Unilever Q4 net profit falls 27 percent

[February 04, 2010]  AMSTERDAM (AP) -- Unilever NV, maker of consumer products such as Ben & Jerry's ice cream and Dove soap, saw fourth quarter earnings fall by 27 percent after its year-ago figures were boosted by a one-time gain on the sale of its Bertolli olive oil business.

Net profit was euro831 million ($1.15 billion) down from euro1.14 billion a year earlier, when Unilever sold Bertolli to Spain's Grupo SOS for euro630 million. Fourth quarter sales fell 5 percent to euro9.66 billion, also due in part to the Bertolli sale.

Unilever said that stripping out the impact of disposals and restructuring, fourth quarter operating profit would have risen 4 percent.

It said sales measured on the same basis rose 1.8 percent, with volume growth of 5 percent outweighing price falls of 3.1 percent.

Over the past year, Unilever has cut prices in order not to lose market share as customers show a preference for cheaper brands during the recession.

In 2010 "consumers will be even more demanding, and rightfully so," said Chief Executive Paul Polman on a conference call. "Our priorities therefore for 2010 are to drive volume growth while providing a steady improvement in underlying profit margin."

Shares fell 2.5 percent to euro21.93 in early trading in Amsterdam.

"Unilever has delivered a solid if not inspirational performance," said analyst Keith Bowman of Hargreaves Lansdown in a note on the earnings.

He praised the company's sales growth, particularly in Asia and Africa. There sales rose 7.4 percent and are now substantially larger than in either the Americas and Europe. Sales growth in the Americas was 1.2 percent, while sales fell 4.2 percent in Europe.

Bowman warned that Unilever's costs could rise this year, threatening the company's plans to continue improving both sales and margins. "On the downside, commodity prices remain volatile, while a recent recovery in advertising volumes for the media industry could see a bounce back in prices," Bowman said.

Unilever's full year net profit was euro3.66 billion, down 33 percent from 2008, on sales of euro39.8 billion, which were down 2 percent.

Among major product lines, Unilever gave only full year sales growth data.

Personal care products such as Dove soap and Axe deodorants grew 5.3 percent. Laundry and cleaning products such as Surf, Omo and Cif, grew 7.1 percent. And ice cream and beverages such as Ben & Jerry's, Magnum and Lipton tea brands, grew 4 percent. Polman noted that sales of Klondike bars grew more than 10 percent in the U.S.

Sales of dressings and spreads such as Hellmann's mayonnaise and Knorr soups fell 0.1 percent.

[Associated Press; By TOBY STERLING]

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