Unilever earnings fall while sales rise

by Jeff Gelski
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LONDON — Net profit from continuing operations fell 15% in the second quarter for Unilever, but sales inched forward and the Americas category also posted higher sales.

Net profit from continuing operations of €833 million ($1,196 million) for the quarter ended June 30 compared with €978 million in the previous year’s second quarter. Second-quarter earnings per share were €0.27 compared with €0.32 in the previous year. Second-quarter sales increased 1% to €10,458 million ($15,019 million) from €10,374 million.

In the Americas region, second-quarter sales were €3,335 million ($4,788 million), up 0.6%, and second-quarter operating profit was €441 million ($633 million), down from €445 million. First-half volumes in the Americas regions were sustained at 2008 levels despite lower food service sales.

"In the U.S., we have adapted quickly to changing consumer needs," said Jim Lawrence, chief financial officer for London-based Unilever. "For example, we have increased investments in campaigns emphasizing consumer value and addressing increased demand for in-home eating.

"This has led to the second consecutive quarter of positive volume growth in our U.S. Consumer business. Sales in food service were down, partly from the exit of unbranded business but also because of fewer people eating out-of-home."

Companywide, in the Savoury, Dressings and Spreads segment, second-quarter sales of €3,232 million were down 6% from €3,433 million while operating profit was €417 million, down from €507 million.

"In spreads, we have lowered the prices of our products in a number of our markets to reflect the easing of edible oil prices and (to) close competitive gaps where necessary," Mr. Lawrence said.

In the ice cream and beverages segment, second-quarter sales rose 4% to €2,468 million from €2,377 million, and second-quarter operating profit fell to €339 million from €370 million. The company reported strong growth in the year’s first half for both ice cream and tea in developing and emerging markets.

For the half year, Unilever posted net profit from continuing operations of €1,636 million ($2,348 million), down 31% from €2,385 million. Earnings per share were €0.52, down from €0.77. First-half sales were €19,963 million ($28,656 million), up slightly from €19,945 million.

The rate of growth in category volumes has slowed since the recession hit, and Unilever executives expect it to stay at those levels for a while, said Paul Polman, chief executive officer.

"This is, without any doubt, the longest and deepest recession during the post World War (II) period, and, whilst it might have bottomed out, we do not believe that there are any signs of a fast recovery," he said.

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