Price cuts fail to stop Unilever sales slide

Unilever said it was unhappy with its results and promised "urgent action" to turn sales around yesterday after the consumer goods and food giant posted a 4 per cent fall in third-quarter sales.

Unilever said it was unhappy with its results and promised "urgent action" to turn sales around yesterday after the consumer goods and food giant posted a 4 per cent fall in third-quarter sales.

Total sales at the food and consumer goods giant slid to €10.6bn (£7.3bn) in the three months to September, while underlying sales, adjusted for disposals, dropped 1.3 per cent compared with a year ago. Earnings were up 3 per cent, just ahead of analysts' forecasts after a surprise profits warning last month, while pre-tax profits were down 2 per cent on 2003 at €1.3bn.

Unilever shares came under pressure as investors worried about the cost of reviving growth. The joint chairmen, Antony Burgmans and Patrick Cescau, said: "We are reviewing our assumptions for the period to 2010 and will communicate the outcome of this review with the full-year results."

Unilever still expects "low single-digit" earnings growth this year. In September it halved its forecast from at least 10 per cent growth to less than 5 per cent, while earmarking more money for marketing, price cuts and restructuring.

Following its "Path to Growth" plan, the company reduced its brands to 400 and is now revamping its back-office operations. That will result in a charge of €1bn this year and is expected to yield annual cost savings of €750m from 2006. The finance director, Rudy Markham, said the fourth quarter would be hurt by higher ad spending and a "significant step-up" in restructuring costs.

Unilever blamed poor third-quarter sales on weak consumer confidence and stiffening competition. Sales of ice cream and ready-to-drink teas were hit by cool, wet weather in northern Europe, while Unilever also faced tougher competition from its arch-rival Procter and Gamble for laundry products, and soaps in Europe and Asia.

Unilever shares closed 2.75p up at 452.25p.