Unilever warns of margin pressure

28th Apr 2011 08:50

Food and household goods giant Unilever reported continued growth in the first quarter of 2011, though developed markets are "sluggish."The company, whose brands include Dove soap and Magnum ice creams, said turnover rose by 7% to €10.9bn (£9.7bn)."We have delivered a good performance which demonstrates that the transformation of Unilever is progressing well; this against a backdrop of rising commodity costs, weak consumer confidence and very competitive markets," the company said. "All categories are growing, driven by a particularly strong performance in the emerging markets. We have continued to deliver volume growth, albeit at a lower rate than in recent quarters reflecting the pricing action taken and the sluggishness of the developed markets."Personal care sales rose by 4.3% to €3.5bn, home care sales by 6% to €2bn. In foods, the savoury, dressings and spreads division saw a 2.1% rise in sales to €3.4bn, while ice cream and beverages sales were up by 4.7% to €1.9bn.Unilever says that rising oil prices mean cost inflation will be around 500 to 550 basis points of turnover in 2011, leading to further upward pressure on prices. As price increases implemented by the company are lagging increases in the input costs it has to pay, which will impact margins ahead of an improvement in the second half.---RG