Unilever shares rise after sales update

Consumer goods giant Unilever today reported a better-than-expected start to the year after higher prices offset a fall in volumes.

The Knorr-to-Dove soap group’s underlying sales growth of 4.8% for the first three months of 2009 was ahead of City forecasts, causing shares to surge 6%.

It said the improvement was due to a 6.8% rise in prices, mainly outside of Europe as it looked to cope with rising costs. This offset a 1.8% decline in volumes, particularly in Western Europe where sales were down 3.7%.

The Hellmann’s mayonnaise maker also said pre-tax profits for the quarter fell 39% to €1.09bn because 2008 was lifted by the sale of olive oil brand Bertolli.

Asian and African markets saw sales rise 9.5%, fuelled by higher prices, with the North America region posting 7.2% growth.

Chief executive Paul Polman described the first quarter results as solid and said attention would now turn to re-igniting volume growth.

He added: “We will further step up innovation and brand support from the second quarter and expect this to drive an improved volume performance.”

Unilever said market growth in Western Europe was more affected by the global economic downturn as customers switched to private label brands.

It said the launch of new Dove products, such as damage repair shampoo, should result in better volumes performance in the rest of the year.