Unilever reports flat operating profit

By Ahmed ElAmin

- Last updated on GMT

Related tags: Cent, United states dollar, Currency, Europe, Unilever

Operating profit was flat while sales rose only two per cent in
real terms for Unilever, which said yesterday its profit rose six
per cent in the first quarter of this year.

Operating margin was 14.8 per cent, 0.2 percentage points lower, due to increased investment in advertising and promotions the conglomerate said in its earnings release.

Consumer-goods companies such as Unilever, Nestle and P&G have struggled to boost sales in generally flat markets in Western Europe and the US. Supermarkets have been cutting prices, forcing producers to hold back on raising theirs in response to rising input and commodity costs.

The food sector accounts for 49 per cent of the Anglo-Dutch group's sales, drinks eight per cent and home and personal care for the rest. As the largest consumers products group in the world the company had a turnover of €39.1bn in 2004. Europe accounts for 43 per cent of sales and the US 32 per cent. Asia and Africa accounts for 25 per cent of turnover.

The company said it earned €990m, up from €934m a year earlier. Net profit from continuing operations was up 10 per cent to €1bn. In real terms net profit rose by five per cent when taking account of currency exchange rates.

Underlying sales up by 2.9 per cent, mostly due to increased volume, with pricing contributing 0.5 percentage points to the growth. Turnover rose by by 8.6 per cent, of which 6.3 per cent was due to favourable currency exchange rates when calculating the figure in euros.

Europe accounted for about 41 per cent of the company's turnover in 2005 compared to 43 per cent in 2004. The Americas accounts for another 33 per cent and the Asia and African regions another 26 per cent.

The company five year programme to cut about 1,200 under performing brands did not work to generate the six per cent sales growth it had forecast in 2004, when sales grew by 0.9 per cent. Sales of its SlimFast diet products fell dramatically as consumers turned from meal-replacement products in favour of other weight- loss methods such as the Atkins high-protein diet.

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