Unilever Posts Disappointing Sales As Competition Heats Up

Unilever posted sales for the third quarter that were lower than had been expected, losing market share to competitors that are much smaller and lowering hopes that the failed attempt by Kraft Heinz to buy the company would spark quick improvement.

On Thursday, Unilever said that is underlying sales increased just 2.6%. That figure was well below the 3.9% growth that analysts were expecting, and less than 3% growth seen during the first six months of 2017.

Shares of Unilever were lower by 4% in early Thursday trading, having increased by a third since the unsuccessful Kraft takeover bid of $143 billion for the Dove soap and Magnum ice cream maker in February.

The company placed blame on Europe’s poor weather, hurricanes in the U.S. and earthquakes in Mexico for a disruption in its sales.

However, it cited as well, the increasing threat from smaller local competitors in markets like the U.S. in ice cream and in Southeast Asia in personal care.

Unilever raised its target for profitability during July and some concerned was seen that less spending n marketing had had a negative effect in its sales.

CFO Graeme Pitkethly said that the company’s competitiveness has dropped some, and indicated that it is gaining market share in slightly more than half of its overall business, which he said was down 60% from previous years.

Nestle, its Swiss rival, posted accelerated sales during the third quarter on Thursday. However, it said that increased costs for restructuring would weigh on its margins.

One analyst in London said that it is become even more difficult for giants in the consumer goods industry, as competition has increased from smaller players and the preferences of consumers’ shifts toward alternative and niche brands.

Unilever said that the quarter ended short about one days’ worth of its sales of company goals equal to about £150 million euros.

The ice cream business for Unilever, which includes Wall’s and Ben & Jerry’s, saw declines of double-digits in Europe due to inclement weather, and suffered losses in market share in the U.S. to Halo Top a new brand.

Unilever lowered its marketing and advertising spending during the first six months of 2017, in its effort to lower costs following the bid by Kraft, and an analyst said that might have hurt its sales during the third quarter.

Excluding its margarine and spreads companies, which are up for sales, for which bids are due Thursday, sales increased by 2.8%.

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