Unilever Q2 profit down 17%

Unilever Q2 profit down 17%
AP
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First Published: Thu, Aug 06 2009. 02 03 PM IST
Updated: Thu, Aug 06 2009. 02 03 PM IST
Amsterdam: Unilever NV PLC, the maker of Dove soap, Lipton tea and Ben & Jerry’s ice cream, said Thursday profit fell 17%nt in the second quarter as its profit margins eroded amid the economic downturn.
Net profit at the consumer products giant was euro758 million ($1.09 billion) in the quarter, down from euro909 million in the same period a year earlier, while sales rose 1% to €10.5 billion.
The sales figure was in line with analysts’ expectations, but profit per share of €0.27 was slightly worse.
Unilever didn’t specify why its margins slid, but noted it had spent more money on advertisements and suffered from higher commodity costs. Profit was also hit by €77 million more in pension-related costs than a year earlier.
“While conditions remain difficult in many markets, I am encouraged by the return to volume growth across all regions,” chief executive Paul Polman said in a statement.
Sales were up 6.6% in Asia and Africa, now Unilever’s largest market, 0.6% in the Americas, but fell 5.1% in Western Europe. Operating profits were up by 18% in Asia, but fell by 1% in the Americas and 24% in Western Europe.
“Unilever is delivering on its promise of a return to volume growth, which comes much quicker than we anticipated,” said analyst Richard Withagen of SNS Securities, who has a “reduce” rating on the share. He said volume growth hadn’t translated to profits due to pricing weakness but “we see this as a solid performance.”
Shares rose 4.3% to €19.61 in Amsterdam.
Among product lines, at Unilever’s savory and dressings arm, its largest, sales fell 5.8% and operating profits were down 18%.
Unilever said its Knorr soups brand had grown well in the Americas and Asia but that sales were down in Western Europe.
Overall in the US, Unilever said it had capitalized on the move to more in-home eating with successful campaigns behind Hellmann’s mayonnaise, Ragu pasta sauces and Bertolli frozen meals.
Unilever’s personal care arm grew sales by 8.5% and operating profit rose 6%. Unilever said new product launches had helped, such as a new Dove deodorant and the Axe “body spray.” It also noted good growth for Suave, its value brand in the US
Ice cream and drinks sales rose 3.8% but operating profits fell 8.4%. Unilever didn’t say why.
And it said Lipton was benefiting from sales of pyramid-shaped tea bags, and ice cream did well in the early summer. Magnum, with the ‘Temptation’ variant, and Ben & Jerry’s were particularly strong, it said.
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First Published: Thu, Aug 06 2009. 02 03 PM IST