'Disappointing' figures for Unilever

Consumer products giant Unilever delivered “disappointing” first quarter figures today after competition in many of its markets remained intense.

The group, whose products include Hellmann’s mayonnaise, Magnum ice cream and Dove soap, saw a 2% drop in turnover to €9.79bn, while net profits were below market expectations at €851m.

Unilever said the performance in the first three months of the year continued the trend of much of 2003 with lower than normal growth in its markets.

In a statement, the Anglo-Dutch company said: “We are not happy with the short-term sales performance and action is being taken to address this.”

Most of the initiatives have already been put in place, including management changes at the Prestige fragrances division and a review at SlimFast after sales were affected by the popularity of low-carb diets.

The performances at those two divisions were among factors behind a sluggish 1.3% rise in sales from Unilever’s leading brands. Prices of those 400 frontline products – the core of the group’s Path to Growth strategy – were flat.

The company added: “Whilst there are clear signs of an improving economic outlook we are also currently seeing an increased level of competitor activity in some key markets.”

Areas of pressure include the haircare sector in Japan and the United States, a spokesman said.

The difficult economic conditions in a number of countries also resulted in sluggish market growth in Europe.

Unilever added: “Germany, France and the Netherlands have been particularly difficult and we have lost some market share in spreads and laundry.”

Despite the tough sales environment, Unilever said savings programmes and a better product mix had improved operating margins and enabled a further increase in brand investment.

As a result, the net profits figure – prior to exceptional costs – of €851m was 7% higher than the same period a year earlier.