a supermarket.
Marco de Swart | AFP | Getty Images

Unilever's CEO cited the firm's emerging markets business as key driver of growth, particularly as Asia "continues to grow well."

The company has continued to win volume share in markets including Indonesia, Philippines, India and China, Unilever's chief financial officer said on an earnings call with media.

Underlying sales in emerging markets rose 7.4% in the quarter, while they fell 1.6% in developed markets. Emerging markets contribute 60% to Unilever's overall sales.

Turnover inched lower to 13.7 billion euros ($15.25 billion).

Wet weather in Europe dampened ice-cream sales following two straight seasons of hot summers.

Average rainfall across 12 European cities was three times higher in April and May than the prior year, while average hours of sunshine were down between 9 and 25 percent in the two months, a Jefferies analysis showed.

Ice cream makes up 13% of Unilever's Group sales, and about 20% of its European sales annually. In the second quarter that number goes up to 30% or about 1 billion pounds in sales, Jefferies analyst Martin Deboo said in a pre-earnings note.

"Obviously if you look across the full economic sector, there are cyclical sectors, there are volatile sectors and then there are steady consumption-driven sectors. And, fortunately, our business is in the last of those," Jope told CNBC on Thursday.