Unilever reports 36 percent fall in Q3 profit

Unilever NV, maker of Dove soaps and Ben&Jerry's ice cream, saw net profit fall 36 percent for the third quarter, mostly because earnings in the same period a year ago benefited from the sale of operations.

The consumer goods giant made €1.05 billion ($1.56 billion), down from €1.64 billion in the same period last year, when Unilever booked a €487 million gain on the sale of its seasonings businesses.

Revenues were down 1.9 percent to €10.2 billion.

Despite the fall in profit, Chief Executive Paul Polman said the results showed "good progress across all regions and the majority of countries and categories" when compared with the second quarter.

During the global recession the company was forced to cut prices and sacrifice margin to keep customers. However, Unilever said its margins improved in the third quarter from the second quarter.

"Savings programs are delivering strongly and we are seeing the benefits," the company said.

But Polman said Unilever is planning on a "long, slow recovery and we should plan our business accordingly."

Shares fell 0.7 percent to €20.65 in early Amsterdam trading.

Unilever said its sales volumes were higher and sales would grown 3.4 percent from a year ago on an "underlying" basis — a nonstandard measure that compares only operations owned in both years and strips out currency effects.

Underlying volumes were up 3.6 percent while prices were down 0.2 percent.

Analysts said the results, particularly the sales, were better than expected.

"Sales have again surprised on the upside, whilst the profit margin has also improved," said Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers.

He said that Unilever's increased spending on advertising — up 14 percent from a year ago — was a major reason for the sales growth.

By region, Unilever's underlying Asian sales grew 5.7 percent, American sales grew 3.9 percent and European sales grew 0.2 percent.

Unilever discussed performance of major product lines only on a 9-month basis, saying it saw 4.8 percent underlying sales growth in personal care products, where it owns brands such as Axe deodorants, Dove soaps and Vaseline skin care. The company credited new product launches.

Ice creams and beverages, including brands such as Magnum and Lipton, grew 4.3 percent, with "diet" teas performing well.

Dressings such as Knorr soups, Hellmann's mayonnaise and Bertolli sauces grew 0.9 percent.

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