The perfect storm

27 October 2004

The consumer goods giant s leading brands supposedly the powerhouse of the business are going backwards. Unilever plans to up its ad spending to counter price deflation. So it isn t surprising that the new boss is reviewing its targets.

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Unilever said that underlying sales in the third quarter declined by 1.3%. Over the ninemonth period, the decline was 0.6%. The consumer goods giant said that performance was particularly poor in Western Europe, where underlying sales declined by 5%. Lower sales of icecream and iced tea, which the group blames on the poor weather this summer, accounted for about two thirds of the decline. Home and Personal care sales also declined due to laundry and household cleaning, where both volume and pricing were negative.

In Asia, Unilever said that it is suffering from increased price competition. The group said it was holding market share and gaining volume in both laundry and haircare in India, but pricing was substantially down. This led to an underlying sales increase of only 0.2% in the region.

Group operating margins rose by 20 basis points. Advertising and Promotional spending declined in the third quarter, mainly due to the lower activity associated with icecream. Earnings per share in the quarter rose by 3%.

Unilever said it was reviewing its assumptions for the period up to 2010, and would update the market on its review at the fullyear results in February.

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