Unilever 2Q17 Earnings Call Notes

Paul Polman

Significant disruption in a number of markets

“In the short-term, there has been some significant disruptions in a number of markets. Political uncertainty is high in several countries. This is hampering their recovery. This is particularly so in Brazil, where the trade has reacted to contrasting demand by reducing stock. In India, the welcome introduction of the new Goods and Services Tax prompted distributors and wholesalers to cut back their stocks during the transition period. And in Indonesia, we’ve seen changes in effects of calendar that led to a few less shipping days.”

We’ve had a prolonged period of weakening in emerging markets

“we have had one headwind that is consistently stuck us which is really in the emerging markets where since the financial crises, interest rates, currencies etcetera, we’ve had a prolonged period of about eight, nine years now where we have seen significant weakening of emerging market currencies. Well, with unfortunately we have to price as many of that is being imported, and as we price for that, we have seen in these countries that rate-related increases or productivity-related increase were actually trailing the pricing that we have to do on our products and the markets have been subdued. So despite seeing in this six months for example, a 5.5% increase in the emerging markets, you actually see the volume component of these emerging markets continuing to be very, very low, while historically it was all volume-driven growth. I am convinced that that is coming back now. We are starting to see these currencies stabilizing.”