UNILEVER chief executive Paul Polman said many emerging markets still had “healthy growth” and the world economy may be reaching a turning point, signalling better prospects for 2015.
“We are sort of hitting the bottom,” Polman said of the global economy yesterday after a speech at a UN forum in Geneva. While growth in some developing nations has weakened to 4 or 5 percent, “Europe or the US would kill for that.”
An economic slowdown in China, India and Brazil has led to the slowest sales increase in five years at Unilever, the maker of Knorr soups and Surf laundry detergents. Polman, whose company gets almost 60 percent of sales from emerging markets, said he was encouraged that the International Monetary Fund (IMF) was forecasting a slight pickup in global growth next year. Unilever shares yesterday rose as much as 1.4 percent to e33.13 (R456) in Amsterdam, the highest in almost 16 years. They traded 1.2 percent higher at e33.07 as of 3.27pm, bringing this year’s gain to 13 percent.
Martin Deboo, an analyst at Jefferies in London, said that while he would not dispute Polman’s prediction of an improvement in the world economy, “the IMF’s latest forecast was still a modest downgrade”.
The IMF lowered its forecast for 2015 economic growth to 3.8 percent from 4 percent in October.
Unilever, whose Chinese sales dropped in the third quarter as big retailers ran down product inventories, still aimed to deal with that issue by the end of the year, Polman said. He declined to comment further on progress in that respect. The slowdown in China was most pronounced in large cities, he said.
Consumers were gaining more purchasing power in rural parts of emerging markets, Polman said. That would benefit Unilever in countries such as Indonesia, where the maker of Magnum ice cream bars had developed a national distribution network, Polman said.
“In Indonesia, we reach more homes than the post office,” he said. – Bloomberg