Unilever warns of tough time ahead

[August 05, 2010]  PARIS (AP) -- Unilever NV on Thursday reported a 39 percent rise in second-quarter net profit, but the maker of Lipton tea, Dove soap and Ben & Jerry's ice cream warned of a tough economic climate to come.

Chief Executive Paul Polman said that Unilever expects consumers to keep watching spending in Europe and North America, keeping down prices even as commodity prices increase.

"We are all competing hard and there is no reason to believe that this is about to change," Polman said in a press conference.

"We stay focused on doing the right thing for the long term."

Since he was appointed in 2008, Polman has been seeking to take market share and boost sales against bigger rivals Procter & Gamble Co. and Nestle SA by slashing prices.

But despite a tough climate in the second half, Polman said he is sticking to his target of a "sustainable improvement in operating margin for the year as a whole."

The Dutch consumer products maker said that net profit in the three months to June was euro1.15 billion ($1.52 billion), compared with euro833 million in the same period a year earlier. Revenue rose 12.4 percent to euro11.75 billion.

Shares fell 1.8 percent to euro22.38 in Amsterdam morning trade Thursday.

In Europe, Unilever was particularly hard-hit in Spain and Greece, where the company responded to debt crises with euro1 promotions which it said were "crafted to reflect the new economic reality."

With "sluggish" markets in North America, Unilever said it is looking to Latin America and Asia for growth.

By product type, Unilever's personal care products became its largest unit in the quarter, with a 7.8 percent increase in revenue to euro3.56 billion powered by sales of deodorants such as Degree in the U.S., Dove in Brazil and the relaunch of Rexona in Japan.

Magnum Gold, Cornetto Enigma, and the new Ben & Jerry's ranges helped push sales growth in the ice cream and beverages unit to 3.5 percent at euro2.7 billion.

Dressings and spreads saw a 0.5 percent rise in sales to euro3.51 billion.

[Associated Press; By EMMA VANDORE]

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