Unilever Q1 Profits Soar 58%, Sales Stagnant at 3%

05 May 2003

Present profitable, future foggy. This seems to be the message from Anglo-Dutch consumer products titan Unilever which Friday reported profits for the first quarter of 2003 up by 58% – although sales growth failed to maintain a similar momentum hitting just three per cent across the group’s most profitable brands.

Mega-brands such as Dove soap, Hellman’s Mayonnaise, Lipton Tea and (in the UK) Persil home laundry products propelled the group to a net profit in the quarter of €670 million ($751.52m; £468.82m), bettering by 58% the same period in 2002.

But negating the performance of Unilever’s 400-strong brand elite were its host of smaller underperforming labels which dragged down aggregated sales to a deficit of 3.2%. And even the group’s flagship four hundred failed to meet the 4% to 5% growth forecast two months back - let alone the 5%-6% originally predicted.

As Unilever knows to its cost, it’s a tough world out there with awesome opposition from the likes of Procter & Gamble, Nestlé, Kraft Foods and Danone – all chipping away at market share.

In a statement, the group preferred to focus on other factors, among them the late-occurring Easter which impacted adversely on food sales and the war on Iraq. Also certain retailers and wholesalers were experiencing “financial difficulties” [no names, no pack drill, but Royal Dutch Ahold springs to mind] and had been vigorously de-stocking during the quarter.

Unilever investor relations director Howard Green told analysts that that post-quarter sales had surged: “We have seen a bounce associated with Easter and a strong sales pickup.” He also insisted that primary brand sales over the fiscal year will increase by 5-6% as originally forecast; also that earnings will hit double-digit growth.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff