Sales down for Unilever's top brands
Consumer products giant Unilever dealt a fresh blow to investors today by revealing that sales of its top 400 brands shrank by 1% in the third quarter.
The Anglo-Dutch group, whose products include Magnum ice cream, Lipton Ice Tea and Hellmann’s mayonnaise, also announced that it was reviewing its targets up to 2010.
Pre-tax profits fell 2% to €1.32bn in the three months to September 30 as consumers in Europe and North America kept a tight rein on spending and discount retailers put pressure on prices.
Poor weather compounded its problems over summer, with lower sales of ice cream and ready-to-drink ice tea responsible for nearly two-thirds of a 5% fall in underlying sales in Europe.
Unilever warned investors last month that its performance in the third quarter had been weak and said full-year earnings growth was likely to be in the low single-digits.
This was reiterated today as total turnover fell 4% to €10.64bn, with margins under pressure from an increase in promotional activity.
Sales across the Atlantic were flat because of weak consumer spending, but the group offered some cheer by revealing that sales of SlimFast have stabilised.
Patrick Cescau, who took over as chairman from Niall FitzGerald in the quarter, said the performance was unsatisfactory.
“Actions are being taken to improve the market competitiveness of our products,” he said.
Unilever has responded to its troubles with a pledge to invest more in advertising its leading brands and step up its support behind new products.
In Europe, Unilever said higher sales of hair and skincare products such as Sunsilk shampoo and Lux soap were ``more than offset'' by declines of other brands, particularly in laundry and household cleaning.
Sales of frozen foods were also lower, although the group reported growth for its Knorr and Hellmann’s ranges.
News that Unilever is reviewing its targets over the next five years comes at a time when its current Path to Growth strategy is in danger of falling flat.
The Path to Growth strategy was drawn up in late 1999 and came with a pledge from Mr Fitzgerald to seek 6% to 8% annual growth from leading brands over five years.
Unilever said today that the outcome of its review of targets up to 2010 would be delivered to investors at the time of its full-year results.
