Unilever cautious despite profits rise

Consumer products giant Unilever banked a 16% rise in profits today but warned of tough sales conditions in the UK and Europe.

The Anglo-Dutch firm, which makes Dove Soap, Hellmann’s mayonnaise and Birds Eye fish fingers, posted first half pre-tax profits of €2.66bn following a strong performance in India and China.

It said it was confident of 3% to 5% sales growth over the full year despite a “modest” six months in the UK and lower ice-cream sales than last year.

Unilever said ice-cream sales in Europe were lower than last year despite the recent heatwave. The ice-cream business includes Magnum, Carte D'Or, Walls and Solero.

Unilever chief executive Patrick Cescau said: “The ice-cream season started slowly because of the later Easter but picked up well in the second quarter, although sales were still slightly behind a strong quarter last year.”

The downturn came as overall group sales across Europe grew by just 0.3% in the first half of the year as increased volumes were offset by price cuts.

Mr Cescau said conditions in Western Europe “remain tough” but added that demand has now “picked up slightly”.

He said the company performed well in the Netherlands while the UK and Italy “returned to modest levels of growth”. However, sales were down in France and Germany.

The weakness in Europe contrasted with 3.2% sales growth in the United States and the rest of the Americas and 8% growth in Asia and Africa where the company said markets were “buoyant”.

Unilever said there was double-digit sales growth in India while China continued to grow “very strongly” which sent group sales up 3% for the half to €19.79bn.

Mr Cescau said he was confident the company would hit its targets for the year despite rising costs, including fuel.

He said the results represented a return to competitiveness following a shock profits warning in 2004 – the first in its history.

Unilever has put most of its European frozen foods business up for sale, including Birds Eye. It is thought the frozen foods business could fetch around €1.5bn.