LONDON — Unilever plc chairman Niall FitzGerald turned up the heat on the firm’s prestige perfume business after the firm reported lower sales and earnings for the second quarter.
Speaking to analysts on a conference call, FitzGerald identified frozen foods, household care and prestige perfumes as three businesses that were failing to meet its standards and were holding back sales growth.
“These businesses are ‘on watch’; they are not up for sale,” he said during the call. “These businesses are not performing up to standard. If they don’t step up and meet our targets we will look for alternative solutions. But these businesses should be well capable of meeting our standards.”
Principally because of exceptional profits on businesses sold last year, net income for the three months ended June 30 dropped 16.9 percent to $736.4 million versus $885.8 million in last year’s quarter. Dollar figures have been converted from the euro at current exchange, as Unilever reported that profits declined to 646 million euros from 777 million euros.
Sales declined 1.5 percent to $14.09 billion, or 12.36 billion euros, from $14.31 billion, or 12.55 billion euros, in the 2002 quarter due to the business divestitures. Sales of continuing operations rose 2.4 percent in the quarter, the firm said.
The firm said sales of its leading brands, which include Dove, Lux, Rexona, Axe and Sunsilk, grew 3.1 percent in the first half, and now represent more than 90 percent of the business.
Unilever officials weren’t available to elaborate on details, but New York-based UCI, a division of Unilever plc, manufactures Calvin Klein, Cerruti, Lagerfeld, Chloé, Vera Wang, Nautica and BCBG Max Azria fragrances.
Reports of a possible sale of Unilever’s fragrance unit, sales of which are dominated by Calvin Klein, have surfaced repeatedly since 2001. Unilever sold its Elizabeth Arden and Elizabeth Taylor brands to FFI Fragrances in 2000. FFI was later renamed Elizabeth Arden Inc.
The company said it’s on track to meet current yearend forecasts for low double-digit growth in EPS and growth of the leading brands of some 4 percent.
In the first half, net income rose 10.1 percent to $1.58 billion, or 1.39 billion euros, from $1.44 billion, or 1.27 billion euros. Sales dipped 2.5 percent to $26.7 billion from $27.39 billion while sales of continuing operations grew 2.1 percent in the period.
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