By Albertina Torsoli

Geneva: Unilever Plc. chief executive officer Paul Polman said the economic slowdown in emerging markets is here to stay as many countries need to enact structural reforms to adjust to new conditions after the boom of recent years.

“They are still relatively stronger economies, but still fragile," Polman said. “And you see that growth coming off now a little bit, obviously not being helped either by lower demand coming from Europe and the US. This will last a few years. And it will only be corrected if some of the reforms have been made in these places."

Unilever, the world’s second largest consumer-goods maker, said on 30 September that slowing growth in emerging markets would weigh on second-half sales. The company gets more than half its revenue from such economies in countries such as India and China. So-called underlying sales rose 3.2% in the third quarter, the weakest increase in four years and a slowdown from the first-half’s 5% pace, the Anglo-Dutch maker of Lipton tea reported on 24 October.

“I am always surprised that I am the one who sort of has to announce there’s a slowdown in emerging markets," Polman said, speaking on 29 November at a reception where he was awarded the 2013 World Wildlife Fund Duke of Edinburgh Conservation Medal for Unilever’s efforts to reduce environmental damage.

Shares fall

The Amsterdam-traded shares fell as much as 1.5% and traded 0.8% lower at €28.78 at 1.18pm local time. Weak currencies in India, Brazil and Indonesia have weighed on sales growth, the company has said.

“Emerging markets are clearly decelerating, but will always grow faster than the developed world," said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. “Unilever is the emerging market play—given 60% of sales are there, what Polman says on them has a lot of weight."

“Investors have pumped money into emerging markets since 2008, spurred by the liquidity generated by central banks," Polman said. US Federal Reserve chairman Ben Bernanke’s statement on 19 June that the Fed may start tapering stimulus efforts this year put pressure on emerging markets, he said.

“People were thinking interest rates in the US would go up again and then money came back to the US," the Dutch executive said. “You saw a lot of these emerging market currencies go down 10-15%. Fortunately these countries are stronger, so you don’t have another Asian crisis."

Polman is the first CEO of a major multinational company to receive the Duke of Edinburgh conservation award since it began in 1970. He spoke in Geneva.

“It’s a great honour," he said of the prize. “WWF clearly understood you have to take some risk by working with people, coalitions together to move things forward."

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