Crisis hits Unilever's sales in RI, Thailand

Crisis hits Unilever's sales in RI, Thailand

LONDON (Dow Jones): Anglo-Dutch giant Unilever Plc. said yesterday the Asian economic crisis has taken its toll on results, with second quarter pretax profit at 722 million pound sterling (about US$1.15 billion), down 24 million pound sterling, or 3 percent, on the previous year.

This was below the most bearish profit forecast made by analysts, whose estimates ranged between 735 million pound sterling to 780 million pound sterling. The pretax profit figure is based on constant currency exchange rates and excludes exceptional items.

In early trade,, Unilever's shares were down 35 pence, or 5.9 percent, at 555 pence, making the stock the largest faller in the FTSE 100.

"The difficulties in East Asian economies remain a concern in the medium term and we have also seen signs of economic slowdown in other developing and emerging markets," Unilever said.

A slowdown in consumption particularly affected sales in Thailand and Indonesia, reflecting the deteriorating economic climate, Unilever said. In South America, the slowdown in Brazil also hit sales.

However, underlying business performance continues to be encouraging with good progress in Europe and North America, Unilever said. "We remain confident that markets will be attractive enough to enable us to grow and make progress in improving the underlying profitability in 1998," the company added.

Net profit for the second quarter at current exchange rates decreased by 8 percent in sterling, reflecting the relative strength of the currency, and 1 in guilders.

Total second quarter sales fell by 7 percent from levels in the same 1997 period, at constant rates of exchange. However, excluding the disposal of its speciality chemicals unit, sales in continuing operations rose by 2 percent. Operating profit fell by 4 percent as a result of a substantial increase in marketing investment.

The earnings per share was 5.83 pence, compared with 33.61 pence the previous year, which included the impact of the chemicals sale.