Unilever profit down 17% in second quarter

AMSTERDAM (AP) — Unilever NV PLC, the maker of Dove soap, Lipton tea and Ben & Jerry’s ice cream, said Thursday profit fell 17 percent in the second quarter as its margins eroded amid the economic downturn.

Net profit at the consumer products giant was euro758 million ($1.09 billion) in the quarter, down from euro909 million in the same period a year earlier, while sales rose one percent to euro10.5 billion.

The sales figure was in line with analysts’ expectations, but profit was slightly worse.

Unilever didn’t specify why its margins slid, but noted it had spent more money on advertisements and suffered from higher commodity costs. Profit was also hit by euro77 million more in pension-related costs than a year earlier.

“While conditions remain difficult in many markets, I am encouraged by the return to volume growth across all regions,” chief executive Paul Polman said in a statement.

Sales were up 6.6 percent in Asia and Africa, now Unilever’s largest market, 0.6 percent in the Americas, but fell 5.1 percent in Western Europe. Operating profits were up by 18 percent in Asia, but fell by one percent in the Americas and 24 percent in Western Europe.

Among product lines, at Unilever’s savory and dressings arm, its largest, sales fell 5.8 percent and operating profits were down 18 percent.

Unilever said its Knorr soups brand had grown well in the Americas and Asia but that sales were down in Western Europe.

Overall in the US, Unilever said it had capitalized on the move to more in-home eating with successful campaigns behind Hellmann’s mayonnaise, Ragu pasta sauces and Bertolli frozen meals.

Unilever’s personal care arm grew sales by 8.5 percent and operating profit rose six percent. Unilever said new product launches had helped, such as a new Dove deodorant and the Axe “body spray.” It also noted good growth for Suave, its value brand in the US.

Ice cream and drinks sales rose 3.8 percent but operating profits fell 8.4 percent. Unilever didn’t say why.

And it said Lipton was benefiting from sales of pyramid-shaped tea bags, and ice cream did well in the early summer. Magnum, with the ‘Temptation’ variant, and Ben & Jerry’s were particularly strong, it said.