Michael Perry, chairman, said he could see little evidence of economic recovery in a number of Unilever's important territories. But he believed that progress in the first half of the year, which has left pre-tax profits 10 per cent higher at pounds 888m, could be sustained in the second half.
The result represented a smart acceleration on the company's disappointing first-quarter profits growth of 5 per cent, and was well beyond the top end of analysts' expectations of between pounds 485m and pounds 500m. Unilever shares rose 12p to 953p.
First-quarter profits had been affected by a 15 per cent drop in European profits, thanks to a fall in consumer goods sales volume in Germany, and an estimated 10 per cent rise in marketing spending, which helped to lower overall group operating margins from 7.7 to 7.4 per cent.
But Europe, which provides more than half of Unilever's sales, recovered to show 5 per cent operating profits growth in the second quarter, despite the disposal of its packaging businesses and a continued high rate of marketing spend.
Sales of ice-cream were particularly strong because of an early summer in northern Europe, where 'impulse' brands such as Magnum, the chocolate-coated ice-cream, and its variant, White Magnum, led the way. Personal products in Britain and France also showed good growth.
In North America the company saw its second consecutive quarter of volume growth in its food businesses, especially Lipton salad dressings, with increased margins on margarine, although Ragu pasta sauces are under severe price pressure.
Operating profits rose by 6 per cent on an overall 2 per cent sales gain. Unilever claims higher market shares in several detergent sectors, especially in Dove, the combined soap and moisturiser, while 'prestige' fragrances like White Diamond and Escape showed good volume gains.
Strongest second-quarter sales growth, of 11 per cent, came from outside Europe and North America, with very strong volume in Argentina and double-digit sales gains across the Latin American market place.
Unilever profits also received a boost from tight cash management. Average second-quarter net borrowings, despite a net pounds 67m spent on acquisitions less disposals, were pounds 600m lower than a year ago taking debt down to pounds 1.5bn at the end of June.
The fall in borrowings, reflecting control over working cpaital, contributed about half of a sharp fall in net interest costs from pounds 77m to pounds 41m in the second quarter.
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