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Unilever backs away from financial targets

Unilever's new chief executive officer scrapped the company's target for profitability, saying forecasts are "inappropriate" as the consumer-products maker faces declining economic growth and volatile commodity prices.

"Given the current economic uncertainty I believe it would be inappropriate at this stage to provide an outlook specifically for 2009 or to reaffirm the 2010 targets," Paul Polman said yesterday. Chief Financial Officer Jim Lawrence told Bloomberg News the company had abandoned its 2010 operating-margin target of at least 15 percent.

The maker of Lipton tea and Magnum ice cream also reported a 58 percent gain in fourth-quarter profit, helped by asset sales and price increases in emerging markets. Sales growth, excluding acquisitions and currency swings, slowed to 7.3 percent from the previous quarter's 8.3 percent, hindered as European and American shoppers cut back on purchases of branded goods.

No predictions

"This year no one can predict how long and deep the recession will be," Lawrence said. "We can't predict the economy, so we don't want to be caught hostage by our own guidance."

Polman, who is a month into the job, faces a global recession that has caused rivals Procter & Gamble and Kimberly-Clark to miss sales forecasts. Unilever is the second-largest consumer-products company, trailing P&G.

"These results and the outlook statement are disappointing," Marco Gulpers, an Amsterdam-based analyst, wrote in a note to investors. "The weak volume numbers and sharp slowdown from the nine-month stage are worrying." He rates Unilever a "hold."

The shares slid 92 cents, or 5.4 percent, to 16.25 euros (US$20.87) at 9:03am in Amsterdam yesterday. They're down 6.5 percent this year, holding up better than P&G's 15 percent decline.

Unilever's fourth-quarter net income was 1.14 billion euros, or 39 euro cents a share, up from 721 million euros, or 24 cents, a year earlier, the Rotterdam and London-based company said. The median estimate of eight analysts surveyed by Bloomberg was 876 million euros.


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