Outlook remains cloudy

4 Aug 2005 By Simon Nixon

The food and household goods group grew underlying sales by 3.3% despite weak European markets and did so without sacrificing margins. That’s encouraging. But in the absence of company guidance, it is still too soon to talk of a turnaround.

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Unilever reported second quarter underlying sales up 3.3%, well ahead of market expectations of growth of no more than 2%. In the half year, sales were up 3% to E19.4bn. European markets remained tough, but emerging markets performed well. Meanwhile, underlying margins fell just 20 basis points, confounding analyst fears that heavy marketing expenditure would cause margins to fall much further.

The biggest disappointment was a further E353m writedown of Slimfast, the food supplement drink. As a result, reported operating profits fell 18% and earnings per share were down 29%.

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