After a disappointing half yearly results for the Anglo-Dutch consumer goods giant, the company said that its European results had been particularly hard hit by difficult conditions in western Europe, namely in Germany, France and the Netherlands. Overall company sales in the region dropped by 1.8 per cent and turnover fell by 5 per cent. Group operating profit before exceptionals dropped 2 per cent to €1.613 billion, missing targets by nearly €60 million.
The company said that a cool start to the summer had meant that its food divisions had been particularly hard hit, with sales of ice cream and RTD iced tea well down on last year's figures, a trend that was mirrored by the company's home and personal care divisions.
Although the company does not differentiate between western and eastern Europe in its financial results, it did emphasise that during the last six months some of its strongest performing food brands have been found in central and eastern Europe. The company said that in Russia the company's Lipton tea brand had done particularly well during the first quarter, with sales of RTD tea and tea leaf well up on last year.
Unilever also reported strong growth in its dressings segment in Eastern Europe. In Russia the company said its Calve brand had shown continuing signs of strong growth, while in Poland a new range of wet sauces launched in the first quarter was reported to have been well received.
Following a disappointing financial year in 2003, Unilever has said that it will no longer pursue its strategy that aims to grow its leading brands by a steady five to six per cent. Instead the company said that it would no longer continue to concentrate on this mainstay of its business. Instead it is now concentrating on generating more value for its shareholders by concentrating its focus on share buy-backs and cash generation.
Currently Unilever's operations in central and eastern Europe encompass Poland and the Baltic States, Russia, Ukraine, Czech Republic and Slovakia, Hungry, Croatia, Slovenia, Romania, Bulgaria, Yugoslavia, Bosnia, Macedonia, Moldovia and Serbia. The company says that in Europe as a whole it is spreads division, alongside its operations in the former eastern block, that show the most potential for the future.