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Unilever Plc Meets Its Growth Target Despite Another Market Slowdown

Market challenges this quarter drove volume lower in India and Brazil as commodity costs rose.
Market challenges this quarter drove volume lower in India and Brazil as commodity costs rose.

Image source: Unilever investor presentation.

Still, the company managed to boost profitability and organic revenue even as two of its largest markets struggled. "This further demonstrates the progress we have made in transforming Unilever into a more resilient business," CEO Paul Polman said. "We have again grown ahead of our markets, driven by strong innovations that support our category strategies," he said.

Looking forward

Polman and his team are predicting that the tough market conditions that characterized this most recent quarter will continue at least through the first half of 2017. That sentiment was echoed by Kimberly-Clark, which earlier in the week warned of near zero growth for the next six months.

Unilever still expects to outpace rivals against that unfavorable market backdrop, though. P&G is looking for 2.5% organic gains this year and Kimberly-Clark's latest forecast calls for a 2% increase. Unilever should see closer to 3% growth, which would indicate minor market share expansion.

The clearest sign that demand conditions are improving will likely come from a volume rebound, and so investors should watch that figure closely for signs of gains. In the meantime, cost cuts will keep profitability churning higher so that the company has the financial ammunition to direct toward product innovations and marketing support, with plenty left over for increased capital returns to shareholders in the form of a steadily climbing dividend.

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Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and Unilever. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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