The strength of the euro weighed on third-quarter sales and earnings at Anglo-Dutch consumer goods giant Unilever, the company reported today (30 October).
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The company behind brands including Ben & Jerry’s ice cream and Knorr soup posted an 80% jump in third-quarter operating profit to EUR2.53bn (US$3.3bn) for the third quarter of 2008.
However, the figure was inflated by a series of disposals including French cheese business Boursin. Underlying operating profit rose 9% on a constant-currency basis but, when including the impact of the strong euro, rose by only 2%. Disposals also boosted net profit, which was up 60% to EUR1.71bn.
Underlying sales rose 8.3% to EUR10.43bn but the strong euro and the impact of acquisitions and disposals meant turnover inched up by only 2%.
Nevertheless, chief executive Patrick Cescau said Unilever had been strengthened against the backdrop of a “tough” trading environment. Underlying sales during the first nine months of the year rose 7%, he said.
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By GlobalData“We have been reshaping the portfolio, allowing us to focus our resources where it matters most; behind our brands and our priority categories. All this leaves us well placed for the future,” Cescau said.
Cescau said Unilever was set to see underlying sales growth for 2008 “well in excess” of the company’s long-term target of 3-5%. Unilever also expects to see an underlying improvement in operating margin for the year, he added.
“Despite the price rises needed in the light of unprecedented cost increases, our volumes are holding up,” Cescau said. “Our cost savings programmes are far reaching and on-track to deliver.”
Underlying sales in Europe climbed 2.5% thanks to a series of price increases. Volumes in the region dipped by 2% due in part to consumers trading down to private-label products, Unilever said.
Price rises also helped underlying sales in the Americas, which climbed 8.2%. However, Unilever said volumes at its food business were “holding up”.
Underlying sales from Unilever’s Asia Africa unit accelerated in the third-quarter, climbing 15.7%, thanks to a combination of increased prices and volumes.
