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Unilever Ratchets Up Profits

The Dutch food and home product giant plans to divest 2 billion euros worth of business.

Unilever

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reported a 14% growth in profits in its second quarter, as the company embarks on a major restructuring that includes divestitures and layoffs.

The multinational maker of food and home care products reported net profit from continuing operations of 1.15 billion euros, vs. 1.01 billion euros in the year-ago period.

Known for famous brands like Lipton teas, Hellman's mayonnaise and Wishbone salad dressings, Unilever also said it will shed 2 billion euros worth of its businesses, in a restructuring that includes a planned 20,000 layoffs over the next four years.

Group Chief Executive Patrick Cescau said the company is taking steps to more "aggressively shape the portfolio." He warned that the divestitures, which includes the divisions that make North American laundry products such as All and Snuggle detergent, will increase restructuring charges going forward.

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Longer term sales growth is targeted to be between 3% and 5%. Operating margins, which had fallen 0.9% for the quarter due to restructuring charges, are targeted to reach 15% by 2010, when the restructuring is complete.

Unilever managed to overcome rising commodity prices that have plagued other consumer products companies.

"Despite rising commodity costs, we have started to see benefits of growth coming through in the bottom line," said Cescau. The company passed on these rising costs to consumers in the form of higher prices, which, combined with cost cutting and high volumes, offset the increase in raw materials.

Investors responded positively to the news on Thursday, sending shares up 85 cents to $30.85 in mid-afternoon trading on the

NYSE

.