Unilever shares jump even as profit dips | Shanghai Daily

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August 7, 2009

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Unilever shares jump even as profit dips

UNILEVER NV Plc, the maker of Dove soap, Lipton tea and Ben & Jerry's ice cream, reported a 17 percent fall in profit in the second quarter as it cut prices in Europe to keep market share. But its ability to raise sales volumes during the recession helped the company's share price rally around 4 percent yesterday.

Net profit at the consumer products giant was 758 million euros (US$1.09 billion), down from 909 million euros in the same period a year earlier. But sales increased by 1 percent to reach 10.5 billion euros.

Sales were up in Asia and the Americas but fell 5.1 percent in Western Europe, where the company slashed prices. That translated to higher volumes, which pleased analysts, but hurt margins.

The company also spent more money on advertisements and was hit by more than 77 million euros in pension-related costs than a year earlier.

"Unilever is delivering on its promise of a return to volume growth, which comes much quicker than we anticipated," said analyst Richard Withagen of SNS Securities in a note on the earnings.

Though he said Unilever's first-half performance was solid, he maintained his "reduce" recommendation on the stock. For now though, investors cheered the results, sending the share 4.3 percent higher to 19.61 euros in Amsterdam yesterday.






 

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