Unilever to review tea business after slowdown in group sales | Progresiv
Unilever has initiated a “strategic review” of its global tea business, which owns brands such as Lipton, Brooke Bond and PG Tips, as part of moves to boost the group’s performance. The announcement was made alongside Unilever’s annual results which confirmed its sales growth had slowed significantly in the final quarter of 2019. 
Over the 12 months to 31 December, Unilever’s underlying sales rose 2.9% (+1.2% volume and +1.6% price), led by its emerging market business (+5.3%) and Home Care division. Developed markets declined 0.5%, with Europe lapping a strong ice cream season from the previous year.
The consumer goods giant had already warned back in December that it would miss its full-year growth target of 3%-5% due to a host of factors, including a slowdown in South Asia and West Africa, and continued “challenging” conditions in developed markets. The group revealed today that its fourth-quarter underlying sales grew just 1.5%, its slowest quarterly growth in a decade.
Annual turnover rose by 2% to 52 billion euros, although net profit slipped 38.4% to 6 billion euros after the previous year’s figure had been boosted by the disposal of its spreads business. Underlying operating profit increased from 9.46 billion euros to 9.95 billion euros, with margin up 50bps to 19.1%, aided by a cost savings programme.
Underlying sales continued to grow well in its Home Care division, up 6.1% (2.9% from volume and 3.1% from price). Sales growth in its Beauty & Personal Care division rose 2.6% (1.7% from volume and 0.9% from price), whilst sales in its Foods & Refreshment unit edged up 1.5% (with volumes down 0.2% and pricing up 1.7%).
Meanwhile, the company stated that the review of its tea business had been triggered by slowing sales of traditional black tea in developed markets as consumers shift towards herbal and fruit alternatives. Unilever sells mostly black tea in 60 countries, which generates annual sales of 3 billion euros.
Graeme Pitkethly, Chief Financial Officer, said it was looking at all options for the business, including a partial or full sale. He added that all regions would be considered in the review, which is expected to conclude by mid-year.
Looking ahead, Chief Executive Alan Jope said Unilever’s growth for the coming year would be “in the lower half of the multi-year 3-5% range and will be second-half weighted”.
He expects improvement from the last quarter in the first half of 2020, although underlying sales growth will still be below 3%. Jope added that the impact of the coronavirus outbreak was unknown at this time.
“As we near the completion of our three-year strategic plan, we expect continued improvement in underlying operating margin and another year of strong free cash flow, remaining on track for our 2020 goals,” he concluded. (www.kamcity.com)
