Unilever PLC (LON:ULVR) has blamed an economic slowdown in Asia as the consumer goods colossus warned that its financial performance will fall short of guidance this year and in the coming months.
The Anlgo-Dutch group said underlying sales growth for 2019 would be below 3%, having previously indicated that it would be in the lower half of its 3-5% medium-term range.
READ: Unilever sales growth continues to slow
Furthermore, for 2020 growth will also be weighted towards the second half, said chief executive Alan Jope, suggesting guidance could also be trimmed for the coming year.
The FTSE 100 group had reported slower growth in the third quarter, despite Jope having previously said that accelerating growth was his “top priority”.
Jope said on Tuesday that the board expects “improvement” in the first half of 2020 compared to this past quarter, but growth in the first half is envisaged to be below 3%.
He guided for underlying sales growth guidance “in the lower half” of the 3-5% range for the coming year as a whole.
The shortfall in 2019, which Unilever said would not effect "earnings, margin and cash", was blamed on a slowdown in South Asia, “difficult” trading conditions in West Africa and ongoing softness in developed markets.
Although there were said to be “early signs of improving performance in North America, a full recovery there will take time”.
Shares in the company sank 5% to 4,378.88p in early trade on Tuesday.
"Weaker sales growth is a problem, but lately we have been encouraged that earnings growth is being driven by price rather than volume," said Neil Wilson of Markets.com.
"However, the problem for fast-moving consumer goods giants with the big brand names is that consumers have a lot more choice and are more discerning than ever."
Broker Liberum said: "We are aware of a slowdown in India, one of Unilever's largest markets, which stems from a crackdown on non-bank lending and rising unemployment which is dampening domestic demand, particularly in the rural locations where Unilever is strong."
Analysts assumed some negative read across to Diageo PLC (LON:DGE) in light of the South Asia and West Africa commentary.
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