Unilever sales rise on higher prices

Image source, SAUL LOEB/Getty
Image caption, Ben & Jerry's is part of the Unilever portfolio of brands

Soft growth in North America, Europe and Brazil hurt sales at Unilever and Nestle, two of the world's major consumer companies.

But both firms said they expected to meet sales goals stated previously.

Nestle reported organic growth of 2.3% in the first three months of the year, boosted by Asia and Africa.

At Unilever, owner of Dove, Ben & Jerry's and other household brands, underlying sales increased 2.9%, lifted by higher prices.

Unilever's total sales, which include the effects of mergers, sales and currency, were 13.3bn euros (£11.1bn), up 6% year-on-year in part on exchange rate factors.

The Anglo-Dutch firm, which rebuffed a takeover by US rival Kraft Heinz in February, said the quarterly growth vindicated its long-term strategy.

Chief executive Paul Polman said: "The first quarter shows growth once more ahead of our markets."

"This reflects our continued investment in both innovations and brand support and reconfirms the strength of our long-term sustainable compounding growth model."

After spurning Kraft, Unilever announced a plan to cut costs and sell or spin off its struggling spreads business, which includes Flora and Stork. Excluding that unit, underlying sales were 3.4%, Unilever said.

Media caption, Why margarine is toast

The consumer goods giant also highlighted appetite for products such as air purification brand Blue Air in China and new products, such as chocolate-topped pints of Ben & Jerry's. The firm also raised its prices, a move that led to a row with supermarket Tesco in the UK last year.

Analysts said Thursday's report pointed to a positive future for Unilever. The firm said it expects to deliver sales growth of 3% to 5% for the year.

"Unilever have been pushed by the Kraft Heinz approach into a more radical pace and scale of change than they had originally chosen for themselves," Steve Clayton, fund manager of the HL Select equity funds, wrote in an analyst note.

"We think the group has enormous potential to steadily boost returns whilst compounding sales over time."

Nestle, known for its KitKat chocolate bars, Purina pet food and Nescafe coffee, reported total sales of 21bn Swiss francs (£16.44bn), growth of less than 1% from the first quarter of 2016.

That number was hurt by the impact of currency fluctuation and sale of an ice cream business.

Nestle said it still expects to meet its 2% to 4% organic sales growth target for the year. The Swiss company highlighted the strength of its skin care products and of Nespresso, which is gaining traction in North America.

The firm also said Nescafe pricing was up in Europe, the Middle East and North Africa.

"The leap year comparison and other seasonal effects made the start of this year particularly challenging," said Nestle chief executive Mark Schneider. "We were encouraged by the growth in Asia and the resilience of consumer spending in Europe."

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