Unilever reports 63 percent jump in 3Q earnings

AMSTERDAM, Netherlands - Consumer products company Unilever PLC, maker of Dove soaps, Lipton teas and Ben & Jerry's ice cream, reported a 63 percent rise in third quarter earnings Thursday, due mostly to the sale of operations.

Net profit was 1.64 billion euros ($2.12 billion), up from 1.01 billion a year earlier. Sales rose 2 percent to 10.4 billion euros ($13.5 billion).

Unilever recorded 487 million euros ($644 million) in after-tax gains, mostly due to the sale of its Lawry's and Adolph's seasoning brands to McCormick & Company, Inc., which closed in July. That gain compares to 151 million euros in restructuring charges in the same period a year ago.

The company said it was growing sales and its profits were benefitting from earlier cost cutting.

"We have strengthened the business in a tough environment," Chief Executive Patrick Cescau said in a statement. "Despite the price rises needed in the light of unprecedented cost increases, our volumes are holding up."

He forecast that, stripping out currency effects and comparing like-for-like operations, the company would show sales growth of 3-5 percent in 2008 and an improvement in margins.

Shares were down 0.7 percent to 18.75 euros ($24.80) in early Amsterdam trading.

Analyst Paul Linssen of Petercam Securities said the results were in line with expectations, but repeated a "reduce" rating on shares.

"A clear risk in our view is that the consumer environment in the emerging countries will deteriorate and put pressure on growth," he said. "In addition we see a continued down trading and shift to private label (products) in the more mature markets."

In other words, U.S. and European consumers may switch to cheaper products and buy fewer name-brand equivalents, during a downturn.

Unilever has been selling off solid but not top-notch brands such as Bertolli's olive oil and Snuggle laundry detergent in order to invest more in the promotion of its biggest and best brands, which also include Hellmann's mayonnaise, Axe deodorants, and Knorr soups.

Geographically, Unilever reported sales and margin increases of less than 1 percent in Europe, its largest market.

In the United States, sales grew 4 percent, which it said was entirely due to price increases. Margins dipped less than 1 percent.

In Asia and Africa, sales rose 6 percent and margins increased by slightly more than a percent.

The company has roughly 40 percent of operations in Europe, with 30 percent each in North America and Asia.

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