• Food volumes fall 1.4%
  • Underlying food sales drop 0.4%
  • Group sales climb 10.3% on emerging market growth
Falling spreads volumes in key markets were a factor in the performance of the division

Falling spreads volumes in key markets were a factor in the performance of the division

Unilever's shares were up 3% this morning (25 October) despite food sales volumes falling in the third quarter as its spreads brands suffered from high pricing in key markets.

Unilever, which owns food brands including Knorr stock cubes and Flora butter, reported a 1.4% decline in underlying food volumes for the third quarter.

Falling spreads volumes in key markets were a factor in the performance of the division, which is Unilever's second largest behind personal care.

A 1% increase in prices failed to help underlying food sales, which dropped 0.4%, leading to a decline in turnover of 2.3% to EUR3.56bn (US$4.63bn).

Despite this, group underlying sales grew 5.9% in the period, boosted by growth in emerging markets.

Group sales climbed 10.3% to EUR13.4bn, driven by a positive impact of 4.1 percentage points from foreign exchange and 0.1 point from M&A.

Emerging markets sales were up 12.1% in the period, while the group recorded underlying volume growth of 3.4%.

Chief executive Paul Polman said the company delivered "good quality growth" despite "high levels of competitive intensity, depressed economies and increasing global imbalances and uncertainty".

However, he added: "It is clear that the environment will remain challenging. Commodity cost inflation is high and remains volatile and there is no sign that the level of competition will ease."

Nonetheless, he said Unilever remains "on track" to deliver "a modest improvement" in core operating margin in 2012.

Shares were up 3% to GBP23.33 at 11:36 BST.