* Unilever Q3 underlying sales up 7.8 pct, f'cast 6.3 pct
* Warns of flat to slightly lower 2011 profit margins
* Beiersdorf sees nine-month consumer sales up 0.9 pct
* Says nine-month EBIT profits fall to 492 mln euros
* Unilever shares off 1.8 pct, Beiersdorf up 1 pct
By David Jones and Victoria Bryan
LONDON/FRANKFURT, Nov 3 Two of Europe's biggest
consumer products groups showed tough times were catching up on
them on Thursday with Unilever warning of flat to lower
profit margins for 2011 while Beiersdorf saw only
marginal sales growth.
Both were reporting third-quarter results with Anglo-Dutch
Unilever cautioning about rising commodity costs and
poor consumer confidence, while Hamburg-based Beiersdorf saw a
fall in profits as it invested heavily behind its Nivea brand.
"This has been an unprecedented year of nature disasters,
geo-political events, depressed consumer confidence while we
have continued to invest behind our brands," said Unilever
Finance Director Jean-Marc Huet in a conference call.
He added events such as flooding in Thailand, unrest in the
Arab world and tough western Europe markets had hit the group as
it struggled to offset the sharp rise in the cost of key
commodities such as vegetable and crude oil.
The group warned these input costs had risen 15 percent, or
2.5 billion euros ($3.45 billion), this year and commodity
prices were still volatile, and so expects underlying operating
margins in 2011 to be flat to slightly lower compared to
Unilever's previous forecast for a small rise.
Beiersdorf's Chief Executive Thomas Quaas said he was not
giving an outlook for 2012 due to volatile markets as the group
looks to recovery by investing behind its core skin care brand
Nivea and push further into emerging markets.
Group results met consensus forecasts as it held its outlook
for 2011, but analysts were concerned about the effect of
slowing global growth and the performance of Nivea.
Although Unilever beat forecasts for quarterly sales growth,
the warning on margins pushed its shares down 1.8 percent to
2,035 pence by 1030 GMT, while Beiersdorf after early losses
recovered to trade up 1 percent at 40.7 euros.
With an array of top brands like Lipton, Knorr, Dove and
Lux, Unilever pushed prices up nearly 6 percent while it gained
from its higher proportion of sales, some 53 percent, in
fast-growing emerging markets than its key rivals.
Quarterly growth of 7.8 percent at the world's third biggest
consumer goods group beat a company-compiled consensus of 6.3
percent and came after the first two quarters of 2011 showed
growth of 4.3 percent and then 7.1 percent.
This third-quarter growth beat European rivals Nestle
at 6.8 percent and Danone 5.9 percent, and
U.S. peers Procter & Gamble at 4 percent and Colgate
Palmolive at 5 percent.
"Trading conditions in developed markets remain tough as
flagged by Nestle. The margin pressure from raw material
inflation should now be at its peak and should ease into 2012 if
current spot prices persist," said analyst Robert Dickinson at
Quarterly sales in western Europe declined 0.5 percent
depressed by tough trading in the southern euro zone, whereas
emerging market showed growth of 13.1 percent. Personal care
product like Axe and Sunsilk grew fastest at 11.3 percent.
Beiersdorf, which is cutting back on unprofitable lines as
it attempts to regain market share, said nine-month sales in its
core consumer division rose 0.9 percent on an underlying basis
to 3.57 billion euros. Adding its tesa adhesives business
overall nine month sales rose 2.1 percent to 4.28 billion euros.
Last month, the group hired 48-year old Stefan Heidenreich
from Swiss group Hero to take over as CEO in April in a sign the
controlling Herz family is impatient with the speed of the
recovery at the group which, in addition to Nivea, also makes La
Prairie anti-ageing cream and Labello lip balm.
The group cautioned that 2011 sales growth will be affected
by the streamlining of its product range, but confirmed its
targets for group sales to rise slightly this year and for an
adjusted EBIT profit margin of between 10 and 11 percent.
"In view of cooling global economic growth, a very cyclical
tesa division and uncertainty surrounding the performance of the
core brand Nivea, we stick to our sell rating," said analyst
Thomas Maul at DZ Bank.
Group comparable earnings before interest and tax for the
nine months to end-September slipped 11 percent to 492 million
euros, in line with analyst forecasts.