Polman, though, says he not a worrier, choosing instead to remain focused on growing his business ahead of the market. I dont tend to worry...because I like to sleep. If I sleep, unlike the people who worry, at least I can come to work and have a little more energy to think about what to do, Polman joked at a media interaction during his visit to Mumbai.
But make no mistake, the slowdown in emerging markets is no joke to Polman and he and his team are constantly strategising on how to beat it. After all, emerging markets contributed 55% of the companys turnover of 51.3 billion euros in 2012. The slowdown has started to show up in the numbers. After warnings about slower growth from emerging markets in September, Unilever reported a 5.9% growth in sales from emerging markets in the July-September quarter, down from 10.3% in the previous quarter.
Emerging markets are slowing down. There is no doubt about that. We have always been able to grow ahead of the market, said Polman, adding Unilever continues to find ways to develop the market in categories it is in.
In India, the slowdown has been complicated by the concerns around the business environment, which some perceive has become less friendly to foreign enterprises over the years. Polman, though, shrugs off those concerns, saying they have been in the country for the last 80 years.
Weve been in this country for 80 years and weve had challenging times and less challenging times but we have been able to build a very successful business by staying focused on trying to solve the issues that India faces, Polman said. There are always opportunities to grow our business and opportunities to make it easier to grow our business, he added.
None of these concerns, be it the slowdown or worries about the business environment, have been enough to keep investors away, who continue to buy the HUL stock despite talk that consumer stocks are getting overvalued. The stock has gained 16% year-to-date and is currently trading at a trailing 12-month price earnings multiple of 34.4 higher than the valuation at which it was trading three years ago when growth rates were far stronger.
It always looks expensive and you always have to prove that it isnt. Thats what we get paid for. I could make it very expensive by having HUL perform badly or I can look at the current share price and say its enormously cheap if we continue to outperform the market. So it just depends, said Polman, adding HUL remains among the top choices for investors.
So, where will the growth in India come from to justify the high multiples that the stock trades at Polman and his top team remain focused on both the rural and urban markets to drive growth but acknowledge that it will be the rural markets which will deliver stronger potential. They intend to target all ends of the spectrum including the premium end and the mass market end, where new focus areas like packaged food could be part of the growth strategy.
We are very confident of India. We have made the biggest investment in India of any country, of over $3 billion. So, we put out dollars where our mouth is. So you know what we think about India. concluded Polman.