The firm, which makes a vast array of consumer products including Ben & Jerry's ice-cream, Lipton tea and Dove soap, said sales fell 2.7% to €48.4bn ($56.1bn; £37.1bn).
Excluding the effect of acquisitions and unfavourable exchange rates, underlying sales rose 2.9%,
Analysts had expected a 3.1% rise.
Despite the weaker-than-expected sales, Unilever reported a 7% rise in pre-tax profit to €7.6bn for the full year.
Unilever chief executive Paul Polman said it had been a "challenging year for our industry", and warned he did not expect a "significant improvement" in market conditions in 2015.
"We expect our full-year performance to be similar to 2014 with the first quarter being softer but growth improving during the year".
Unilever said underlying sales growth in emerging markets, where it makes more than half its sales, slowed to 5.7%.
The firm has been hit hard by a combination of slowing growth in China, a recession in Brazil as well as western sanctions on Russia.
Unilever cut 1,400 jobs last year and Mr Polman said due to the "low growth environment" it would continue to cut costs and simplify the business.
The firm has recently sold a number of its products, including its Slim-Fast brand and Ragu and Bertolli pasta sauces.

He was being questioned about problems with a Trident missile test last June.
The ex-defence minister said that "years ago" a Seaslug aircraft missile was "fired into Wales" by mistake.
It is believed he was referring to an incident in Cardigan Bay in 1958 involving HMS Girdle Ness, when a missile crashed into a hillside.
Giving evidence to the Commons Defence Committee on Tuesday, Lord West said: "Years ago we had an aircraft missile called the Seaslug missile and we fired one into Wales."
"Those sort of things happen but you don't go and talk to the prime minister about that, unless their constituency happens to be there," he added.

While its recommended nationwide pay rate goes up from £7.85 an hour to £8.25 - an increase of 40p - in London the suggested rise is only 25p.
Next year, when the government brings in a compulsory National Living Wage across the United Kingdom, there will be no separate rate for London.
The living wage is calculated according to the basic cost of living.
The capital's voluntary living wage - which is not legally enforceable - is assessed by the Living Wage Foundation and economists at the Greater London Authority.
Mayor Boris Johnson's office estimates 724 employers in London have now signed up.
Those employers now have six months to implement the new pay level.
National minimum wage: The current mandatory minimum is £6.70 per hour for people aged 21 and over, and £5.30 for those aged 18 to 20
National Living Wage: This will be mandatory from April 2016 for workers aged 25 and above. It will initially be set at £7.20 an hour and is intended to exceed £9 an hour by 2020
London living wage: A voluntary higher rate of the living wage in the capital, which will rise from £9.15 to £9.40 an hour. There are currently no plans to make this scheme mandatory
Mr Johnson said the move would help "pay the people who work hardest on lowest incomes decently".
While he is a prominent supporter of the voluntary London living wage, he has resisted calls to make it mandatory, saying small businesses "would struggle with wage rigidity".
Labour's mayoral candidate Sadiq Khan called in-work poverty "a shameful blight on our city", adding: "Neither the government nor the mayor are doing enough to turn things round."
The Green Party highlighted disparity between the new recommended rate in London and the national minimum wage for Londoners aged 18 to 20, currently £5.30 an hour.
Assembly Member Baroness Jones said: "The mayor should be making the case for raising the minimum wage in London to a living wage, especially for young Londoners."

Emmanuel Manzi from Italy won the event at Llanberis, while Richard Roberts was the first Welsh competitor to finish.
Organisers say the 10-mile (16km) race attracts some of the best mountain racers in Europe.
Snowdon Race tweeted its congratulations to one couple who got engaged after finishing the event.
This year's race start was moved to Llanberis high street, where the very first race began.
"The buzz in this little village come Snowdon Race weekend is unbelievable," said organiser Stephen Edwards.
Consumer goods giant Unilever has reported lower-than-expected full-year sales after demand for its products in emerging markets continued to slow.
[NEXT_CONCEPT]
A surface-to-air missile was once accidentally fired into Wales by the Royal Navy, the Labour peer Admiral Lord West has told MPs.
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The London living wage is to rise from £9.15 an hour to £9.40, the Living Wage Foundation campaign group has said.
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About 600 runners have taken part in the annual mountain race up Snowdon with a series of other events being held to mark its 40th anniversary.