Unilever will keep investing in emerging markets like India even though growth is slowing, Chief Financial Officer Jean-Marc Huet said, pointing to the group's increased stake in Hindustan Unilever as a long-term bet.
"Yes there is a slowdown in emerging markets, but if you're in the consumer business, you should be where people are, and this is where aspiring consumers are," Huet said at the Reuters Global Consumer and Retail Summit on Tuesday.
"We continue to invest."
Unilever, the Anglo-Dutch maker of Hellmann's mayonnaise, Lipton tea and Dove soap, generates about 57 per cent of its 51 billion euros of annual sales from developing and emerging markets, a fact that has weighed on its shares as growth has slowed in India and other markets such as Indonesia.
But Huet said there was absolutely no change whatsoever in his view on Unilever's move in July to raise its stake in Hindustan Unilever to 67.3 percent from 52.5 percent.
Even with a record weakening in the Indian rupee last month, the investment is still sound, Huet said of the deal, valued at 191.74 billion rupees, or 2.49 billion euros at the time.
"Financially it's absolutely intact, but the real reason why we're doing it is long term," he said. "That was not a very value-creating exercise, because you buy a stake without taking costs out, synergies which usually support the premium ... so it really is a bet on the long-term."
In India, Huet said the collapse of the rupee had dented business self-confidence.
"I'm not talking about Unilever, but just overall ... you just feel as if India has gotten a hit to its confidence," he said. "Confidence being the driver of everything at the end of the day, that's an area that doesn't feel as good as 12 months ago."
SLOWER EMERGING MARKETS
Like many multinational companies, Unilever has turned to emerging markets to compensate for slower sales in the more mature markets of western Europe and the United States.
It has a greater emerging market exposure than many of its peers, which include Reckitt Benckiser, L'Oreal , Procter & Gamble, Beiersdorf and Colgate-Palmolive.
The emerging market slowdown has weighed on Unilever's shares, which have underperformed many stocks in the home and personal care sector. The stock has fallen nearly 16 percent since May.
But some analysts think the sell-off is overdone. Deutsche Bank this week upgraded Unilever's stock to "Buy" from "Hold," saying the concerns were exaggerated and that earnings growth should