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Unilever targets emerging markets for 75 percent of sales

A worker scans barcodes by a chiller cabinet of Flora margarine at a Sainsbury's supermarket in London
A worker scans barcodes by a chiller cabinet of Flora margarine at a Sainsbury's supermarket in London

By Seda Sezer

ISTANBUL (Reuters) - Consumer goods group Unilever expects to see three-quarters of its turnover from emerging markets by 2020 as heavy investment in these fast-growing regions and sluggish growth elsewhere take effect.

"Europe and the U.S. will be, for the next 10 years, low-growth territories, I'm afraid. So, soon we will have 75 percent of our turnover in emerging markets ... 70-75 percent by the end of decade," Chief Executive Paul Polman said in an interview.

"This is also where the 2 billion more people will be born in the next 40 years, and obviously where most of the world growth is going to be."

The CEO of German detergent and glue maker Henkel made a similar prognosis of a swing in growth to emerging markets from Europe over the next 10 years in an interview on Wednesday.

Unilever and its brands like Knorr, Hellmann's, Dove and Sunsilk already derive a higher proportion of sales in emerging markets now -- 55 percent -- than key rivals Procter & Gamble and Nestle .

The Anglo-Dutch group's growth is driven by its big presence in Asia, Africa and Latin America, with Brazil, India, China and Turkey among its fastest growing markets.

"So we are by any standards the emerging market company. We are growing by 10 percent or more now consistently in the emerging markets, and that's a very healthy growth. We can continue to grow at a 4 to 6 percent range overall. It's a healthy growth," Polman told Reuters late on Tuesday in Istanbul.

Unilever Plc shares had gained 1.92 percent to 20.74 pounds by 7:35 a.m. EDT in a falling London market.

Unilever raised its prices sharply in the second quarter to offset higher commodity costs, helping it beat forecasts with a 7.1 percent increase in quarterly underlying sales, and Polman said the group should be able to grow underlying sales at 4-6 percent a year into the future.

"Broadly, as a company we think we have priced ahead of our competitors in some cases, and we now need to see our competitors moving their prices before we would look at other things. That is happening right now, and we feel more or less happy with our pricing," he added.

Sales growth is ahead of the market and will remain so, Polman said.

"If markets remain healthy, there is no reason why we cant maintain this top-line growth we are now showing."

Polman also said as part of the company's plan to divide Unilever into eight mega regions, Unilever Turkey will be responsible for North Africa, Middle East, Russia, Ukraine and Belarus, increasing Turkey's responsibility from 12 to 36 countries.

Turkey is a very important part of Unilever's plan to boost the share of emerging markets in its turnover, Polman said.

The country is attracting international investors' interest, with one of the highest economic growth rates globally. Gross domestic product (GDP) grew 11 percent in the first quarter.

Unilever is building its eighth factory in the province of Konya in central Turkey, Polman said, with an ice-cream section projected to cost around $100 million. The company easily invests 100 million lira a year in Turkey, Polman said.

Unilever also plans to make Turkey a center for its halal food, Polman said.

(Reporting by Seda Sezer; Editing by David Jones and Will Waterman)

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