Unilever warns of tough year ahead

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Consumer goods group Unilever said 2012 is likely to be a difficult year as emerging market growth slows and Europe and North America stay flat, after matching 2011 sales forecasts helped by its own sharp price rises.

The Anglo-Dutch group, which pushed up the prices of brands such as Dove, Hellmann’s, and Knorr to offset higher commodity costs, said growth in emerging markets had now slowed due to those price rises and weak consumer confidence.

Finance director Jean-Marc Huet said growth in emerging markets such as Africa, Asia and Latin America stayed strong, but the group needs to do better in Russia and eastern Europe where its own performance was sluggish.

“We have seen a deceleration in some markets and one or two are now more difficult, so our focus is on Russia and eastern Europe where we need to improve,” he said.

The world’s third-biggest consumer goods group reported underlying sales in 2011 rose 6.5 per cent in line with forecasts of 6.4 per cent, with four-quarter growth of 6.6 per cent compared to rival Procter & Gamble which saw a four per cent rise.

Emerging markets, which make up 54 per cent of Unilever’s business, grew 11.5 per cent in 2011.

In product terms, its personal care goods like Lux and Sunsilk were the fastest growing at 10 per cent while its food business grew just over three per cent.

“We expect the macro-economic environment to remain difficult in 2012 and input cost headwinds will persist although to a lesser extent than in 2011,” said chief executive Paul Polman.

The group which sells Lipton tea, Ragu sauces and Blue Band margarine, reported 2011 core earnings per share rose four per cent, below forecasts.