A buoyant Unilever looks East for growth

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The Independent Online
Growth at Unilever, the Birds Eye Walls to Persil consumer group, is likely to come from markets outside Europe and the US, Sir Michael Perry, chairman, said yesterday.

China, where Unilever trebled sales to £130m last year, looks a particularly attractive prospect and the group's second Walls ice- cream factory is already under construction in Shangahi.

"These regions are growing much faster than the developed economies and they will have priority in the allocation of corporate resources," Sir Michael said. Unilever has already spent $200m on its Chinese adventure, though infringement of copyright remains a problem.

Sir Michael also ruled out a bid for Heinz, the US foods group, where recent rumours have tipped Unilever as a possible buyer. "As you know, Heinz has been up for sale for some time. Unilever always considers purchases like that but no activity is planned."

He announced a steady-as-she-goes set of results towards the top end of analysts' expectations. Pre-tax profits increased by 24 per cent to £2.43bn in the year to December, though the figures are flattered by last year's profits which were dampened by a £490m restructuring charge including 7,500 job cuts. Sales edged up 6 per cent to £29.6bn. Unilever spent a net £450m on acquisitions during the year; gearing fell to 23 per cent.

"These figures represent pretty solid stuff and show that the company has established a good base for when the European economies improve," said Julian Hardwick, food industry analyst at brokers BZW. "I think Unilever will increasingly be seen as an attractive stock."

In Europe, where trading remained tough, ice-cream was a highlight, helped by warmer summer weather and a new brand, Solero.

Detergents were held back by the £57m write-offs associated with the unwanted stock of Persil Power, though analysts said the figure was too small to be of great importance to the group. However, uncertainty remains on how much impact the Persil Power problems will have on the rest of the Persil range.

The food division, which includes the Birds Eye and Cup-a-Soup brands, had a tougher time due to severe price competition in Germany and operating difficulties in Italy.

Sir Michael said the group was experiencing rising prices in raw materials and packaging, which would necessitate increased prices or reduced costs.

The dividend was raised by 7 per cent to 26.8p. The shares were unchanged at 1,173p.