Unilever missed first-half organic sales expectations as a continued slowdown in emerging markets and a lacklustre performance from its food business impacted the group’s top line result.

The Anglo-Dutch FMCG giant booked underlying sales growth of 3.7% to EUR24.1bn (US$32.5bn) in the six months to 30 June, missing consensus expectations of 4.3%.

The performance of its food business did pick up in the second quarter with underlying sales up 0.7%, compared to a fall of 1.7% in the first quarter, reflecting the late Easter. In the half, underlying food sales fell 0.5%.

The company said markets in Europe and North America remained “challenging” and flagged slowing conditions in emerging markets.

“Our markets have been challenging and we have experienced a further slowdown in the emerging countries whilst developed markets are not yet picking up,” CEO Paul Polman said.

Nevertheless, Unilever stressed the company is growing “ahead” of its markets and booked a robust performance from its refreshment business, which includes ice cream. Sales at the unit rose 5.1%, with volumes driven by new products including Ben & Jerry’s Cores.

Unilever is selling under-performing brands in order to boost margins. The company booked a 50 basis point improvement in margins at its food unit but refreshment margins fell 100 bps. On a group-wide basis gross margins remained flat in the half, beating consensus analyst expectations for a 10 bps drop in margin.

First-half operating profit was helped by lower pension costs and increased to EUR4.38bn, up from EUR3.89bn last year. Net income was boosted by a reduction in financing costs, climbing to EUR2.99bn from EUR2.68bn.

After an early dip, shares in the group were up 0.26% at 10:00 BST.

The company reiterated its full-year guidance for volume growth ahead of its markets and margin expansion in the year.

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