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AMSTERDAM — Unilever NV, the maker of consumer products such as Dove soaps and Ben & Jerry's ice cream, on Thursday reported a 45 percent fall in net profit for the first quarter compared to a year ago, when earnings were increased by the sale of its Boursin cheese operations.
The company also saw declining sales in recession-hit Europe, with falling profit margins there.
Unilever said net profit was euro731 million ($973 million), down from euro1.34 billion. Last year's figures were boosted by euro517 million in one-time gains, mostly from the Boursin disposal. Net profit was also hit by higher restructuring and pension costs.
Sales fell 1 percent to euro9.51 billion.
Unilever said in its report Thursday that "underlying" sales — a nonstandard measure that strips out the impact of currency changes and operations that have been sold — would have risen 4.8 percent, due entirely to price increases.
The results were "solid given today's trading environment" said Chief Executive Officer Paul Polman, who took the top job at the company in January.
He said the company planned to restore growth in sales volumes by advertising more, but wouldn't sacrifice margins.
Shares rose 7.8 percent to euro16.735 in Amsterdam and are now down just 3 percent since January — though they are down more than 20 percent from a year ago.
Unilever's "underlying" sales increase was composed of a 6.8 percent hike in prices of the company's products, offset by a 1.8 percent fall in volume.
Unilever said underlying sales increased by 3.8 percent in the U.S. and 9.5 percent in developing countries, but fell by 2.1 in Europe, the company's largest market.
Europe "has been more affected by the global economic downturn than the rest of the world," the company said. It added that some customers were turning to cheaper products rather than Unilever's name brands.
Analysts for SNS Securities said the earnings were only "in line with expectations" and repeated a "reduce" recommendation on shares, with a one-year target of euro15.
"Emerging markets helped to offset a particularly weak performance in Western Europe," the bank said in a note on the earnings.
It said that the fall in sales in Europe was accompanied by worsening margins, a worrying sign.
A bright spot was the company spent less on advertising than expected, as media companies slashed prices amid the recession.
Unilever has invested heavily in promoting its top brands and sales of many individual products rose.
The company said sales of its spreads and dressings — such as Knorr soups and Hellmann's mayonnaise — increased by 2.9 percent.
Sales of ice cream, including Ben & Jerry's and Magnum, were up 4.3 percent.
And sales of personal care products such as Dove soaps, Axe deodorants and Vaseline, were up 4 percent.
