Unilever declares 'good start' to year as weak euro lift sales

Unilever with declared a "good start" to the financial year, reporting higher-than-expected first-quarter sales and signs of a turnround in some of its key emerging markets.

The producer of Lipton tea, Dove soap and Ben & Jerry's ice cream said on Thursday that sales in the first three months of the year had risen by 12.3 per cent compared with the same quarter last year, mainly due to the fall in the value of the euro against the dollar.

Excluding the currency impact, underlying sales growth of 2.8 per cent was higher than analysts' consensus expectations of 2.1 per cent, indicating a stronger than expected bounceback from last year's weak second half. Unilever shares were 3.7 per cent higher in early trading after the first-quarter statement on sales.

Jean-Marc Huet, finance director, said: "There is improved momentum in the business. The Chinese business has recovered better than expected and food, especially savoury and mayonnaise, has had a good start, boosted by Easter."

Paul Polman, chief executive, who cautioned in January that he did not expect much improvement this year, said the trading environment was still "tough" but nevertheless struck a relatively upbeat note.

"We have had a good start to the year, helped by favourable currency movements but also an improvement in underlying sales," he said. "Despite high levels of currency and commodity volatility, we are now starting to see more tailwinds than headwinds in our markets. "

Andrew Wood, analyst at Bernstein Research said: "That is the most optimistic we have heard Unilever sound in some time."

He added that though: "the description of the start to the year as being "good" seems a bit of a stretch," the sales numbers were "a solid and balanced beat to consensus expectations."

Emerging markets - which account for 59 per cent of sales - grew by 5.4 per cent, driven mainly by price rises. There was improvement in India, more stable conditions in China but a deterioration in Brazil and Russia.

But there was price deflation in Europe, where underlying sales continued to fall, this time by 0.4 per cent. In North America sales grew again - by 4.9 per cent - but sales in developed markets as a whole fell by 0.7 per cent, reflecting the weight of the group's exposure to Europe.

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