Unilever shares fall after wet summer blamed for sales fall

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The Independent Online

Consumer products giant Unilever today said that summer trading had been below expectations after poor weather cooled demand for ice cream and iced tea.

The Anglo-Dutch group, whose products include Magnum ice cream, Lipton Ice Tea, Hellman's mayonnaise and Dove soap, said the disappointing weather was among a series of factors contributing to its "unacceptable" performance.

Unilever said it would take action to strengthen its brands after saying it expected margins to be lower in the third quarter of its financial year when compared with last year.

It is the latest in a series of disappointing updates for Unilever, which has been battling to reinvigorate the business with a major growth strategy.

The company has blamed weak consumer confidence for sluggish sales of its leading brands.

Today, Unilever said trading in July and August was below expectations for a number of reasons, including very poor weather in northern Europe, which led to "substantially lower" sales of ice cream and ready-to-drink tea.

It also said continued weak consumer confidence, along with competitive pressures, led to a further decline in the home and personal care markets in Western Europe.

And competition in laundry and hair care markets remained intense in a number of key countries in Asia.

Chairmen Antony Burgmans and Niall FitzGerald said the recent performance was "unacceptable".

They added: "We are determined to put this right and we are therefore moving forward with the simplification of our operations and, most importantly, increasing investment behind our brands."

Unilever said the protection of the health of its brands and a return to long-term profitable growth were its overriding priorities.

The company said it would increase spending on advertising and promotion on a number of key brands, in areas such as foods, and home and personal care.

However, earnings per share were expected to be lower in the third quarter than last year.

Trading across the rest of the business was broadly in line with expectations.

Unilever, whose other frontline brands include Knorr, Surf and SlimFast, launched its five-year Path To Growth strategy in 2000, in a move to focus on its leading products.

The profits warning, which sent Unilever's shares five-per-cent lower, follows another downbeat trading statement in July.

At the time, the company blamed factors including weak consumer confidence, poor ice cream sales and aggressive pricing by rivals for the slowdown.

Unilever's overhaul has included management changes at the Prestige fragrances division and the launch of low-carbohydrate products to stabilise sales at SlimFast, which has suffered from the popularity of the Atkins diet.