* Underlying sales up 5.9 pct, vs 5 pct forecast
* Strong demand for cleaning, hair and skin products in
* On track for modest improvement in core operating margin
* Shares up 3.1 percent
(Adds more CFO comments, analyst comments)
By Sarah Young
LONDON, Oct 25 Unilever's
quarterly sales growth beat forecasts as demand for cleaning and
personal care products in China helped the consumer goods group
outshine larger rival Nestle.
Shares in the maker of Dove soap and Cif cleaners climbed on
Thursday to equal their all-time high as the Anglo-Dutch group
shrugged off the worries about slowing growth in China that have
rattled a procession of consumer goods companies recently.
"It is probably our best quarter out of the last three
quarters so it is really very, very good growth throughout our
categories," finance chief Jean-Marc Huet said of the group's
Chinese business, adding Russia was also growing strongly.
Unilever posted underlying sales growth of 5.9 percent in
the third quarter, ahead of a company-compiled consensus of 5
percent and a second-quarter rise of 5.8 percent. Emerging
markets, which make up 55 percent of sales, grew 12.1 percent.
The group's performance in China contrasted with the
experience of Switzerland's Nestle.
Nestle, the world's biggest food group, said earlier in
October that China was not meeting its potential, as it reported
growth slowed more than expected in the first nine months of the
year due to cooling emerging market demand.
Both Nestle and Unilever have benefited from their emerging
markets exposure in the recent past, contrasting with a more
negative trend at French and U.S. peers Danone and
Procter & Gamble. The latter is due to report its results
later on Thursday.
Unilever's London shares were up 3.1 percent at 2,335 pence
by 0925 GMT, outperforming Britain's bluechip index
which was up 0.4 percent. They earlier touched 2,353 pence,
equalling an all-time high hit last week.
Unilever, which also makes Knorr soups, Lipton tea and Ragu
sauces, said it was on course to meet its target of posting a
modest improvement in core operating margin for 2012, but
cautioned inflation in the cost of ingredients was high.
Huet said volatility in commodities prices was challenging,
and predicted the increase in their cost would be higher than
the "above mid-single digits" percentage forecast in July,
although below "double digits".
Investors will be keeping a close eye on Unilever's margins
as, despite grinding out consistent growth, the company's
profitability continues to lag that of Nestle.
"Epic growth out of homecare suggests to me that they're
winning market share from the troubled P&G," Investec analyst
Martin Deboo said, noting that homecare is Unilever's lowest
"If you're looking for the clouds in the silver lining, I
think they've slightly tweaked up their commodity cost inflation
guidance which pressures the margin."
Selling consumer goods in more developed markets remained
difficult, said Huet, with the company noting that markets in
Europe were "intensely competitive". While business in Greece
was still difficult, he said the Spanish market had stabilised.
($1 = 0.7711 euros)
(Reporting by Sarah Young; Editing by David Cowell and Mark