Results show strong European consumer goods demand

By @ibtimes on

Some of Europe's biggest consumer goods groups defied high input costs and tepid demand to report higher sales.

Unilever, Adidas and Beiersdorf raised prices, saw strong demand in China and benefited from a warm spring in Europe.

With an array of top brands like Lipton, Knorr and Dove, Unilever was able to push its prices higher, Adidas saw its second-quarter Chinese sales rise 41 percent and Beiersdorf enticed consumers back to its key Nivea brand.

Strong quarterly sales boosted all three stocks. Unilever Plc shares were up 5.3 percent at 20.07 pounds, Adidas rose 1.6 percent to 49.60 euros and Beiersdorf increased 4.2 percent to 44.40 euros by 1050 GMT.

Anglo-Dutch Unilever expects its input commodity costs for the likes of vegetable oils and chemicals to rise 15 percent this year, but it pushed through big price rises of 5.1 percent in the second quarter to see underlying sales beat forecasts with a 7.1 percent rise.

Unilever's results in our view look impressive, showing a sharp acceleration in sales growth from 4.3 percent in Q1 to 7.1 percent in Q2, said analyst Graham Jones at Panmure Gordon.

With commodity cost pressures appearing to peak and most price rises now complete, analysts said Unilever was on track to meet Chief Executive Paul Polman's goals of sales volume growth and profit margin expansion for 2011.

In the first six months of 2011 the group saw 10 percent plus sales growth in China and India and broad-based growth across south east Asia as it benefited from having a higher proportion of its sales in emerging markets than its rivals.

German-based Adidas raised its sales forecast for the third time this year. It is now anticipating a 10 percent rise after reporting a second-quarter increase of 5 percent as demand for sportswear soared and its big North American market remained strong.

No matter which retailer I speak to, or which market share statistic I read, our product sell-throughs are stronger than they have ever been, said Chief Executive Herbert Hainer.

The group which competes with Nike and smaller rival Puma said it expects less of a decline in Japan than previously forecast following the earthquake and tsunami earlier this year.

Good for the sentiment in our opinion is especially the positive outlook for the U.S. business in the remainder of the year, said DZ Bank analyst Herbert Sturm.

Fellow German group Beiersdorf was also upbeat after seeing its core consumer division back in growth, helped by a marketing revamp and 100th anniversary campaign for Nivea, and saw second quarter consumer sales up 1.6 percent after a similar fall in the first quarter.

The group, whose other brands include luxury skincare line La Prairie and Labello lip balm, tweaked its sales guidance for the year, saying it expects slight sales growth in 2011, compared to a previous guidance for flat revenues.

Chief Executive Thomas Quass said the Nivea program generated positive momentum at retailers and among our consumers in the second quarter.

Q2 operating performance was strong. Consumer organic sales showed a sharp improvement over Q1 due to the one-off benefits from the weather and sell-in ahead of the Nivea 100th anniversary launch, said analyst Andrew Wood at Bernstein.

(Editing by Sophie Walker)

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