Unilever joins latest victims of rising pound

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The Independent Online
The strong pound claimed three more victims yesterday when Unilever, Arjo Wiggins and BPB, the plasterboard group, all revealed figures affected by currency translation.

Currency movements knocked nearly pounds 50m off profits at Unilever, the consumer products group, which announced a 30 per cent increase in second- quarter net profits to pounds 473m. Pre-tax profits for the six months were pounds 1.4bn, which excludes the pounds 3bn made on the sale of the speciality chemicals business to ICI.

Niall FitzGerald, chairman, said there would be a "significant" impact on the full-year results as a result of currency movements including the pound and the Thai baht.

Analysts said currency effects would knock 10 per cent off Unilever's full-year profits. Some analysts expressed concern about the slow growth in sales, which were up by just 1 per cent in the second quarter.

Unilever also announced a four-for-one share split yesterday to improve liquidity in the stock. The shares closed 52.5p higher at pounds 18.21p.

Unilever executives in Amsterdam were understood to be playing down the prospect of the company using its cash pile on one large acquisition. Unilever will concentrate on a series of smaller strategic deals in emerging markets instead.

At BPB, the strength of sterling more than wiped out the increase in profits at the group this year so far, in spite of a strong growth in plasterboard sales.

Addressing shareholders at the company's annual meeting yesterday, the retiring chairman, Alan Turner, said that if exchange rates remained at current levels the adverse impact on reported profits would be just under pounds 20m, compared with pounds 10m last year. The shares fell 6.5p to 329p.

Speciality paper manufacturer, Arjo Wiggins, has suffered a similar impact with turnover falling for the second quarter running, although the hit was less severe than in the first three months of the year.

Sales were up 4.3 per cent in volume but down 7.7 per cent in sterling terms to pounds 826m in the second quarter, the company said. In the first quarter, volume was down 4 per cent and down 15 per cent in money terms to pounds 816m.

The combined figures for the first half were level in volume but down 11.6 per cent in money terms. Prices were down 7.3 per cent in sterling terms.

About two thirds of turnover is in Europe, including France, the UK, Belgium, Italy, Spain and Switzerland, and a quarter in the US.

Turnover figures are required by the Paris stock exchange where the shares are also listed. The strength of sterling has had a beneficial impact on raw material prices. Profit figures for the first half are not due until 11 September. The shares were unchanged at 163p