Anglo-Dutch consumer goods giant Unilever today (4 May) reported increased turnover of 8.6%, benefiting from a 6.3% favourable currency move, while EPS from total operations rose by 7% to EUR1.03 (US$1.306) in the first quarter. However, sales came in below the market expectations, increasing by a disappointing 2.9%.

Patrick Cescau, group chief executive, emphasised that the company’s recovery programme, initiated following the 2004 shock profit warning, was still on track despite the fact that underlying sales fell below analysts expectations.

“Our priorities for 2006 are to sustain top line growth and improve margins. With the first quarter performance we are on track to achieve these objectives and our aggregate market share remains broadly stable since the start of last year,” Cescau said.

Unilever reported that increased marketing expenditure, which has helped to drive its sales-led recovery and enabled the company to post its sixth consecutive quarter of underlying sales growth, decreased its operating margin by 0.2% to 14.8%.
The world’s number three food group said that sales had been hit by “sluggish” European demand throughout the first three-months of the year, with a recent upsurge in commodity prices.
Cescau’s message was upbeat, as he commented: “In Western Europe, we are maintaining market share and there are some encouraging signs of improvement as work continues to return the business to sustainable growth.”

In Europe underlying sales increased by only 0.5% and in the US sales rose by just 1.1%. The emerging Asian and African markets saw more buoyant demand, with sales rising by 8%.