Unilever, the Anglo-Dutch conglomerate, is expected to have seen sales growth slow during its second quarter – but stronger volumes suggest an improved mix, leading analysts have argued.

The Knorr-to-Ben & Jerry’s maker – booked a 4.8% rise in organic sales in thr first quarter of 2009, helped by stronger pricing. Volumes, in fact, dropped 1.8%.

However, Jon Cox, analyst at Kepler Capital Markets, believes Unilever could “positively surprise” when it publishes its figures for underlying growth. In a note to clients, he estimates Unilever’s sales growth will slow to 3%, although he predicts the fall in volumes will be less marked – at 1%.

Investec’s Martin Deboo also estimates Unilever’s underlying sales growth at 3%, which although slower than its first quarter, “reflects what we would regard as a better quality mix of price and volume”.

In its first quarter, Unilever booked a fall in underlying operating margin of 30 basis points. Investec predicts a fall of 20-30 bps for the second quarter, while Kepler forecasts a fall of 30 bps.

Kepler’s Cox argues that Unilever will see volumes and margins improve as the company moves through 2009. “We believe the quarter will represent the bottom for Unilever in terms of weak volume and margin trends and expect the company to benefit in H2 from lower commodity prices,” he says.

At Investec, Deboo argues that cost inflation will be “key” to Unilever’s second-quarter results. Unilever, Deboo says, should have seen “dramatic cost deflation” in the second quarter, although the company has hinted that rising costs could still have had an impact on the numbers.

“It seems clear from Unilever’s informal guidance that this will not be the case and the group will have continued to experience the tail end of input cost inflation in Q2. The inference for us is that the length of forward cover has been longer than we thought. Unilever have also argued that adverse forex translation on commodities in currencies like sterling has also been offsetting the benefits of cost deflation,” Deboo writes in a note.

He adds: “The numbers will be closely watched for signs that new CEO Paul Polman’s early initiatives are bearing fruit and that the tidal wave of input cost inflation that has washed over Unilever in the last two years is beginning to abate.”