Unilever stockpiling in case of no-deal Brexit

Andrew Cummings
February 3, 2019

Alan Jope who is the new chief executive of Unilever said, "In 2019 we expect market conditions to remain challenging".

Unilever's chief has warned, that he expects 2019 to be a tough year for sales growth.

As regards underlying sales growth, Unilever reported underlying sales increase of 2.9 percent, ending below analysts' average estimate of 3.5 percent, according to a consensus forecast provided by the firm.

"In very round numbers these are roughly equal and not material to total Unilever at the moment", Jope said.

The Anglo-Dutch group, which is working to move on from last year's botched plan to shift its main headquarters to the Netherlands, saw its shares fall almost 3 percent on Thursday as the sales miss overshadowed full-year earnings that were ahead of expectations.

"We have built inventory on either side of the Channel", Mr Jope said.

The London-based manufacturer, which is trying to move on from 2018's rejected plan to move its headquarters from the United Kingdom to the Netherlands due to concerns over uncertainty surrounding Brexit, had stated that full-year sales would be at the bottom end of its 3 to 5 percent forecast range.

He added: "For us to move up into the top half of our guidance range we would need to see a sustained recovery in Latin America and the continuation of the progress we are seeing in south-east Asia".

Unilever's ice creams are produced on the Continent.

Management is targeting an underlying operating margin of 20% and cash flow conversion of 100% by 2020. The same happened in Europe, though the company eked out 0.8 percent sales growth in the region.

Overall, Unilever's underlying sales in developed markets only advanced by 0.4 percent in the fourth quarter. Meanwhile, the company reported turnover of €49.6 billion ($57.05bn) - down 5.1 per cent year-on-year due to an adverse currency impact of 6.7 per cent and the disposal of its spreads business to KKR in a deal completed in July last year. Its full-year underlying earnings were 2.36 euros per share, topping analysts' estimates of 2.31 per share.

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