July 26 (Bloomberg) -- Unilever, the world’s second-biggest consumer-goods maker, rose to the highest since 1999 after reporting second-quarter sales that beat analysts’ estimates as growth of personal-care products and in Asia helped offset declines in Europe.
The shares advanced as much as 4.8 percent. Underlying revenue rose 5.8 percent in the second quarter, the maker of Flora spreads said today in a statement. That topped the average estimate of 32 analysts surveyed by the company for a 4.8 percent increase.
To counter weakening developed markets, London- and Rotterdam-based Unilever has introduced products such as Magnum ice cream bars and Clear shampoo in faster-growing emerging countries including China and Pakistan. That’s helped them outrun rivals including Danone and Procter & Gamble Co., which both cut their full-year profit forecasts last month as they grappled with recession-wracked economies across developed markets.
“We had hoped that Unilever could sail smoothly though 2012 despite the macro volatility, unlike some of its major peers, especially Danone and P&G, and this seems to have been confirmed,” Andrew Wood, an analyst at Sanford C. Bernstein, said in a note today.
Unilever rose to as high as 27.75 euros in Amsterdam trading, the highest intraday price since Jan. 19, 1999. Personal-care sales rose 10 percent in the quarter, fueled by moving brands like Clear and Tresemme hair products into new markets. Home care revenue increased 9.6 percent, helped by higher sales of Sunlight hand-dishwashing products.
Higher prices for Unilever’s spreads and shampoos mostly fueled the sales uplift. Underlying volume growth was 2.2 percent, slower than the 2.4 percent forecast by analysts, as shipments of food, including soups and spreads, declined 2.4 percent, while ice cream and tea volumes fell 1.4 percent in the quarter.
Polman wants to double sales by expanding in emerging markets, where underlying sales rose 11 percent in the quarter as Europe struggles. European underlying sales declined 2.2 percent in the period, hurt by declining consumer confidence and record rainfall in Northern Europe, which reduced sales of ice cream.
“We were expecting Europe to be weak, but this is a little worse than we were expecting,” Warren Ackerman, an analyst at Societe Generale, said today.
While allowing that economic conditions across Europe “are deteriorating,” Chief Financial Officer Jean-Marc Huet said Southern European countries such as Greece and Italy comprise just under 4 percent of total sales. France and the U.K. “performed very well,” he said on a conference call with reporters today.
In contrast, Unilever’s Indian unit, which makes up about 5 percent of revenue, doubled net income and boosted sales 14 percent in its first quarter, sending its shares soaring on July 24 to the highest level since Bloomberg started compiling data in 1991. Sales were also “strong” in Turkey, Indonesia and Vietnam.
Underlying sales growth excludes the effect of acquisitions, disposals and currency fluctuations. Unilever’s core operating margin, a measure of profitability, was unchanged. Analysts had expected it to narrow by 20 basis points.
“Looking forward, we expect continued volatility, especially in commodity costs and economic conditions,” Chief Executive Officer Paul Polman said in the statement. The company remains “on track to deliver a modest improvement in core operating margin” this year.
Huet said today there was “no change” to Unilever’s April outlook for commodity cost inflation for the full year to be “slightly higher” than a mid-single-digit increase.
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