Unilever advances despite 'soap wars': Acquisitions boost profits in Europe and America

UNILEVER shrugged off fears of a profits squeeze from 'soap wars' on both sides of the Atlantic to produce better-than-expected second-quarter pre-tax profits of pounds 611m, a rise of 4 per cent.

Sir Michael Perry, chairman, said that trading conditions had gradually improved as the year progressed, most evidently in speciality chemicals, and a further strengthening was expected.

In response to the figures Unilever's share price jumped 55p to 1,097p. Interim dividends for 1994 will be announced along with third-quarter results in November.

The Unilever subsidiary Lever Brothers has been locked in a propaganda war in Europe with its rival Procter & Gamble over the pounds 100m launch of Persil Power, the concentrated soap powder that P&G claims damages clothing.

Adverse publicity has led to a poor sales showing in the Netherlands, Switzerland and parts of Scandinavia but sales were strong in Britain and France. European detergent profits were slightly lower in the second quarter but ahead in the six months.

Acquisitions boosted operating profits in Europe and North America, which bounced back from a disappointing first quarter despite continuing price pressure in detergents, while a revival in Brazil led to accelerating profits growth from the rest of the world.

After a pounds 33m rise in interest charges to pounds 107m, only partly offset by a pounds 13m exceptional credit on disposal of office buildings, pre- tax profits for the half-year to 30 June increased by 3 per cent to pounds 1.06bn. In constant currency terms profits after tax and minorities improved by 2 per cent to pounds 686m but were slightly lower at pounds 674m expressed at current exchange rates with sterling.

Group sales grew by 6 per cent to pounds 14.4bn in the half-year. Acquisitions accounted for about half of that growth, with higher prices adding 2 per cent and volume a little over 1 per cent, much the same as in the first three months.

Unilever, which is tipped as a possible purchaser, at least in part, of Kodak's dollars 2bn consumer products businesses, has spent pounds 575m on 20 acquisitions so far this year.

European operating profits rose by 5 per cent to pounds 685m against a mixed trading background where only Britain showed stronger demand. Boosted by the acquisition of Ortiz-Miko in France, ice-cream made progress along with ready- to-drink tea.

Early cycle speciality chemicals performed strongest and detergents were slightly ahead thanks to past cost-cutting, while launches in personal products were a depressing influence.

Ice-cream acquisitions also boosted performance in North America, where half-year profits were 4 per cent ahead at pounds 104m after halving in the first quarter.

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