Unilever shares slump as analysts downgrade full-year expectations

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UNILEVER, the Anglo-Dutch consumer products group, disappointed the market yesterday with its third-quarter figures, as weaker operating profits from Latin America held back group performance.

The company, which makes a range of foods, detergents and cosmetics, said that global sales rose 2 per cent to pounds 7.07bn in the three-month period, while pre-tax, pre-exceptional profits gained 3 per cent to pounds 934m.

After one-time items, however, pre-tax profits were 19 per cent lower at pounds 868m, compared with analysts' expectations of about pounds 900m. The company netted a significant exceptional gain in the year-ago third quarter from the disposal of a plant breeding centre.

Unilever shares dropped 74.5p, or 14 per cent, to close at 74.5p as analysts trimmed full-year pre-tax forecasts by about pounds 50m to about pounds 3bn. Some doubted that first-half sales growth of 3.5 per cent could be replicated in this half, as Unilever officials have suggested.

In Latin America, operating profits for the quarter dropped 34 per cent to pounds 45m despite a 4 per cent gain in sales to pounds 855m. "It's a huge punch- up in Latin America," Investec Henderson Crosthwaite analyst David Lang said. "Unilever is determined to stand its ground."

Analysts said the European operations were also of concern, as tough conditions across Eastern Europe and in Russia restrained Continent-wide performance. European sales were flat at pounds 3.29bn, while profits edged up 3 per cent to pounds 540m.

However, "highlights in the quarter ... included a further improvement in volume and margins in Western Europe," the company said. "Asia and [the] Pacific forged ahead with a 10 per cent growth in sales across the region and a strong improvement in margins."