Unilever beat analysts’ forecasts with a 6.1 percent rise in its fourth-quarter sales Thursday.
And the company expects to hit the high end of its growth forecast for 2008 despite challenging market conditions, CEO Patrick Cescau told "Worldwide Exchange."
"This confidence is born from the changes we've made to Unilever, we're now a fitter, leaner more aggressive company, and that will continue in 2008," Cescau said.
But shares of the consumer goods giant fell 3.4 percent on the FTSE-100, with investors disappointed by the company's dividend allowance. The company opted instead to launch an extended share buyback program.
The Anglo-Dutch group said on Thursday it planned a share buyback program of only "at least" 1.5 billion euros for 2008, similar to 2007, after some analysts and investors had hoped for a cash return of up to 5 billion euros.
Concern over rising commodity prices and weakening consumer confidence took the shine off the upbeat outlook for 2008 from the maker of Dove soap, Hellman's mayonnaise and Knorr soups.
Chief Executive Patrick Cescau forecast 2008 underlying sales would grow at the top of its long-term 3 to 5 percent range and said the world's third-biggest food and consumer goods group was set to hit its 2010 margin goal of over 15 percent.
The underlying sales growth of 6.1 percent for the last three months of 2007 was well ahead of analysts forecasts of 4.0 to 5.6 percent and an average of 5.1 percent, and gave a 2007 annual rise which was also above forecasts at 5.5 percent.
"I think two main messages came out of these results, first they are very comforting results and second it signals that the management has a lot of ambition," Marco Gulpers, an analyst from ING Wholesale Banking, told "Squawk Box Europe."
Higher Commodity Prices
Unilever Finance Director Jim Lawrence said the group had seen some signs of a slowdown in its U.S. soap and shampoo personal-care business, but this had been offset by growth in U.S. food and more buoyant growth in other areas of the world.
"We certainly are cognizant of economic conditions and while we have seen some signs of a slowdown we have seen buoyant demand in other parts of the world," he said on a conference call.
Quarterly sales growth in Europe jumped to 5.5 percent, but the U.S. saw a more steady 3.2 percent growth rate while revenue in Asia-Africa emerging markets raced ahead by 11.1 percent.
Lawrence added pressure from higher costs of commodities such as vegetable oil, tea and mineral oil will continue into 2008, but he was confident the group will see higher margins in 2008 helped by its cost-cutting programs.
Analysts said Unilever's confidence for 2008 was "pretty aggressive" given the background of rising input costs and weakening consumer confidence and showed it was still on a recovery track making a disastrous profit warning in 2004.
Unilever, whose 400 brands include Lipton tea, Lux soap and Omo detergents, has, like others such as the world's biggest food group Nestle, been pushing up its prices and cutting costs to offset the sharp upswing in commodity costs.
"Our caution remains for 2008 but our recent feeling, based on poor U.S. results last week, that problems would emerge earlier (i.e. Q4 2007) has proved misplaced," said Deutsche Bank analyst John Parker.
Last week, two of the biggest U.S. food groups, Kraft and Kellogg, posted lower fourth-quarter earnings hurt by rising commodity costs such as milk and grains.
Unilever said 2007 earnings per NV share rose 12 percent to 1.32 euros from continuing operations in line with a consensus of 1.31 euros. Its full-year operating margin showed an underlying improvement of 0.2 points to 13.1 percent.
The group paid a final dividend of 0.50 euros per NV share and 34.11 pence per Plc share, making a year rise of 7 percent.
Unilever stock trades at 15.7 times forecast 2008 earnings, below both Nestle on 17.5 and Danone on 19.3 times, according to Reuters Estimates.
Danone reports next week and Nestle the following week. Swiss-based Nestle has already said it expects underlying sales to grow within its 5-6 percent range for 2008.