European personal care sales help drive Unilever

By Simon Pitman

- Last updated on GMT

Related tags Personal care Procter & gamble Profit Unilever

Particularly strong personal care sales in key European markets
help Anglo-Dutch consumer giant Unilever to end 2006 on a higher
note, but results are still below expectations as the general
market in Europe remains tough.

The company reported a turnover of €9.7bn for the quarter ending in December, an increase of 3.4 per cent in underlying sales. Analysts had expected that sales for the quarter would increase by 3.7 per cent. For the full year the company said that underlying sales growth came in at 3.8 per cent, representing a figure of $39.64bn.

Net profit from continuing operations was up 35 per cent for the quarter, to €898m, whereas for the full year it was up 10 per cent to reach €3.68bn.

The rise in profitability reflected the the off-loading of several of its less profitable frozen food brands, and a continued emphasis on its more profitable personal care brands.

"At the heart of Unilever's strategy is a concentration of resources on areas where we have leading positions and on high growth spaces, especially in personal care,"​ said Patrick Cescau, group CEO.

But despite the emphasis on personal care, the group is presently shrinking, with disposals over the past two years reducing cash generation by €1bn.

This is in stark contrast to rival Procter & Gamble, which, thanks to an emphasis on investment in the personal care sector that has included the purchase of the Gillette business, has helped it to nudge Unilever out of its position as the world's leading consumer goods manufacturer.

Adding to its woes, Unilever said that Europe - its main market - remains tough on account of heavy competition and modest consumer demand.

However, after a prolonged period of falling sales in Europe, the company underlined the fact that its European operation managed to jump back into positive figures, with sales growth of 1 per cent helped by strong sales of deodorants and body care.

Although the company said that it had been particularly pleased with a return to growth in the UK and German markets, it did also stress that the market in France remained 'difficult', whilst in general sales of hair care products also remained low.

It also said that sales of Dove, Rexona and Axe had helped to drive a good year in the Netherlands.

"We expect to deliver underlying sales growth in 2007 within our 3 - 5 per cent longer term target,"​ Cescau said. "Savings programmes are expected to drive an improvement in operating margin to over 13.6 per cent, after charging restructuring costs of 0.5 to 1 per cent of sales.

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