Unilever sees more volatility after sales top forecasts

By Paul Sandle

LONDON (Reuters) - Consumer goods group Unilever (ULVR.L)(UNc.AS) said it faced another volatile year after improvements to products from Magnum ice cream to Omo detergent helped its sales in 2015 to beat forecasts.

Turnover at the Anglo-Dutch maker of Knorr soups, Dove soap and Lipton teas rose 10 percent to 53.3 billion euros (40.44 billion pound), boosted by a 5.9 percent tailwind from exchange rates.

The past year has been more positive for Unilever after it was hammered in 2014 by a slowdown in emerging markets such as China that caused retailers and wholesalers to curb purchases.

But the company told investors not to expect smooth progress.

"We are preparing ourselves for tougher market conditions and high volatility in 2016, as world events in recent weeks have highlighted," Chief Executive Paul Polman said on Tuesday.

Global uncertainty had never been higher, he said, evident in jumpy stock markets, low commodity prices, currency volatility and slower economic growth in China.

Underlying sales rose 4.1 percent, beating an average 3.9 percent forecast from analysts, it said, accelerating to 4.9 percent in the fourth quarter. Core operating profit rose by 12 percent to 7.9 billion euros.

Chief Financial Officer Graeme Pitkethly said Unilever had performed better in emerging markets in 2015, growing by 7.1 percent, with volume coming back quite strongly. Underlying sales growth in developed markets was flat.

"Our job is to deliver a consistent performance despite the bumps in the road," he said.

"Our best estimate is we will deliver (sales) growth between three to five percent (this year), and our current momentum rate would put us squarely in the middle of that range."

Shares in Unilever, which have risen 6 percent in the last 12 months, were trading up 1.7 percent at 2,893 pence at 1045 GMT in London, in line with the broader market (.FTSE).

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Unilever appeared to be firmly back on track.

"Fourth quarter underlying sales have exceeded forecasts, underpinned by ongoing product innovation and brand investments," he said.

The company, which gets a sizeable portion of its sales from emerging markets, has recently sold a bunch of mature North American food brands and bought several faster-growing skincare brands, as it aims to reposition its portfolio.

Chief Executive Polman said a focus on continuously improving products and investing in marketing was paying off.

In personal care, Dove Men performed strongly, he said, while in home care a new formulation for detergent Omo boosted profitability. Ben & Jerry's and Magnum ice cream ranges were also a highlight.

Demand for spreads, like Unilever's Flora, remained stubbornly weak, however, as more customers opted for butter.

There has been speculation that Unilever could sell the underperforming business, which was spun off into a separate unit last summer.

(Editing by Kate Holton and Keith Weir)