AMSTERDAM: Unilever, the world’s second-largest consumer-products company, reported slower sales growth as the maker of Knorr soups cut prices more than analysts anticipated in the fourth quarter amid heightened competition.
 
Revenue, excluding acquisitions and currency swings, rose 1.8% in the final three months of the year, slowing from the 3.4% increase in the previous quarter, the London- and Rotterdam-based company said. Analysts had estimated sales growth of 1%. Net income dropped to 831 million euros ($1.15 billion), beating the 650 million-euro average estimate.
 
Unilever cut prices by an average of 3.1% in the quarter and increased marketing spending as Chief Executive Officer Paul Polman tried to stoke sales growth that lagged behind competitors Procter & Gamble Co. and Nestle SA for years. Increased competition prevented the maker of Dove soap from raising prices in the period, Unilever’s head of investor relations said today on a conference call.
 
The “volume growth recovery is expensive and requires high investments as in price as in promotions,” said Pierre Tegner, an analyst at Oddo Securities in a note today. He recommends investors “reduce” Unilever stock.
Unilever fell as much as 70 cents, or 3.1%, to 21.80 euros in Amsterdam and traded at 22.12 euros as of 9:25 a.m. The shares are down 2.7% this year.
 
The company expects “continued pressure on consumer spending power and heightened levels of competitive activity in 2010,” Polman said in the statement, adding that he plans to continue to focus on volume growth. Selling volumes rose 5%, Unilever said.
 
Selling volumes
 
Polman has also accelerated new-product introductions to lure cash-strapped shoppers in countries from Germany to India. The increase in Unilever’s selling volumes was the third straight quarterly gain after two quarters of declines.
Analysts had expected a 3.2% volume increase in the quarter and an average price reduction of 1.9%, according to the Bloomberg News survey of 12 analysts.
 
P&G posted a 5% gain in so-called organic sales in the fourth quarter, after cutting prices of 10% of its products. P&G also boosted its revenue forecast by percentage point, to growth of 3% to 5% for this year.
Net sales fell 5% to 9.7 billion euros, Unilever reported today.