* Q1 underlying sales growth 4.9 pct vs f'cast 5.6 pct
* Sales fall 3.1 pct in Europe
* Hit by economic backdrop, cold weather
* Outperforms in emerging markets
* Shares fall 2.3 pct
By Rosalba O'Brien
LONDON, April 25 Anglo-Dutch consumer goods
company Unilever said its breadth of businesses and
markets will enable it to ride out the tough environment in
Europe after reporting weaker than expected first-quarter growth
The maker of products from detergent and soap to margarine
and ice cream posted underlying sales growth of 4.9 percent for
the three months to March 31, against a consensus forecast of
5.6 percent in a company-supplied poll of analysts.
It was a tale of two markets, with sparkling outperformance
in emerging markets dragged down by weakness in the United
States and Europe.
The company's performance in emerging markets was in
contrast to some of its consumer goods rivals, who have run into
faltering demand in Latin America and Asia.
In Europe, however, sales fell 3.1 percent as consumer
confidence was eroded by the economic backdrop, the company
said. Performance was also affected by an unusually cold spring
that hit sales of its ice-creams, which include Ben & Jerry's
Trading in crisis-ridden southern Europe had been
particularly difficult, but northern Europe was not much easier,
Chief Financial Officer Jean-Marc Huet told Reuters.
"We're improving and strengthening the competitiveness of
our business but we have realistic expectations and just want
stable performance from that part of our portfolio," he said.
Unilever's food operation slipped 0.5 percent, held back by
its declining spreads business. Sales of products such as Flora
margarine were driven lower by a tough promotional environment
and consumers' increasing preference for butter.
"We think spreads must be reaching the point now where it is
on notice that if it doesn't improve it will be considered for
disposal," Panmure Gordon analysts said.
Unilever - born 83 years ago out of the merger of
Dutch group Margarine Unie and Britain's Lever Brothers - has
outpaced rivals in recent quarters thanks to its focus on
high-growth regions such as Latin America and Asia.
It said on Thursday that growth in emerging markets - which
now provides about 57 percent of turnover - was a better than
expected 10.4 percent, led by sales of soaps, shampoos and
deodorants such as Lifebuoy, Tresemme and Axe.
Some of the company's multinational rivals, meanwhile, have
fared less well amid difficult conditions in the first quarter.
Drinks maker Diageo last week flagged signs of
slowing growth in markets like Brazil.
On Wednesday Procter & Gamble, the world's largest
household products maker, downgraded its fourth-quarter profit
outlook, citing factors including volatility in Venezuela,
Argentina, Egypt, Syria and South Korea.
But Huet said Unilever had built-in resilience, supported by
its broad range of markets, with no individual country making up
more than 8 percent of its total.
"What I do think is that there is a premium to having a
portfolio with many emerging markets because they will not all
perform at the same time," he said.
Huet pointed to tough comparatives compared to last year and
a 10.7 percent rise in its quarterly dividend as a sign of the
company's continued confidence in its momentum.
"Yes, macro environments are difficult, yes, competitive
intensity is here to stay and yes there's the number game
But Unilever regarded 4.9 percent growth as showing that it
maintained strong underlying momentum, he said.
The company's shares, which have been trading at record
highs since it beat growth expectations in its full-year results
in January, fell 1.9 percent by 1044 GMT on Thursday.
They trade at about 19.2 times estimated earnings for the
next 12 months, at a premium to Nestle at about 18.5
but a discount to L'Oreal at 25.0.