Unilever sales top estimates

Unilever said it may sell its underperforming Ragu pasta sauce and SlimFast brands as it reported higher-than-expected first-quarter sales yesterday, led by strong sales in Northern Europe of personal and household cleaning products.

The Anglo-Dutch maker of Ben & Jerry’s ice cream, Dove soap and Lipton tea announced a strategic review of its North American pasta sauce business, which includes the market-leading Ragu brand, and the troubled SlimFast brand whose sales have tumbled in its biggest market, the US.

Unilever bought SlimFast for about $2.4 billion in 2000, when it was a leader in a burgeoning weight-loss market that has since struggled amid a lack of innovation and an economic downturn that also led Nestle to sell most of its Jennie Craig business. “It may lead to a disposal but it doesn’t necessarily have to,” chief financial officer Jean Marc Huet said. “We’re looking at all options.”

The review follows the sale of Skippy peanut butter and Wishbone salad dressings and marks the end of the reshaping of the US portfolio, Mr Huet said. Unilever has said it wants to focus more on higher-margin personal care products in higher-growth markets of Asia and Latin America.

In the first quarter, underlying sales, which exclude the impact of foreign exchange and acquisitions and disposals, rose 3.6 per cent. That was down from growth of 4.1 per cent in the fourth quarter but analysts had on average forecast growth of 3.3 per cent. Sales in emerging markets rose 6.6 per cent, slower than the 8.4 per cent growth in the fourth quarter but still greater than the overall market, which Mr Huet said rose about 5 per cent.

Unilever’s shares were down 1.5 per cent in London at £25.95, having dropped 6.9 per cent over the last 12 months. Its London and Amsterdam shares each trade at about 19 times forward earnings, in line with peers such as Nestle, Danone and Reckitt Benckiser Group. – (Reuters)