Increased Marketing Spend Slims Unilever's Margins

07 August 2006

LONDON: Unilever investors last week developed nervous tics over the Anglo-Dutch consumer goods manufacturer's ability to generate healthy profits, after it reported a sharp decline in Q2 operating margins.

Unilever blamed the fall on its increased advertising and promotional spending in emerging markets and personal care businesses, as well as higher commodity costs. Unilever's sales are growing faster in Asia and Africa than in the Americas or Europe.

However, analysts were more relaxed at Unilever's top line growth. Underlying sales rose 3.9% in the quarter, while revenues rose 3% to €10.2 billion ($13.15bn; £6.89bn).