Unilever disappoints

2 May 2003

The consumer giant’s stock is down on slow firstquarter growth. Sales of food brands more than half the total stagnated. Investors are punishing Unilever for raising expectations with cheery guidance. But it’s too soon to decide that the group is off course.

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Unilever's shares fell over 7% on 2 May after it released firstquarter results that disappointed investors. Sales of its 400 top brands, which account for some 90% of all revenues, grew 3% over the quarter. In March, the food and consumer goods giant lowered its sales growth target for the first quarter to 4%5%, compared to a target for the year of 5%6%. Within the total, sales of food brands were flat. The group said that sales had been affected by the timing of Easter, but also by unexpected slowdown towards the end of the quarter. Headline sales growth, including minor brands, was 4%, reflecting disposals carried out as part of Unilever's "Path to Growth" business transformation programme.

Operating profit before amortisation and exceptional items was down 2%, although margins rose 0.3%, to 14.7%.

Unilever's chairmen, Niall Fitzgerald and Antony Burgmans, said that they "remained comfortable" that the company would meet its fullyear targets of 5%6% sales growth and doubledigit earnings growth, and that it was on course for the Path to Growth target of a 16% operating margin by 2004.

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