Unilever sees its Euro sales melt

The group, which also owns the household brands Domestos, Dove and Knorr, said sales volumes in Europe contracted 2.1 per cent in the first quarter, with trading in the southern part of the region particularly difficult.

Better performances in Asia and the Americas meant overall volumes rose 2.2 per cent as the company reported turnover of £10.4bn for the three months, an increase of 4.9 per cent excluding currency movements.

However, this was below City expectations for growth of 5.6 per cent, causing shares to fall by almost 3 per cent yesterday. Rival Procter & Gamble disappointed Wall Street investors on Wednesday by missing expectations in its own first quarter update.

Panmure Gordon stockbrokers analyst Graham Jones said Unilever’s spreads division, which includes Flora, was a “real area of weakness” and that the company needed to start considering its options in this category.

He added: “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.”

Emerging markets posted double digit growth for the eight successive quarter and now accounts for 57 per cent of all turnover, at a time when Unilever chief executive Paul Polman said developed markets remained sluggish.

Unilever has a research and development centre and deodorants manufacturing site in Leeds employing 600 people.