By Simon Zekaria
LONDON--Unilever PLC (ULVR.LN) Thursday warned of ongoing global
uncertainty in the consumer economy, but nonetheless recorded
higher sales lifted by price increases.
"It is clear that the environment will remain challenging.
Commodity cost inflation is high and remains volatile and there is
no sign that the level of competition will ease," said Chief
Executive Paul Polman.
Still, he said the company delivered "good quality growth"
despite "high levels of competitive intensity, depressed economies
and increasing global imbalances and uncertainty".
The global consumer goods giant which makes products such as
Wall's ice-cream and Persil washing powder generates more than half
of its sales from faster-growing developing economies like
Indonesia and India, meaning it has fared better than rivals more
exposed to the gloomy consumer picture in recession-ridden Europe.
Earlier this month, France's Danone SA (BN.FR), which is taking a
hit from Spain's battered economy, said poor trading in the south
of the continent shows no sign of improving.
But concerns over a slowdown in emerging markets have also
started to weigh on the sector. Swiss food giant Nestle SA
(NESN.VX) reported slowing revenue growth last week and flagged
some nervousness about China's economy. U.S.-based Procter &
Gamble Co. (PG), which has suffered profit warnings this year amid
criticisms over its emerging markets strategy, reports later
Thursday.
Unilever, which benefits from a strong position in home and
personal care, said third-quarter sales rose 10% to 13.4 billion
euros ($17.4 billion).
Stripping out acquisitions, disposals and currency movements,
sales rose 5.9%, beating consensus expectations of 5% growth. That
compares with 7.8% growth in the same period last year and a 5.8%
increase in the previous three months. Sales in emerging markets
and the Americas rose 11% and 4.7%, respectively.
In Europe, which comprises around a quarter of Unilever's top
line, sales ticked up 0.9%, compared with a 2.2% decline in the
second quarter when poor summer weather ate into ice cream
purchases. To counter lower demand in Europe, the company is paring
costs and raising prices, but in a promotional environment the
results have been chequered.
Volumes stripping out acquisitions, disposals and currency
movements rose 3.4%, compared with 1.9% growth last year and a 2.2%
increase in the second quarter. Unilever increased prices by 2.4%
in an attempt to pass on the rising cost of commodities such as oil
and plastics to consumers.
The company targets a "modest improvement" in operating margin
this year. It also aims for volume growth ahead of its markets and
sustainable operating margin improvement over the longer term.
Unilever shares closed Wednesday at 2265 pence, valuing the
company at 29.07 billion pounds.
Write to Simon Zekaria at simon.zekaria@dowjones.com
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