On the surface, Anglo-Dutch consumer products giant Unilever appears to be an ideal bellwether for the global economy. It’s heavily represented in all the major developed and developing markets, with a bewildering array of brands in categories ranging from tea bags to bathroom cleaners and dandruff shampoo.
So, there would appear to be cause to celebrate when it reports a 9.4% rise in quarterly revenue at a time when doomsayers are shaking their heads at China’s hard (or at least turbulent) landing, the corresponding and impending implosion in commodity-dependent emerging markets and the uninspiring economic performances of Europe and Japan.
Unilever’s sales were up in Asia, Europe and the Americas for the three months to the end of September, across all product categories. Growth in China was in ‘double digits’ while in Latin America it was a whopping 15.1%. Europe, meanwhile, grew at 2% despite significant (2.5%) price deflation, driven by a surge in demand for novelty ice creams. Some slump.
Like most headline figures, though, this one needs to be taken with a pinch of salt (or indeed, a dollop of Unilever's excellent yeast extract spread, Marmite). Stripping out currency movements – to which Unilever is particularly vulnerable – shows a rather less dazzling underlying sales growth figure of 5.7%.
That’s still respectable, though, and higher than the 4% analysts expected, sending shares up 4% in London to 2,902p by lunchtime today. It certainly doesn’t imply collapsing demand in China and emerging markets, something Unilever doesn’t expect in its next quarter either – its guidance is now for full-year underlying sales growth to be at the upper end of its previously announced 2-4% range.
So is all hunky dory in the world according to Unilever? Not quite. ‘We continue to see soft markets with no immediate sign of getting help from an improving global economy,’ said chief executive Paul Polman, who credits the firm’s ‘agility’ and ‘stronger innovation pipeline’ (there’s those novelty ice creams again) for its ability to outpace the market in challenging conditions.
One can’t quite give the world economy a clean bill of health for the year to come by examining Unilever’s entrails, then. But sustained demand across the world for consumer products isn’t exactly a bad sign either.