Consumer goods giant Unilever came under pressure on the London market today as interim figures from the group revealed a fall in sales volumes.
The Dove soap-to-Hellmann’s mayonnaise firm reported pre-tax profits of €3.14bn in the six months to June 30, a 21% hike on a constant currency basis.
But the group’s 6.8% rise in second quarter like-for-like sales failed to impress as Unilever revealed that revenues were boosted by a 7.4% hike in prices.
Shares plunged 8% on the sales disappointment, while news of a cut in marketing spend also hit sentiment towards the group.
Analysts at Panmure Gordon said: “On the face of it, 6.8% like-for-like sales growth and a 50 basis point underlying margin expansion is a strong performance, but the fact that the group has moved into negative volume growth and marketing spend was cut by 0.7% of sales makes the results more mixed.”
Sales volumes in Europe fell by 2.9% in the second quarter, with overall growth of 2.3% inflated by higher prices.
It said commodity costs soared by around €600m in the second quarter and by €1bn in total in the first half.
It said product price increases and cost cutting protected margins, up 0.4 percentage points on an underlying basis in the six month period.
However, operating profits sunk 5% to €1.37bn in the three months to June 30 largely due to a restructuring charge.
Unilever is overhauling the business under its “One Unilever” programme, which will see 20,000 job cuts worldwide.
The Dutch-Anglo group announced job losses in its European operation last year, with more than 300 jobs set to go at three of its UK factories at Burton, Warrington and Port Sunlight on the Wirral during this year.
Before the latest round of job cuts, Unilever employed around 8,000 people in the UK.
It is also reportedly hunting for a new chief executive as speculation suggests that boss Patrick Cescau, who turns 60 next year, is preparing to step down at the firm’s annual general meeting in May 2009.