Unilever's sales up 5.7 percent
Consumer goods giant Unilever reported a better than expected 5.7 percent rise in first quarter underlying sales on Thursday, putting it in line to meet its 2007 targets and helping to drive its share price higher.
The Anglo Dutch group reported a good start to 2007 especially from its soaps, shampoos and deodorant products eclipsing the group's caution that it was seeing a big rise in agricultural commodity prices and the effect of a weak dollar.
The sales jump in the first three months of 2007 from the world's third largest consumer goods group, which makes Sunsilk shampoo, Dove soap and Knorr soups, came well above forecasts for a 3.4 to 4.2 percent rise, while profit margins also rose.
Unilever shares were up 3.8 percent at 16.15 pounds by 8:50 a.m. to be the FTSE 100 index's biggest riser after having rallied over the last two months from an early March low of 13.20 pounds on hopes of an improved performance.
Growth in personal care products was particularly strong at 8.4 percent, driven by new product roll outs for its Dove pro age range for the over 50s, Clear anti dandruff shampoo and its new Axe vice range of deodorants.
The European business, which accounts for nearly half of Unilever's sales and had seen sluggish growth previously, saw sales grow 3.6 percent, led by ice cream and personal care products.
"This is encouraging progress for Unilever with sales and margins ahead, but it is still underperforming against its peers," said analyst Rob Mann at Collins Stewart.
Charlie Mills at Credit Suisse said, "Often criticised for not delivering both top line and margin in tandem, Unilever has delivered strongly on both counts in its first quarter."
Chief Executive Patrick Cescau warned of a rise in commodity costs such as for edible vegetable oils, tea and grains which may prompt price rises.
"I am confident, however, that the combined benefits of organic growth in our 3 to 5 percent guidance range and improved efficiency leaves us well placed to achieve our margin objectives for 2007," he added.
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