The Chinese marketplace looks horrible for European consumer product maker Unilever.
Unilever recently published its worst financial report over the past five years, stating that its sales in the third quarter of 2014 decreased by 2% compared with the same period of last year, and its sales in China decreased by 20%.
According to the report, Unilever's Chinese business saw a sharp shrink in the third quarter and the demands were weak in its other major markets. As a result, Unilever's sales in the third quarter decreased by 2% year-on-year to EUR12.2 billion, which was about USD15.5 billion, and it was reportedly the worst quarterly performance of the company since the fourth quarter of 2009.
The financial report showed that in the third quarter of 2014 the growth rate of emerging markets, which contributed 60% of the total sales of Unilever, decreased to 5.6%. The number was 6.6% in the second quarter of 2014 and 5.9% in the third quarter of 2013. At the same time, due to the large-scale stock compression of the entire industry in China, the company's sales in this marketplace dropped by 20%.
Paul Polman, chief executive officer of Unilever, said they expected that the market environment will still be tough for the rest of the year. Therefore, to ensure the company's flexibility and recovering ability, Unilever will accelerate the reduction of unnecessary costs, including employee layoffs, laundry product formulation reductions, and pension financing expense reduction.
Meanwhile, to meet the demands of the market, Unilever plans to launch cheaper products.