Unilever pre-tax profit falls as company warns of challenging year ahead

Consumer goods giant Unilever posted a decline in annual pre-tax profit, warning the market is likely to experience "high volatility". The company said it is bracing itself for a tougher economic environment.

In the 12 months to the end of the December, the FTSE 100 group posted a 6% year-on-year decline in pre-tax profits to €7.2bn, which partially offset a 10% increase in turnover to €53.3bn, helped by favourable currency translations. Meanwhile, net profit slid 5% from the corresponding period in 2015 to €5.3bn and core operating profit grew 12% to €.7.9bn, largely in line with forecast.

The Anglo-Dutch giant added underlying sales grew 4.1% year-on-year in the final three months of 2015, ahead of the 4% gain analysts had expected but down from the 5.7% growth recorded in the previous quarter, while volumes rose 2.1% and prices climbed 1.9%.

However, despite ending the year on the front foot, chief executive Paul Polman said the group was preparing for "tougher market conditions and high volatility in 2016, as world events in recent weeks have highlighted. Consumer demand remained fragile and volume growth was barely positive in the markets in which we operate.

"Many emerging markets continued to be weak, particularly those dependent on oil and other commodity exports and those where currency devaluation is pushing up the cost of living for our consumers. Market growth in developed markets was negligible," said Paul Polman.

Unilever said its European business returned to growth in 2015. Its Latin America division delivered double-digit underlying sales growth driven by strong pricing to recover higher input costs but also modest volume growth despite challenging macro-economic conditions.

However, it was a mixed picture for the group's Asian arm, with growth in Turkey and Japan offset by a decline in volumes in Russia.