Emerging markets push Unilever profits by 7%

Unilever posted £42bn annual turnover for the first time buoyed by sales growth of 6.9%, beating forecasts of 6.5%. The world’s third-biggest consumer goods company reported pre-tax profit rose 7% last year to €6.68bn (£5.61bn), on turnover up 10.5% to €51.3bn (£43.18bn), despite higher food and energy costs.

The consumer goods company reported fourth-quarter sales rose by 7.8%. For the full year, Unilever saw strongest sales growth in Asia and Africa – up 10.6% – and in the US, sales were up 7.9%. Unilever reported sales growth across all markets, with emerging economies, which now make-up 55% of the company’s turnover, growing 11.4%.

Unilever’s concentration on emerging markets paid off, and placed the company in contrast with its main household products rival Procter & Gamble, which is shedding jobs, and French yoghurt maker Danone, which may do the same as the European economic downturn weighs on its business.

The Anglo-Dutch company reported that Magnum ice creams and Sunsilk hair care products both became billion-euro brands during the last year. But Unilever warned that ”markets will remain challenging, with intense competition and volatile commodity costs”. Last year, Unilever cut 350 jobs in Wales pushing the manufacturing sector in doldrums.

Unilever has also adopted marketing strategies used in developing countries in order to drive future growth in Europe, selling some of it products in smaller, cheaper sizes to appeal to austerity-hit consumers. In Spain, Unilever sells Surf detergent in packages for as few as five washes, while in Greece, it offers mashed potatoes and mayonnaise in small packages. The Unilever shares rose 2.7% to 2,518p in early morning deals, which was a record high for the multi-national. The company will pay a fourth quarter dividend of 20.4p a share.