Unilever expects to beat forecast

Unilever, the world's second-largest maker of food and detergent, said revenue will beat its forecast for the first time in six years after raising prices and selling more Dove soap, Hellmann's mayonnaise and Lipton tea.

Unilever jumped the most in a year in London trading. First-quarter net income climbed 33 percent to 1.34 billion euros, exceeding analysts' estimates, boosted by gains from selling its Boursin cheese unit, the London- and Rotterdam-based company also reported yesterday.

The company raised prices 4.8 percent in the quarter, more than analysts estimated, to pass on higher commodity expenses. Unilever booked a 517 million-euro gain, mostly on the Boursin sale, helping offset 400 million euros worth of raw-material inflation. The food and soap maker is selling assets to catch up with larger competitor Procter & Gamble Co, which has boosted sales more quickly since 2003.

"Aggressive pricing action was able to mitigate the effect of commodity cost increases," Christopher Gower, an analyst at MF Global in London, said in an investor note, calling the earnings "excellent".

Revenue climbed 7.2 percent excluding acquisitions, asset sales and currency movements, accelerating from a year-earlier pace of 5.7 percent and beating a 5.9 percent analyst estimate. Unilever said it will beat its goal for annual sales growth on that basis, "at the upper end" of a 3 to 5 percent range.

The shares rose as much as 5.9 percent in London. The stock traded at 1,743 pence as of 9:51 am local time, cutting this year's slide to 7.8 percent, less than the 10 percent drop by Procter & Gamble, the maker of Olay skin creams. Yesterday's gain is the most since March 2007.

Then co-Chairman Antony Burgmans said more than five years ago that 2002 growth for the company's top brands would exceed the 5.3 percent pace of 2001.

In subsequent years, Unilever fell behind P&G, unable to pass on all of its raw-material costs and suffering from stagnant tea sales and declining market share in laundry detergent.

"Commodity-cost increases accelerated further in the quarter," the company said in the statement. "We have continued to manage through this with a combination of innovation-led growth, savings programs and price increases."

Sales in Asia and Africa, the source of almost a third of revenue, increased 14 percent, also above estimates. European sales rose 2.3 percent, below the 4.1 percent median estimate.

"Asia and Africa more than made up for the slightly disappointing growth in Europe," said Ton van Ooijen, an analyst at Landsbanki Kepler in Amsterdam.

Agencies

(China Daily 05/09/2008 page16)