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Unilever sales volumes rise on discounting

By Simon Pitman , 06-Aug-2009
Last updated on 06-Aug-2009 at 13:33 GMT

Unilever has seen its sales volumes for the European market rebound on heavy discounting, although net profits continue to dive.

Second quarter sales grew by 2 per cent in volume and fell 1 per cent on a like-for-like basis to reach €10.46bn. Like-for-like sales for the first six months remained virtually unchanged at €19.96bn.

Underlying sales growth was 4.1 per cent for the quarter.

The performance was even stronger for the group’s personal care sales, with like-for-like sales up 5.4 per cent to €2.99bn, while sales for the six month period were up 4.6 per cent to $5.80bn.

Discounting saves the day

The company said that discounting had enabled it to raise sales volumes in all regions, particularly in Europe, where in the second quarter volumes rose by 1 per cent, compared to a fall of 1.2 per cent for the first six months of the year.

All other regions showed stronger increases during the quarter, with like-for-like sales increasing 8.2 per cent in the Africa and Asia region, to €3.85bn, while sales in the Americas rose 4.9 per cent to €3.33bn.

But discounting proved to be very market and product specific, as overall the company reported that it had raised group prices by an average of 2.1 per cent during the quarter.

Net profits continue to slide

Reflecting the tough market conditions, net profits were down by 15 per cent for the second quarter to €833m, whereas they fell 31 per cent for the first six months of the financial year, to €1.64bn.

CEO Paul Polman said that he was encouraged by the results, particularly the sales volume increases, and went on to stress that the combination of sales volumes growth while protecting margins, would continue to be the future focus for the company.

As part of its strategy for further discounting, the company says it will be introducing ’30-day plans’ on specific products that have continued to show signs of declining sales.

Unilever’s results compare well with long-standing rival P&G, which yesterday announced that net sales had fallen 11 per cent during its fourth quarter to reach $18.66bn.

Analysts pointed out that the US company had lost out to heavy discounting by competitors as well as the fact that consumers had continued to switch to cheaper solutions such as private label brands.

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