Unilever 2Q15 Earnings Call Notes

We can do better

“I would be the first to acknowledge that the underlying sales growth today, despite, obviously, the portfolio mix that we have, is still below the levels that Unilever is capable of. So there’s certainly more to do and I will come back to that in my concluding remarks.”

Overall consumer demand is still weak

“Overall, consumer demand is still weak. And it is no surprise that the IMF recently once more lowered its global forecast. Emerging market growth continues to be below historic levels. As predicted, disposable incomes are being squeezed by the rising costs of living, following the devaluations of the last two years. And structural reforms, frankly, are not yet happening at the pace that is needed.”

Brazil is in its worst recession since 1990

“Brazil, I believe, is in the worst recession since 1990. ”

A step back for every step forward in North America

“In North America, it feels as though every step that we make forward there is one step back. After a better first quarter, market growth has slowed again. Competitive price pressure is high and there certainly has been some destocking. The developed markets still show some deflationary tendencies, more so than inflationary.”

There is a rapid shift from retail to ecommerce in China

“Despite what people say, the ups and downs, there’s obviously an enormous potential in total China still. But what you really see is a rapid shift away from traditional retail which is more or less stable in its markets, at least for the market that we operate in and moving rapidly to online, where we see the bulk of our growth.”

The Chinese stock market decline really hit institutional investors

“What happened to the recent stock market, where you saw a 30% adjustment and 10 trillion was wiped off at one point in time, was a lot of institutional investors who had come in at the end of this enormous run in the market probably taking a little hit. I think it will show up a little bit in consumer confidence in the months to come and we should be mindful of that and we’re building that into our plans.”

Volume growth in Europe, but deflation

“our volumes actually are up in Europe, but that is offset by a price decrease with the general deflation that we see, especially around brands which are being used by the retailers, obviously, in this stable environment to attract consumers. So, slight volume growth we’re pleased about, with a little bit of deflation.”

We’ve seen some inventor destocking in the US

“The reason that volumes are slightly down in the U.S. doesn’t bother me too much, because we really have seen some reasonable de-stocking in some of our customers”

The slowdown in Brazil is real

“the slowdown in Brazil is real. That country is in a recession. Argentina has been holding the things together, but we also think that there is uncertainty on the horizon there.”

Destocking in the US is in response to a lower growth environment

“Our destocking is, basically, in the major retailers, where in a low-growth environment of the U.S. we just see again a little bit of better management of their total stock levels. And that’s reflected in these numbers which I think, again, we will not have to deal with in the next months, moving forward.”