Unilever expects sales growth to recover after strike

London

UNILEVER said it will make up some lost ground in the second half after a strike in Brazil held back sales growth in the early part of the year.

The more upbeat outlook comes after the maker of Ben & Jerry's ice cream and Dove soap on Thursday reported sales growth below analysts' expectations after truckers walked off the job earlier this year in the Latin American country to protest against rising fuel prices.

The London- and Rotterdam-based company was unable to lift prices enough to make up for the setback. The shares were down 0.4 per cent early on Thursday in Amsterdam.

As chief executive officer Paul Polman prepares to leave after nearly a decade, he's completing work on a plan to consolidate the company's headquarters in the Netherlands, despite dissent from some investors.

Unilever has a "very strong bench internally", the CEO said in an interview with Bloomberg TV, "and obviously, you benchmark against external candidates" as the search for a successor proceeds.

Unilever said underlying sales grew 1.9 per cent in the second quarter, compared with a 2.3 company-compiled analyst estimate. Sales growth was reduced by 0.6 percentage point in the first half because of the strike in Brazil. Latin America accounts for 15 per cent of Unilever's sales.

The company expects the measure to bounce back in the second half with growth of about 4.5 per cent to 5 per cent, chief financial officer Graeme Pitkethly said by phone.

"We're pretty happy, and the margin performance is very strong indeed," Mr Pitkethly said. "We're already making good progress toward getting a little more pricing in the second half" as the company rolls out new products.

Unilever had previously given a muted outlook for sales growth in the first half, saying it would be below the range of 3 per cent to 5 per cent it expects to achieve in the full year. Underlying sales exclude acquisitions, divestments and currency fluctuations.

The company said it expects to implement the unification of its headquarters in the fourth quarter. BLOOMBERG