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February 7, 2008

UK: Unilever chief heralds “strong finish” to 2007

A jump in underlying profits during the last three months of 2007 has boosted annual earnings at consumer goods giant Unilever.

A jump in underlying profits during the last three months of 2007 has boosted annual earnings at consumer goods giant Unilever.


The Anglo-Dutch conglomerate today (7 February) booked a 1% rise in full-year operating profit to EUR5.2bn (US$7.6bn).


When the effect of currency fluctuations was taken into account, operating profit fell 3% in 2007, Unilever said.


Nevertheless, the result was helped by an 11% increase in fourth-quarter profits, driven by cost-savings and selected price increases to offset rising commodity costs.


“The fourth quarter was a strong finish to a good year,” said Unilever chief executive Patrick Cescau.


“2007 marks the third successive year of accelerating sales growth and came with an underlying improvement in margin. This is clear evidence that our strategy of focusing resources on faster growing and profitable segments is succeeding.”


Last August, Unilever announced it was to revamp its business with a programme to sell businesses worth EUR2bn and a plan to focus on its faster-growing operations.


In recent months, the company has sold cheese brand Boursin to French firm Fromageries Bel and offloaded its US seasonings business Lawry’s to McCormick & Co.


Earlier this week, the company announced it had agreed to buy Russia’s largest ice cream maker Inmarko.


Underlying sales rose 5% to EUR9.9bn, with revenue rising across Unilever’s three operating regions – Europe, The Americas and Asia / Africa.


Unilever said its Russian business had been the “outstanding performer” in Europe during 2007. The company saw sales across the region rise 2.8%.


Unilever said it saw sales growth in key markets including the UK, the Netherlands and France – all markets where the company has announced recent job cuts.


In The Americas, sales rose 4.1%, driven by a 3.2% rise in revenue in the US, despite lower ice cream sales.


In the emerging markets of Asia and Africa, turnover jumped 11.1%. Unilever said growth had come in its more “established” markets like India and Indonesia and from newer markets like China.


“We remain confident of achieving our 2010 goals – for an operating margin in excess of 15% while delivering consistent, competitive growth along the way,” Cescau added.


“In 2008 we expect underlying sales growth to be towards the upper end of our 3-5% target range and to see a further underlying improvement in operating margin.”

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