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Unilever Sees Steady Financial Results for Q3 2010

Posted: November 5, 2010

Unilever has released its Q3 2010 and nine months financial reports, highlighting a steady quarter for the company. For the third quarter of 2010, Unilever's underlying volume growth was 4.8% and underlying sales growth was 3.6%, with underlying price growth improving to (1.2)%. Also, in-quarter pricing was flat for the third successive quarter. Highlights in the nine months report include turnover up 10.9% at €33.4 billion, and underlying volume growth at 6.0%. Additionally, underlying sales growth was at 3.8% and underlying price growth was at (2.1)%.

The third quarter results reflected solid progress for Unilever, particularly given the combined headwinds of slow economic growth, weak consumer confidence in many markets and higher commodity costs. While market growth continued to be sluggish in developed economies, the company’s emerging markets continue to grow strongly albeit more slowly than the levels seen earlier in the year. Volume share improved in an environment of continuing high levels of competitive activity. In-quarter pricing was flat for the third successive quarter and gross margin declined in the face of higher input costs, although the company found this was partially mitigated by its strong cost savings initiatives. Its advertising and promotions spending was flat at constant exchange rates against the high comparators in the prior year quarter. Indirects were significantly lower in the quarter, reflecting the benefits of the company’s savings programs and phasing effects, some of which will reverse in the fourth quarter.

The transformation of the organization continues with the establishment of the global supply chain organization and the announcement of the proposed acquisition of Alberto Culver. Unilever also expects to complete the acquisition of Sara Lee’s personal care business during the fourth quarter of 2010.

Unilever CEO Paul Polman commented, “We have delivered another quarter of solid progress driven by our emerging markets business which again reported high levels of volume growth. This reflects the strength of our position in these markets where competitive activity is intense. Overall volume growth remained strong on the back of stronger innovations and the extension of our brands into new markets. In-quarter pricing was flat with increased prices in some categories offset by others where downward adjustments were needed to stay competitive. During the course of the first nine months we have significantly increased the investment in our brands and are spending in line with the timing of our in-market activities.

"These results confirm again that our strategy to focus on the consumer and to accelerate growth is working. Our priorities remain to drive profitable volume growth and strong cash flow along with steady and sustainable improvement in underlying operating margin for the year as a whole. We continue to expect underlying price growth to turn positive towards the end of the year,” said Polman.