Feb 5, 2009
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Unilever reports big profit gain, uncertain outlook

Feb 5, 2009

THE HAGUE, Feb 5, 2009 (AFP) - Anglo-Dutch food and cosmetics giant Unilever on Thursday reported a 51-percent rise in net earnings in the fourth quarter of 2008 but cancelled 2010 growth targets due to uncertainty.

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"Given the current economic uncertainty I believe it would be inappropriate at this stage to provide an outlook specifically for 2009 or to reaffirm the 2010 targets," chief executive officer Paul Polman said in a statement.

The target had been to achieve an operating margin of more than 15 percent in 2010 -- compared to 17.7 percent in 2008 and 13.1 percent in 2007.

The company, which includes such brand names as Lipton tea, Dove soap and Magnum ice cream, said its net profit for the fourth quarter of 2008 amounted to 1.2 billion euros.

Net earnings for the full year rose by 28 percent to 5.3 billion euros.

The performance was supported partly by the sale of assets worth 1.6 billion euros, including the Boursin cheese brand and the Bertolli olive oil and vinegar business.

As commodity costs increased by 2.7 billion euros, sales volumes dropped but values grew by 7.3 percent in the fourth quarter and 7.4 percent for the full year, partly in response to price increases.

"We achieved top line growth ahead of our target range, and faced with unprecedented input cost pressures, (we) protected profit by early pricing action and savings programmes," said Polman.

Cost pressures were expected to ease beyond the first quarter of 2009, he added.

Turnover for the quarter rose three percent to 10.2 billion euros, and for the year by one percent to 40.5 billion euros.

Earnings per share grew by 61 percent to 0.41 euros in the fourth quarter, reaching 1.79 euros for the year overall. A total of 3.6 billion euros in cash was paid to shareholders in 2008.

Unilever said it had managed to save 1.1 billion euros as a result of "supply chain and organisational efficiencies."

Expressing confidence in the strength of the business, Polman said the focus in future would be on volume growth.

"At the same time we will protect cash and margins, driving our savings programmes even harder. By doing this, we expect to emerge from the current conditions stronger and more competitive than ever," he said.

Unilver shares were showing a loss of 4.4 percent at 16.42 euros at mid-morning on an overall Amsterdam exchange that was down 1.9 percent.

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