Unilever Q1 rises, sales up 2.9%

Consumer goods giant Unilever Plc/NV reported a 9 per cent rise in first-quarter earnings.

Consumer goods giant Unilever Plc/NV reported a 9 per cent rise in first-quarter earnings on Thursday but said its underlying sales grew a less-than-expected 2.9 per cent in the first three months of 2006.

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Anglo-Dutch Unilever, the maker of Knorr soups, Dove soap and Omo detergents, posted first-quarter earnings per Unilever NV share for total operations of 1.03 euros, at the top of forecasts of 0.75-1.04 euros.

The group reported first-quarter underlying sales rose 2.9 per cent, with higher prices contributing 0.5 percentage points and the rest coming from volume increases, while its operating margin was down 0.2 percentage points at 14.8 per cent.

Analysts had looked for underlying sales growth of around 3.3 to 3.8 per cent as part of Unilever's recovery programme.

"Our priorities for 2006 are to sustain top line growth and improve margins. With the first-quarter performance we are on track to achieve these objectives and our aggregate market share remains broadly stable since the start of last year," Chief Executive Patrick Cescau said in a results statement.

The world's number three food group and one of the biggest soap and deodorant makers has said its medium-term aim is to expand sales at the rate of 2 to 4 per cent at which the categories it operates in are growing.

The 2.9 per cent first-quarter sales figure puts Unilever behind its rivals Nestle, which showed 6.7 per cent first-quarter underlying sales growth, Danone at 9.0 percent and Reckitt Benckiser Plc at 6.0 per cent.

Unilever's valuation gap with its rivals has closed with its recovery. Its Dutch NV shares currently trade on 14.1 times 2007 consensus earnings compared with Nestle on 14.9, Danone -- boosted by takeover talk -- at 18.9, and Reckitt on 17.8.