Unilever profits rise, but sales suffer

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Anglo dutch consumer goods group Unilever posted an 11 per cent
rise inprofits today after announcing their results for the third
quarter, animproving margin even though sales stagnated.

Anglo dutch consumer goods group Unilever​ posted an 11 per cent rise inprofits today after announcing their results for the third quarter, animproving margin even though sales stagnated.

The company, home to household names such as Slimfast, Dove soap and Knorrsoups, repeated its its prediction of healthy net earnings growth for theyear.

According to a Reuters report, these figures were in line with marketexpectations, coming hard off the back of Unilever's second sales warningthis year, although first trades in London this morning saw the share priceedge up 0.6 per cent.

"Not withstanding a more difficult business environment, we... expect toachieve another year of low double-digit growth in earnings per share, as wehave throughout the 'Path to Growth' (savings) programme",​ aspokesperson for the company said in a statement.

The Path to Growth programme has seen Unilever significantly cut costs andditch hundreds of underperforming brands, and aims to leave just 400profitable product lines leftwhen it winds up next year.

The successor to the programme has not yet been announced. Considering thedifficult economic environment, some analysts have expressed doubt about thecompany's growth potential, even once the programme is completed ­ theReuters report added.

However, encouragingly for investors, profitability continues to rise, withthe margin of operation increasing by one point in the quarter to 17 percent.

"Figures were in line with expectations following the sales warning. Thedebt reduction is a positive surprise",​ Ton van Ooijen at SNS securitiessaid.

The main catalyst of Unilever's diminishing sales trends is its failure toperform in the mass market for perfumes and Health & Wellness, wherebySlimfast diets have been hit hard by new innovations such as the Atkinsdiet.

In the meantime, the stagnation of Unilever's sales growth is in substantialcontrast to its main competitors. Nestle, the world's top food group, lastweek posted a 5.4 per cent increase in organic sales whilst Danone, a worldleader in fresh dairy products and bottled water, recently reported a 9.4per cent growth in third quarter sales. Similarly, US giant Proctor andGamble notched up 13 per cent sales growth on Monday.

Related topics: Markets

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