UNILEVER THIRD-QUARTER EARNINGS SOAR 67%

Sales Down, Ad Spending up, but Divestiture Spurs Gains

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CINCINNATI (AdAge.com) -- Unilever's net earnings soared 68% to $779 million in the third quarter, ahead of analyst expectations, despite declining sales and a $236 million increase in advertising and promotion spending globally from a year ago.

Earnings per share rose 71% to 79 cents as sales fell 1% to $12.7 billion.

Postive reports by rivals
Unilever joined such industry peers as Procter & Gamble Co. and Clorox Co. in posting big earnings increases on the back of restructuring savings and declines in raw material and interest costs in recent days. Unlike the others, however, Unilever had no sales growth as divestitures cut 5.5% off the top line.

Unilever is the maker

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Even without divestitures, Unilever's top-line growth lagged that of recently reporting competitors such as P&G, Clorox, Dial and Colgate-Palmolive Co. But the company said sales of its 400 leading brands -- the ones Unilever plans to keep after its "Path to Growth" restructuring program ends in 2004 -- were up 5.4%, ahead of the 4.5% rate for the first nine months of the year.

Sales down 6.7%
In North America, Unilever sales were down 6.7% to $3.2 billion. Without divestitures, sales would have been up 2%. Food sales were up 2.7%, with home and personal care sales up 1%. Growth in skin care, hair care and deodorants was offset by declines in the laundry care business.

Howard Green, senior vice president of investor relations, said Unilever would invest more in new initiatives and marketing support across the North American business going forward, including in laundry, where the emphasis in the past year has been on improving margins.

Unilever's North American advertising and promotion spending was up about $70 million from a year ago in the third quarter, largely behind the $90 million launch of Axe, which Mr. Green said is doing well.

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