Consumer Giants & # 039; Having an emerging market problem

Consumer Giants & # 039; Having an emerging market problem https://www.eresviral.com/wp-content/uploads/2018/10/Gigantes-del-consumidor-amp-039-Tener-un-problema-de-mercado-emergente-219x146.5

Consumer Giants & # 039; Having an emerging market problem







Big footprints in emerging markets are often considered the crown jewels of European consumer products giants like

            Nestle



                NSRGY 3.32%


            Y

            Unilever
.



                UL 3.89%


            But the disadvantage is evident as the US Federal Reserve. UU Increase rates: the fastest growth can be compensated with coins.

Unilever, whose portfolio includes Ben & Jerry's ice cream and Dove soap, on Thursday reported an "underlying sales growth" in the third quarter, a widely observed measure that excludes changes in the portfolio and the currency, " 3.8% The US colleagues would be delighted with this type of number:

            Procter & Gamble
'S

            "Organic" growth, a comparable measure, was Only 1% during the year until June..



But Unilever's real sales in euros contracted. The key reason was the currency, which eliminated 5.2 percentage points of the underlying growth number. The movements in the Brazilian real, the Turkish lira and the Argentine peso were particularly extreme. Unilever earns almost 60% of its revenues from emerging markets compared to 35% of Procter & Gamble.







        




          A vial of Marmite yeast extract, made by Unilever, is in a shopping cart. 



                            Photo:
Chris J. Ratcliffe / Bloomberg News






The strong euro is just an information problem; What really matters for business is the strong dollar. Commodities at dollar prices, such as oil and paper, account for a large part of the cost of consumer products such as shampoo and packaging. This problem may worsen as the Fed continues its policy of gradual rate increases.

The price increases needed to compensate for the fall of the Argentine peso have become so extreme that both Unilever and the French yogurt giant.

            Danone



                BN 1.67%


            it excluded the country from its underlying figures of price growth in the third quarter. This makes a huge difference. Including the underlying growth of Argentina Unilever sales, it would not have been 3.8% but 4.5%; including Venezuela, where inflation is measured in at least six digits, it would have pushed more than 20%. This is not the kind of "growth" that companies want.

Nestle reported on Thursday Underlying sales growth of 2.9% in the third quarter., but this included Argentina. It will remove the country from its numbers for the fourth quarter.

Consumers pay increasing attention to ingredients in packaged products. Investors should examine similarly the numbers of owners informed by the companies that manufacture them.





                        After the financial crisis, investors sought higher returns in emerging risk markets. Today, money is returning to the US UU What went wrong in countries like Argentina and Turkey, and could it get worse? Composite of photos: Crystal Tai / iStock

    



 Write to Stephen Wilmot in stephen.wilmot@wsj.com





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