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Unilever's quarterly sales figures beat expectations

By Guy Montague-Jones , 07-May-2009

Unilever has reported better than expected first quarter sales figures but the company admitted that some switching to private label goods had affected turnover.

Helped by a 6.8 percent rise in prices, Unilever reported a 4.8 percent increase in underlying sales for the quarter. But currency movements and disposals/acquisitions depressed reported turnover, which fell 0.7 percent to €9.5bn.

Regional variations

Performance varied greatly between regions with Americas enjoying 7.2 percent underlying growth while sales in Western Europe dropped 2.8 percent.

Here Unilever said some down-trading to private label goods was affecting sales figures.

The Anglo-Dutch company is pinning its hopes of a sales recovery in the region on new products and innovation. It cited new Dove products such as ‘hair minimizing’ deodorant and damage repair shampoo as examples of launches that should improve European sales volumes.

Commenting on its performance in personal care, Unilever said underlying sales were up 4 percent but warned that consumers had pared back their purchases.

New products and the addition of TIGI professional hair, the acquisition of which was completed last month, are expected to drive growth over the year.

While Unilever’s overall sales growth in the first quarter was higher than many of its rivals, pretax profit looked less attractive falling 39 percent to €1.09bn.

However, much of this decrease is attributable to gains made in the previous year from selling businesses.

Results "not a disaster"

Bernstein Research analyst Andrew Wood said: “In an environment of recent big misses to expectations, especially on the top-line, by some of Unilever’s peers, being “in the ball-park” in Q1 could be seen as a relative success.

“Or, to put it another way, with results not a “disaster”, as some had feared, this might actually be considered to be somewhat of a success.”

Looking more closely at the figures, Wood expressed some concern at “another big cut in advertising and promotion spend” that could cause Unilever to loose ground in future quarters.

Unilever stuck to its new policy of not giving guidance. CEO Paul Polman even suggested in an interview with the Financial Times that the policy could be in place for quite some time.

He told the newspaper: “I don’t even see right now a need to think about when we will give guidance again.”

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