Asia boosts Unilever’s profit

City A.M. Reporter
CONSUMER goods giant Unilever’s drive to increase volume growth paid off for the fourth quarter in a row as it beat forecasts with a rise in underlying sales in early 2010, with a boost from strong emerging market growth.

Unilever, which makes Ben & Jerry’s ice cream, <a href="";>Knorr</a> soup and Dove soap, said yesterday that quarterly volumes rose 7.6 per cent, after price cuts of 3.3 per cent, beating the 5.2 per cent consensus forecast and reflecting the strong growth seen from rivals Nestle and Danone.

The group’s western Europe business had sluggish growth of just 0.2 per cent, held back by tough trading in southern Europe.

Unilever’s underlying quarterly earnings rose 32 per cent to €0.34 per share, beating a consensus forecast of €0.32, while operating margins rose 60 percentage basis points to 15.2 per cent helped by on-going cost cutting and lower commodity costs.

Overall first-quarter group sales rose 6.7 per cent to €10.1bn giving an operating profit rise of 17 per cent to €1.4bn.

Chief executive Paul Polman was cautiously upbeat seeing “green sprouts” of recovery – as opposed to green shoots.

“As they say in Dutch, don’t smoke too much pot, stay realistic,” said the Dutch-born chief executive.

Emerging markets shone for the Anglo-Dutch Unilever with Asia, Africa and Eastern Europe sales growing 7.6 per cent and Latin America up more than 10 per cent. An underlying first-quarter sales rise of 4.1 per cent, beat a consensus of 3.2 per cent.

“Unilever has come in with a strong set of figures which demonstrates that recovery is on track”, said analyst Sara Welford at brokers Citi.