Tags: unilever | china | personal

Unilever Plans Fivefold Boost to China Business

Sunday, 12 Jun 2011 01:50 PM

Unilever, the world’s second-biggest consumer goods company, plans to increase its business in China to as much as five times the current level, Asia chief Harish Manwani said.

“Our business has been growing steadily about 18 percent to 19 percent per annum,” said Manwani, president of Unilever’s Asia, Africa, and Eastern and Central Europe operations told Bloomberg TV in Jakarta at the World Economic Forum on East Asia. “Our commitment in China is to build a business four- or fivefold” what it is now, he said, without giving a target date.

The maker of Dove soap and Magnum ice cream has raised prices as costs for commodities such as crude oil gain. Unilever last month said it accepted a decision by Chinese authorities to fine it 2 million yuan (309,000) for telling media about plans to raise prices. The economy of the world’s most-populous nation may grow 9.5 percent this year, more than triple the U.S. pace, according to economist estimates compiled by Bloomberg.

More than 55 percent of Unilever’s business now comes from emerging markets, Manwani said. “Asia, emerging Asia, is a very important part of it. I’m very excited about business prospects in Asia.”

Unilever derived 40 percent of its 44.3 billion euros in revenue last year from Asia and Africa, according to data compiled by Bloomberg. The Americas contributed 33 percent and Europe 27 percent.

Cost Volatility

Unilever in April said profitability will drop in the first half because of higher costs. Unilever, which predicts a margin improvement in the second half, said it expected the impact of rising input costs to be around 500 to 550 basis points of sales this year, up from a February forecast of 400 basis points.

Commodity-cost volatility is “unprecedented” this year, Unilever Chief Financial Officer Jean-Marc Huet said April 28. Crude oil costs have affected the company’s health and personal- care business while prices of edible oils including palm oil affect the spreads business, he said.

Inflation in the developing world “is something we probably know how to handle better, having been in the market for so many years,” Manwani said. “Of course we have inflation, but the point we’re making is we also have a portfolio which allows us to manage our business somewhat better than if you were just a single-play company.”

Manwani is also chairman of India unit Hindustan Unilever Ltd., the country’s biggest listed maker of consumer products, according to data compiled by Bloomberg. PT Unilever Indonesia is the largest household goods maker in the Southeast Asian country, according to the data.

Unilever’s underlying first-quarter sales growth, which excludes the effect of acquisitions, disposals and currency fluctuations, was 4.3 percent, missing the 4.4 percent median estimate of eight analysts surveyed by Bloomberg News.

Unilever, which Manwani said has 2 billion customers globally, acquired an 89.35 percent stake in PT Sara Lee Body Care Indonesia in June 2010. Last month, it completed the purchase of Alberto Culver Co. for $3.7 billion in cash.

“At this stage, we are trying to make sure that we make the most of some of the exciting brands,” Manwani said.

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Unilever, the world s second-biggest consumer goods company, plans to increase its business in China to as much as five times the current level, Asia chief Harish Manwani said. Our business has been growing steadily about 18 percent to 19 percent per annum, said Manwani,...
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