Anglo-Dutch food and consumer goods company Unilever has reported a fall in profit for the second quarter of 2005 and said it needs to do more to improve its competitiveness in Western Europe.

Net profit from continuing operations was €787m (US$970m), down 26% on the same period last year. Sales were up 1% at €10,222bn.

Net profit for the first half was down 6% at €1.751bn, with sales up 2% at €19.367bn.

"The second quarter marks another encouraging step as we execute our plans to improve top line performance," said group chief executive Patrick Cescau. "We have strengthened our innovation programme and halted the decline in overall market share."

"We are making good progress against our business priorities," he said. "Developing and emerging markets are once again a key driver of growth for Unilever, with strong
sales in buoyant markets, and in personal care the improvement made in the first quarter has been sustained."

"Conditions in Western Europe generally remain difficult and we have more to do to improve our competitiveness there," he said.

"We continue to drive cost efficiency through our savings programmes and these are being reinforced as we integrate our foods and home and personal care operations around the world," he said. "This has meant that so far this year we have largely contained the impact on operating margin of higher input costs and the increased level of investment behind our brands."

"The meal replacement category declined further in the first half year. While this is less than 1% of our business, the reduced market size requires an additional write-down on Slim-Fast which affects operating profit and earnings per share in the quarter," he said.