Unilever shares slim on Atkins diet

http://edition.cnn.com/2004/BUSINES...er.slump.reut/#

LONDON, England (Reuters) -- Shares in Unilever fell nearly seven percent after the Anglo-Dutch consumer goods giant said it was unhappy with a slim 1.3 percent rise in sales of its 400 top brands, prompting management changes and action on new products.

Unilever, whose brands include Knorr and Hellmann's in food and personal care top-sellers Dove, Lux and Sunsilk, said Wednesday prestige perfumes like Calvin Klein and Slimfast diet meals continued to suffer in the first quarter.

Analysts said the top brands growth was disappointing. Some had expected sales as high as 3.5 percent after 2003's 2.5 percent. Unilever's big European food group rivals had showed underlying sales growth of over five percent.

"We are not happy with the short-term sales performance and action is being taken to address this," said Unilever Chairman Niall FitzGerald in a results statement.

He added that in the first three months of 2004 Unilever had seen a continuation of the tough trading seen for much of 2003, and warned it saw stiffer competition in some key markets.

A Unilever spokesman said actions being taken included management changes at its prestige perfumes division, more low-carbohydrate meals at Slimfast to counter the popularity of the Atkins diet, while it was countering tough price competition in France, Germany and the Netherlands with keener pricing.

Unilever shares were the biggest blue-chip loser in Europe, losing 6.6 percent to 524 pence by 1230 GMT in London, and off 6.9 percent at 54.75 euros in Amsterdam.

"They're obviously very disappointing top-line numbers. Our concern is they're going to have to spend more money, invest in brand development, and that's not a quick process and it's not a cheap process," said Nigel Cobby, managing director of European equities at JP Morgan.

Analysts pointed out the 1.3 percent top brands sales rise all came from volume increases and not price rises just showing how tough competition and pricing was in the market place.

"Things are getting tougher and Unilever is digging is to defend its position but we still see double-digit earnings growth for this year," said analyst David Lang at Investec.

Unilever investor relations head Howard Green said he was not expecting a big step-up in SlimFast sales in the first half of 2004, after it lost 15 percentage points of market share in 2003 in the U.S. diet foods market, but it had launched five new low-carb products which now accounted for a fifth of SlimFast sales.

The world's third-largest food group after Nestle and Kraft reported a seven percent rise in first-quarter net profit before exceptional items and amortisation (BEIA) of 851 million euros in line with forecasts of 687-926 million, while earnings per share (BEIA) rose eight percent, all at constant currency.

For 2004, Unilever reiterated it expects improved growth of its top brands above 2003's 2.5 percent, operating margins over 16 percent and low double-digit percentage earnings growth.

In February, Unilever abandoned its five-year target of five to six percent sales growth from its 400 leading brands by 2004 to focus more on improving shareholder value through a greater focus on share buybacks and dividend rises.

Unilever has battled throughout 2003 to reverse stagnating sales and gave two warning of lower sales growth during the year due to low-growth from frozen foods, Slimfast and prestige. Unilever first-quarter sales lag its two big European food rivals with Swiss-based world number one Nestle earlier this month reporting underlying sales growth of 5.1 percent and France's Danone sales up 5.7 percent.

Unilever stock has underperformed the FTSE 100 index by just over 20 percent over the last year and the DJ Stoxx Food & Beverages index by just under 20 percent after the two sales warnings during 2003.



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This is a bit off topic but doesn't it occur to anyone that there is something very wrong about this



They are unhappy because their sales did not grow. Every single industry out there is trying to get their sales to grow. How does that translate ? Into an ever increasing whirlwind of "buy buy buy" and "consume consume consume". I rarely see anyone question that. Isn't that a large part of the obesity crisis. People are urged and encouraged to consume more and more and more. Products are produced to entice people to do this, clever and persuasive marketing campaigns are designed in order to increase consomation.

Just how much can the environment sustain. How much food can people eat.

Seems to me there was a time when small farmers where happy to sell what they produced and make a decent living. They weren't fired because they failed to increase sales year after year. Now farmers are now taken over by big industries and must produce more and more and sell more and more. If you don't consume you aren't a good citizen. Doesn't matter who gets hurt in the process, society, the environment, people.

It's out of control it seems to me. Yet no one seems to say much about it.

Well, part of it is that the market grows daily -- the number of people. If a company wants to grow, it has to enlarge with the size of the market it serves.

Ultimately you have no choice about consuming. We all do. It's not a bad thing, although rampant consumerism is bad for us as individuals when we aren't saving or are going deep into debt just to have a nice fancy whatsis.

Economics is about using limited resources to fill unlimited needs. My job depends on people buying things. All jobs depend on people buying things. That doesn't mean we make the world for corporations, though. It's just reality that no matter what you do for a living, if you get paid to do it, someone is buying something to do with you down the line. Even a social worker is dependent on a chain of misfortune. That's his market (unfortunately, it's a growth market).

You can get into a whole debate about population control, but the people that read it on this board are mostly from countries with creeping population growth...

Somehow I can't feel sorry for Unilever. They could have had huge UK sales if they had brought out their low-carb Slim-Fast over here, especially if they had undercut Atkins' prices by even a little bit, or used their already massive distribution chain to their advantage. It would have flown off the shelves.

But they chose to bad-mouth LC diets and try to ride out what they saw as a "fad." LC Slim-Fast was brought out in the US as they realized SF was going to go down the toilet if it didn't change. Over here they still apparently think they can use bad press and government pressure to keep people from trying LC.

Hah.

Got to agree with that, Emily. Even here, their low carb stuff came with what feels like a grudging attitude. The commercials are thrown together and don't really give you the impression that they want to be doing it.

Of course, I associate them with the massively stupid concept of drinking two meals a day from a little can. They can't really remove that image from themselves, and the processed nature of what they do is counter to low carb anyway.

YES! I never got that concept. I can drink a tiny amount of bad tasting liquid from a can or I could have a meal with the same number of calories.... hmmmm.... such a hard decision!

They probably still think it's just a fad and and are annoyed by having to spend money and ressources on something that's going to go away soon