Unilever CEO Says Emerging Market Slowdown to Last for Years

Unilever CEO Says Emerging Market Slowdown to Last for Years

Unilever (UNA) Chief Executive Officer Paul Polman said the economic slowdown in emerging markets is here to stay as many countries need to enact structural reforms to adjust to new conditions after the boom of recent years. “They are still relatively stronger economies, but still fragile,” Polman said. “And you see that growth coming off now a little bit, obviously not being helped either by lower demand coming from Europe and the U.S. This will last a few years. And it will only be corrected if some of the reforms have been made in these places.”Unilever, the world’s second-largest consumer-goods maker, said Sept. 30 that slowing growth in emerging markets would weigh on second-half sales. The company gets more than half its revenue from such economies in countries such as India and China. So-called underlying sales rose 3.2 percent in the third quarter, the weakest increase in four years and a slowdown from the first-half’s 5 percent pace, the Anglo-Dutch maker of Lipton tea reported Oct. 24.

“I am always surprised that I am the one who sort of has to announce there’s a slowdown in emerging markets,” Polman said, speaking Nov. 29 at a reception where he was awarded the 2013 World Wildlife Fund Duke of Edinburgh Conservation Medal for Unilever’s efforts to reduce environmental damage.

Shares Fall

The Amsterdam-traded shares fell as much as 1.5 percent and traded 0.8 percent lower at 28.78 euros at 1:18 p.m. local time. Weak currencies in India, Brazil and Indonesia have weighed on sales growth, the company has said.

“Emerging markets are clearly decelerating, but will always grow faster than the developed world,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. “Unilever is the emerging market play — given 60 percent of sales are there, what Polman says on them has a lot of weight.”

Investors have pumped money into emerging markets since 2008, spurred by the liquidity generated by central banks, Polman said. U.S. Federal Reserve Chairman Ben S. Bernanke’s statement on June 19 that the Fed may start tapering stimulus efforts this year put pressure on emerging markets, he said.

“People were thinking interest rates in the U.S. would go up again and then money came back to the U.S.,” the Dutch executive said. “You saw a lot of these emerging market currencies go down 10 to 15 percent. Fortunately these countries are stronger, so you don’t have another Asian crisis.”

Polman is the first CEO of a major multinational company to receive the Duke of Edinburgh conservation award since it began in 1970. He spoke in Geneva.

“It’s a great honor,” he said of the prize. “WWF clearly understood you have to take some risk by working with people, coalitions together to move things forward.”

To contact the reporter on this story: Albertina Torsoli in Geneva at atorsoli@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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