By Michael Carolan
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- Unilever PLC (UN, UL) beat expectations with its third-quarter sales performance Thursday as volumes grew strongly for the second quarter running, and margins edged higher.
The maker of Ben & Jerry's ice cream and household products such as Dove, Lynx and Cif posted a 2% drop in sales to EUR10.2 billion for its third quarter, after a 1% rise in the previous quarter. Net profit dropped to EUR1.05 billion from EUR1.64 billion a year ago, when a number of disposals boosted the bottom line.
Stripping out acquisitions, disposals and currency movements, second-quarter sales grew 3.4%, after a 4.1% rise in the previous quarter and ahead of analysts' estimates of 2.7% growth. This measure of sales is closely watched because it's a directly comparable measure of how the company's products are selling.
The sales rise was wholly a result of a 3.6% rise in volumes rather than any price rises, after a 2% volume rise in the previous three months. New Chief Executive Paul Polman identified volume growth as his key focus for the group when he joined earlier this year. The company said all regions and categories showed positive volumes.
The volume figure compares favorably with rival Procter & Gamble Co (PG), which saw its volumes fall 3% in its latest quarter.
"We are on track towards our objective of restoring volume growth while protecting margins and cash flow for the year as a whole," said Chief Executive Paul Polman in a statement.
Operating margin was up 0.7 percentage points in the period. The company said earlier this year its margins would return to growth in the second half as commodity prices fall.
Polman said there had been good progress across all regions and the majority of countries and categories, with market shares responding to strong innovations, greater value and increased marketing support.
"Market conditions remain challenging and in this environment we will continue to increase investment behind our brands and build long-term capabilities in research and development," he said.
The company's shares have grown more than 15% in the year to date, as CEO Polman's new strategy has borne quick results. They closed Wednesday at 1829 pence.
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; michael.carolan@dowjones.com