Unilever warns of slow sales as it faces FTSE exit

London

UNILEVER gave a muted outlook for sales and said it's "extremely unlikely" to remain in the UK's benchmark FTSE 100 stock index after the company consolidates its headquarters in the Netherlands.

The consumer-goods giant said sales growth in the first half is likely to be below the full-year forecast range of 3 per cent to 5 per cent. The effect of strikes in Brazil will cut sales by 150 million euros (S$234 million) in the second quarter, it said.

The company's comments on Thursday on the stock listing go further than its indication in March that ending its dual-location structure may result in it being designated under only one index nationality. The owner of Lipton tea and Ben & Jerry's ice cream plans to combine its headquarters in Rotterdam, abandoning a separate UK base it has maintained for nearly a century.

Exiting the FTSE 100, where Unilever was one of the original members more than three decades ago, may mean the stock is less likely to be included in UK fund managers' portfolios.

Fewer than 30 of the original constituents of the index remain. Companies that have disappeared from the gauge include Boots, British Home Stores, Hanson Trust and Midland Bank.

Unilever has previously said its NV shares, traded in Amsterdam, are more liquid than the Plc shares traded in London, and that it would be ideal for the company to retain membership in both the FTSE 100 and Dutch AEX, but that the ultimate decision lay with the managers of those indexes.

FTSE Index Unilever has been speaking with the FTSE Russell index authority, and it's become clear that continued inclusion in the UK index was a long shot, chief financial officer Graeme Pitkethly said at a Deutsche Bank conference.

The company understands that this development would inconvenience funds that benchmark against the FTSE index, but its move to Rotterdam is "the right thing as a whole", Mr Pitkethly said. BLOOMBERG