Unilever shrugs off soaring commodity costs

3rd Feb 2011 07:26

Unilever has taken a €110m provision to cover possible competition law breaches in the European consumer detergents market. The Anglo-Dutch food and households goods giant, which owns the Domestos bleach brand, said it had concluded it is now 'appropriate' to take a provision following an European Commission investigation that began in 2008.The group added it is also involved in ongoing competition investigations in Greece, France, the Netherlands, Belgium and Germany over a range of products.Unilever posted good results last year as it shrugged off higher commodity costs to lift profits by 25% though it felt the pressure in the last quarter.Profits for 2010 rose to €6.1bn from €4.92bn, on sales up 11% at €44.3bn, from €39.8bn. Progress was slower in the last three months however, with profits up 16% at €1.4bn on sales of €10.8bn, up from €9.7bn last time.Operating margins in the last quarter fell by 20 basis points (0.2%) with gross margins also lower, primarily due to increased commodity costs, Unilever said. It adjusted by cutting advertising and promotions spend.The group, which recently bought VO5 hair style products group Alberto Culver, said it has pushed through some price increases though this just helped cover the input price increases with all of the 5.1% underlying sales growth in the quarter coming from higher volumes."We delivered strong volume growth, particularly in emerging markets which continued to be the engine of growth," chief executive Paul Polman said."We gained volume share in all regions driven by stronger innovations, significant increases in marketing investment and the extension of our brands into new territories," he added.