Unilever Profits Rise, Forecasts Scrapped

The consumer-products company saw fourth-quarter profits rise 58%, but said it won't provide an outlook for 2009 or reaffirm targets for 2010.
Publish date:

Updated from 2:42 a.m. EST


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, the maker of Dove soap and Lipton tea, said fourth-quarter profit rose 58% to 1.14 billion euros ($1.47 billion), up from 721 million euros a year earlier as revenue gained 3% to 10.15 billion euros.

Unilever sold the Bertolli olive oil operation during the quarter for 630 million euros.

Underlying sales growth in the quarter was 7.3%, while price increases peaked in the quarter at more than 9%, Unilever said Thursday. Volumes were lower by 1.6%.

Unilever said its operating profit margin slipped by 0.3% because of higher raw materials costs.

The consumer-products company said margins were pressured by the reduction in volumes, dilution from disposals and "exceptionally high increases in input costs." Unilever said cost pressure is "expected to ease beyond the first quarter of 2009."

Full-year net profit rose 28% to 5.3 billion euros on a 1% increase in revenue.

"We achieved top line growth ahead of our target range and, faced with unprecedented input cost pressures, protected profit by early pricingaction and savings programs," said Unilever CEO Paul Polman.

But "given the current economic uncertainty," Polman said it would be "inappropriate at this stage" to provide an outlook for 2009 or reaffirm targets for 2010.

"That said, I am confident in the underlying strength of thebusiness and over the longer term expect that we will deliver very competitive levels of growth and margin improvement," the CEO said.

Unilever said advertising costs were down in the fourth quarter because ads became cheaper and competitors were spending less. Unilever's largest rivals are

Procter & Gamble

(PG) - Get Report

of the U.S. and


of Switzerland.

Unilever increased its full-year dividend by 3% to 0.77 euros, and said it will pay dividends on a quarterly basis in the future.

The company's sales are split roughly evenly between Western Europe, where they declined 4% in the fourth quarter, the Americas, where they rose 1.8%, and Asia & Africa, where they were up 10%.

In the U.S. "trading conditions deteriorated in the fourth quarter, with a drop in consumer confidence and purchasing power, and a reduction of trade inventories" by retailers, Unilever said.

While some consumers were buying cheaper brands and store brands, "our own market share has held up well," Unilever said.

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