Unilever shares down on sales stall 'Action being taken' to address sales disappointment By Emily Church, CBS.MarketWatch.com Last Update: 9:46 AM ET April 28, 2004 LONDON (CBS.MW) - Shares of Unilever dropped over 6 percent on Wednesday after the Anglo-Dutch consumer and food products giant said sales of its key brands rose a disappointing 1.3 percent in the first quarter amid flat pricing and growing competition.
Unilever (UN: news, chart, profile) (UL: news, chart, profile) said it was "not happy with its short-term sales performance.. While there are clear signs of an improving economic outlook we are also currently seeing an increased level of competitor activity in some key markets."
Swiss rival Nestle SA (NSRGY: news, chart, profile) last week posted a 3.4 percent rise in its key real internal growth sales measure, bolstered by pet food sales.
At Unilever, faltering sales in the Slim Fast diet drink, Prestige Fragrances and frozen foods cut leading brands sales growth by 1 percent.
The group has a long-term target for 3-5 percent growth in its leading brands. Analysts had been looking for the key sales measurement to show an increase of at least 2 percent in the first quarter after a 0.7 percent rise in the fourth quarter.
"We knew this was going to be a tough quarter, but we didn't know it was going to be this tough," said Lex Werkheim of Eureffect in Amsterdam. "They'll need a turbo quarter to reach their target (for 3 percent to 5 percent growth in leading brands), and that's going to be pretty hard to achieve."
Unilever said "action is being taken to address this" disappointment in sales.
Leading brands sales rose 2.5 percent in 2003. The segment accounted for 93 percent of sales last year. For this year, company executives confirmed on a conference call that they are maintaining expectations for leading brands sales growth to improve on 2003.
Unilever said pre-tax profit in the first quarter declined 8 percent to 931 million euros ($1.1 billion) while sales declined 2 percent to 9.788 billion euros, reflecting some disposals. Net profit dropped 15 percent to 530 euros, largely reflecting tax profits on disposals.
Shares in London (UK:ULVR: news, chart, profile) dropped 6.5 percent in morning trade to 525 pence a share, helping to drag the FTSE 100 lower. See London Markets
Analysts were cautious on the stock's prospects after the results.
"With this lackluster start to the year, we believe that the group's ability to deliver targeted low double-digit earnings growth this year will be questioned," Merrill Lynch told clients.
Deutsche Bank said Unilever's 30 basis point rise in margins missed its expectations and pointed to increasing competition in Europe and Japan.
"The contrast between Unilever's disappointing numbers and the good figures from Reckitt Benckiser, Danone (DA: news, chart, profile) and Nestle is stark," the German bank said.
Overall, underlying sales grew by 0.4 percent. Unilever said sales of leading brands rose 1.3 percent amid flat pricing. Brands include Lipton teas, Knorr soups and Hellmann's mayonnaise in foods and Dove soaps and Surf detergent in household products.
Commenting on European markets, "Germany, France and the Netherlands have been particularly difficult and we have lost some market share in spreads and laundry."
In the U.S., Unilever said underlying sales declined by 1.8 percent "in weak markets, including a positive 0.6 percent from price." It said Slim-Fast and prestige fragrances diluted growth by 2.1 percent and that sales, including the impact of disposals, declined by 4 percent.
All that doesn't explain why Whoopi's face disappeared. I believe we can make a difference.
Yeah I just didn't believe much of what I was reading here, I was about to go over to some of the finance boards and get the rest of the story. Thanks for getting it for me...
And I want the boycott to work, bigtime...we just need to be real about it.
Hate to rain on your parade, but....This drop is based on 1st qtr sales drop, not the sudden Whoopi controversyJoe,Unilever shares down on sales stall 'Action being taken' to address sales disappointment By Emily Church, CBS.MarketWatch.com Last Update: 9:46 AM ET April 28, 2004 LONDON (CBS.MW) -
I'm not necessarily suggesting that the drop yesterday was from this whole boycott, I don't know either way. However, your article was dated back on April 28, 2004. UN dropped 6% that day. Yesterday's drop was a new 2% drop, and it occured after the news you posted had been factored in for over three months.
I seriously doubt your article and the things it discussed were the cause of yesterday's drop.
patent
You know, our family stopped buying Unilever products over a year ago when Natalie Maines dissed the POTUS in England and Lipton continued to use her fat mouth to promote their products. Until a few weeks ago. We were at Sams Club, and we were out of tea. We had a choice of Luzianne DeCaf or Lipton caffeinated tea. I bought the caffeinated stuff. Well, it won't happen again. I believe the boycott of Unilever that began over a year ago is what has made a difference in sales of that product. And I believe someone might want to investigate their number inflation.
So...a news item from April caused yesterday's $1.2b drop?