Demand sees Unilever outshine rival

Shares in the maker of Dove soap and Cif cleaners climbed yesterday 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 per cent in the third quarter, ahead of a company-compiled consensus of 5 per cent and a second-quarter rise of 5.8 per cent. Emerging markets, which make up 55 per cent of sales, grew 12.1 per cent.

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 US peers Danone and Procter & Gamble.

Unilever, which makes Knorr soups, Lipton tea and Ragu sauces and has a factory in Leeds, 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.

Mr Huet said volatility in commodities prices was challenging, and predicted the increase in their cost would be higher than forecast.

Selling consumer goods in more developed markets remained difficult, he added.

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.