Volume growth slows at Unilever

5th Aug 2010 08:04

Anglo-Dutch household goods conglomerate Unilever saw volume growth slow in the second quarter and expects the trading environment to remain difficult for the rest of the year.The company announced second quarter turnover of €11.75bn, up 12.4% (3.4% using constant exchange rates) from €10.46m in the corresponding quarter of 2009.Underlying year on year (yoy) volume growth in the second quarter was 5.7%, below the growth rate for the half year, which was 6.6%.Underlying sales growth of 3.6% in the second quarter also represented a slowdown from the first quarter; growth for the six month period yoy was 3.8%.On the bright side, the underlying price contraction in the second quarter narrowed to 2.0%; for the half year price growth was also negative at -2.6%.Profit before tax rose 32%, or 24% using constant exchange rates (CER), in the second quarter to €1.59bn from €1.20bn in the second quarter of 2009.Net profit jumped 39% (CER: 30%) to €1.15bn from €0.83bn.Though chief executive Paul Polman hailed "another quarter of robust volume growth with improved volume market shares in all of our regions" he warned that the company is working on the assumption that economic growth will continue to be sluggish, especially in developed markets "where consumer confidence remains fragile.""We do not expect competitive pressures to ease and our ability to increase prices will remain constrained despite rising commodity costs in the second half. We still expect underlying price growth to turn positive towards the end of the year," Polman said.Concerns about economic growth were reflected in disappointing sales in Western Europe, where underlying sales growth was negative at -2.2% in the second quarter, with performance in southern European countries such as Greece, Spain and, to a lesser extent, Italy, acting as a drag.The Americas performed better, seeing underlying sales growth of 3.9% yoy but they were left in the shade by the Asia, Africa and Central & Eastern Europe region, where underlying sales growth was 8.2%.The latter region achieved volume growth of 11.5% (Americas: +5.0%, Western Europe -0.3%), the third successive quarter of double-digit percentage growth.Capital expenditure in the half year increased by €247m to €753m in support of future growth in emerging markets such as Russia and Indonesia.Net debt at €7.6bn was up from €6.4bn as at 31st December 2009, primarily reflecting the impact of the changes in foreign exchange rates.The net deficit in pension schemes was €4.0bn at the end of June up from €2.6bn at the end of 2009. This is mainly due to the impact of lower discount rate assumptions on the liabilities.The second quarter dividends will be €0.208 for the Unilever NV shares and 17.26p for the Unilever plc shares.