Unilever took a pounds 108m restructuring hit in the second quarter which included its acquisition of a US shampoo maker, and another pounds 7m from falling meat sales due to the mad cow disease scare.
Despite disappointing results at the bottom of expectations, the City kept faith with the Anglo-Dutch food giant's recent purchase of the US- based Helene Curtis shampoo group, and Unilever's shares closed at 1,243p, down just 6p.
Recent results from similar groups such as Procter & Gamble have pointed up the near-zero growth in continental European demand, and against this Unilever's overall sales growth of 8 per cent to pounds 16.5bn was welcomed by analysts.
The pre-tax profit figure emerged 6 per cent lower than last time at pounds 617m, at the bottom end of City forecasts, due to the slightly larger- than-expected restructuring charge.
Analysts also pooh-poohed the perennial rumours that Unilever might seek to liven up its growth rate by buying confectionery and soft drinks giant Cadbury Schweppes. The rumour was re-ignited by Cadbury's sale on Thursday of a US business, but John Campbell of Paribas Capital Markets said Cadbury's market share was not big enough for Unilever's needs.
"In reality, Cadbury is number three world-wide in soft drinks and number four in confectionery. Unilever wants a business in the number one or two spot, if it's going to compete with the likes of Nestle and Phillip Morris."
The BSE scare had already forced Unilever to write off pounds 15m in the first quarter as sales of Birds Eye Beef Burgers and other meat products dipped, particularly on the Continent. But the company had already started a strategic move away from meats towards sauces.
A Unilever spokesman said: "The continued effect of BSE is a little sad. We had a further pounds 7m write-off in the second quarter which brings the total for the half-year to pounds 21m. Consumer confidence is still being unnerved by the continuing debate over the BSE issue."
He said there had been some recovery in meats in the UK but not back up to pre-BSE levels, although that had been somewhat offset by improved sales of white meats such as chicken.
In Europe, overall sales were flat. Underlying margins improved further in personal care products and in Unilever's food business.
This was achieved through cost reductions and changes to the portfolio as the company sold low-margin businesses, mainly in meat, Unilever said.
The City's eyes are firmly on the autumn when Niall Fitzgerald takes over as chairman from Sir Michael Perry. Mr Fitzgerald is expected to redirect the business towards emerging markets and brands where the company can build better growth. Not that Sir Michael has been idle on the corporate front. Unilever has bought 24 businesses since Christmas and sold another 15.
Trading profits from Europe were pounds 407m in the second quarter, little changed from pounds 403m previously. Overall operating margins in Europe were flat at 9.3 per cent.
Unilever added that trading remained difficult in both France and Germany.
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