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Poor spring weather dents Unilever’s ice cream sales in Europe

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Poor spring weather dents Unilever’s ice cream sales in Europe

April 26
10:30 2013

Unilever’s ice cream sales in Europe have been hit by the poor Spring weather, it has emerged as the consumer goods giant announced its first quarter (Q1) results yesterday (April 25).

The group missed C ity analysts’ expectations in Q1 on weak volumes (up by 2.2% compared with expectations of +3.2%) and weak trading in Europe, according to Investec’s Martin Deboo. Organic sales were down by 3.1%. Part of the problem is that Unilever’s performance in Europe in Q1 was against comparatively strong trading for the same period last year.

Unilever reported increased turnover of 0.2% for Q1 to €12.2bn, which included a negative currency impact of 3.5%.

“The Q1 was against a tough prior year volume comparison, driven by an extra trading day, an earlier Easter and a strong start to the ice cream season,” said Deboo.

Extremely cold weather

In its trading statement, Unilever reported that overall ice cream sales were up slightly, despite a high prior year comparator and the extremely cold weather conditions that prevailed in much of Europe.

Magnum, now a €1bn brand, continued to make good progress supported by the roll-out of Magnum Gold to the US, the roll-out of the ‘5 kisses’ limited editions and the new pint format in Europe, and the launch of Magnum Pink and Magnum Black in Mexico and Turkey. C ornetto was relaunched in Europe, Mexico and South East Asia and Unilever introduced a new C ornetto mini variant in Europe, while Fruttare was launched in the US.

In teas, it reported that its Brooke Bond range of brands performed well in India and PG Tips grew in the UK in a strongly promotional market.

In foods, Unilever’s savoury and dressings business continued to grow in Q1, underpinned by innovations such as Knorr jelly bouillon variants, now in more than 35 markets, and baking bags, now in more than 40 markets. In dressings, Hellmann’s growth was driven by market development activities encouraging new uses of mayonnaise and the launch in Europe of a superior squeeze pack.

Spreads activity declined

Its spreads activity declined, however, driven by lower volumes in a tough promotional environment.

Unilever stated: “Market dynamics are not currently in our favour with consumers switching to alternatives. Despite the success of recent innovations such as Flora Buttery and liquid margarines, which have now been launched in Turkey under the Becel brand, we have more to do to communicate the improved taste and health benefits of our margarines to consumers.”

Commenting on the results, Unilever ceo Paul Polman said: “We maintained good growth momentum in the first quarter, despite challenging economies and the tough competitive environment. This performance is further evidence that Unilever is becoming fit to win and capable of delivering consistent growth ahead of our markets. Our strategy is working.”

He added that growth in developed markets remained sluggish. “Europe faced a particularly strong prior year comparator and whilst the overall performance was solid, the reported growth was held back by the slow start to the ice cream season and weakness in spreads,” he said.

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