Unilever results point to problems in Latin America

By Simon Pitman contact

- Last updated on GMT

Unilever results point to problems in Latin America
Unilever posted strong full year 2018 results, with big gains in the Asia Pacific region, but in Latin America the picture was not so rosy, with Argentina and Brazil being singled out.

The results showed that the full year 2018 turnover came in at €51 billion, an increase of 5.1% compared to 2017, while net profit was up 51% to €9.8 billion – indicating an overall solid performance.

In its biggest division, beauty and personal care, worldwide full year underlying sales were up 3.1% to €20.7 billion, driven by strong growth in the new Vaseline skin care range and the new Love, Beauty & Planet range.

Latin America results

Despite the strong overall performance, Unilever executives did point to rising commodity prices and currency devaluations putting the pressure on results, while also pointing to Latin America as being the weakest performing region, overall.

Full year sales for the Latin American region came in at €7.0 billion compared to €8.1bn in 2017, but with a number of markets showing the strain from economic challenges, revenue in 2018 fell by 13.6%.

Indeed, in looking at the growth figures for 2018, Unilever executives did point specifically to Argentina and Brazil, as well as Southeast Asia, as being the weaker points.

What went wrong in Brazil and Argentina

Unilever said that the situation in Brazil was particularly impacted by the truckers strike, which had a significant effect on the country’s economy during the first half of the year.

However, the company did also note that its performance in the country had recovered significantly in the second half of the year, which had also been reflected in the country’s overall economic growth.

In Argentina, where high debt and a sliding peso has hampered the economy, the company said that its performance had seen a 10% decline in sales volumes that was not offset by price growth in underlying sales growth that was recorded after July.

The company also pointed out that in the Latin American region as a whole its operating margins were down due to currency driven commodity inflation and an adverse reaction from hyperinflationary accounting, mainly because of Argentina.

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