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Big Brands > Unilever

Unilever results show sharp recovery

By Simon Pitman , 02-Nov-2007

Anglo-Dutch consumer goods giant Unilever today reported a steep increase in its third quarter profits on lower charges and improved sales, though the company's personal care division showed a less dynamic performance.

Net profit jumped an impressive 37 per cent, up from €737m in the corresponding quarter last year to reach €1.01bn. The company said that the strong profit growth showed how it had been able to counteract the effect of increasing costs by increasing consumer prices combined with the positive effect of company cost cuts. "Commodity pressures have increased sharply, but we have successfully offset these through timely pricing action and continued delivery from our savings programmes," said Patrick Cescau, company chief executive. Sales increases for the group were solid as a whole, with growth of 1.2 per cent taking total sales up to €10.24bn, compared to €10.12bn a year earlier. At a constant rate this figure represented growth of 4 per cent, after taking into account the positive impact of currency exchange. For the first nine months of the year sales were up 1 per cent to reach €30.30bn, while net profit was up 18 per cent to reach €3.35bn. Although the company highlighted the performance of its savory, dressings and spreads categories for its food operations, as well as noting healthy sales for its home care division, the performance of its personal care operations was overshadowed. The division reported sales down 0.3 per cent for the quarter, to reach €2.86bn, whereas they were up 1.6 per cent for the nine month period to reach €8.47bn. The company said that its personal care division had experienced challenges in the US market in particular, due mainly to a relatively weak quarter caused by a 'different phasing of innovation' together with lower skin care sales in a competitive market. On a regional basis sales were impacted by a relatively poor performance for the company's Americas operations, which account for a third of all revenues. Sales in the region were down by 2.3 per cent to €3.36bn for the quarter, mainly on account of the poor exchange rate for the US dollar, but were up 2.8 per cent on an underlying basis. European sales, which also account for more than a third of total sales, did not fair so well either, with sales falling 0.6 per cent to €3.88bn, but up 0.7 per cent in underlying terms. The biggest gains were experienced in the Asian and African region, where sales were up 8.1 per cent to exceed €3bn for the first time. Looking ahead to the rest of the year, the company highlighted a series of personal care launches for Clear anti-dandruff shampoo worldwide, as well as the Dove pro-age shampoo range in Europe.


Although the results were broadly applauded by the financial world, challenges are expected to lie ahead for the company in the next quarter as commodity costs bite further and the possibility of an economic slowdown looms.