Consumer goods giant Unilever reported a 9 per cent rise in first-quarter earnings today but said underlying sales grew a less-than-expected 2.9 per cent in the first three months.
Unilever stressed its recovery programme was still on track, but its closely watched underlying sales line was below analysts' forecasts of 3.3 to 3.8 per cent.
The Anglo-Dutch group said its operating margin was 0.2 percentage points lower at 14.8 per cent as it spent heavily on its sales-led recovery to post its sixth consecutive quarter of underlying sales growth since a shock profits warning in 2004.
Analysts described the underlying sales as unimpressive and the margin picture as disappointing as many had looked for at least stable margins.
Unilever shares were off 1.7 per cent at 566 pence.
The world's number three food group and one of the globe's biggest soap and deodorant makers has been cutting prices and boosting marketing to drive a sales-led recovery since 2004. Its medium-term aim is to increase sales at the rate of 2 to 4 per cent rate at which the categories it operates in grow.
The group said it benefited from favourable currency movements, while its cost savings helped to offset cost increases.
Although overall world consumer demand remained robust, western Europe remained sluggish, it said.