Unilever, the world’s second-biggest consumer-products maker, fell the most in a month in Amsterdam trading after Investec Securities removed its “buy” recommendation on the shares for the first time in 17 years.
The shares dropped as much as 1.6 percent, the steepest intraday decline since Feb 24, and traded down 1.4 percent at 25.61 euros at 11 a.m.
Investec analyst Martin Deboo cut his recommendation to “hold” today on concern about higher ingredients costs and increased competition from Procter & Gamble Co. Deboo said he expects operating profit margins to be little changed in 2012, compared with his previous estimate of increased profitability.
Costs for commodities such as crude oil, palm oil, tea and sugar will increase as much as 10 percent in 2012, higher than the company’s forecast of about 5 percent, Deboo wrote in a report. A $10 billion cost-cutting program announced last month by P&G is a “direct threat” to Unilever, as it may lead to price wars in emerging markets such as India, the analyst said.
“This reflects less a fundamental change of view, but more a hard-nosed response to the threats of re-inflating commodities and change afoot at P&G,” Deboo said in the note. “We anticipate another year of slow grind in 2012. And grindstones are never very comfortable places to sit.”