Unilever recovery continues

By David Jones

LONDON (Reuters) - Consumer goods giant Unilever beat forecasts with a 3.6 percent rise in third-quarter underlying volume sales and pledged its turnaround under Chief Executive Paul Polman's will continue into the fourth quarter and 2010.

Polman's second successive quarter of volume growth came as he spends more on marketing and cuts selective prices to drive growth in the current downturn, and he is being helped by falling prices for commodities like edible oils and packaging.

Anglo-Dutch Unilever Plc/NV (ULVR.L)(UNc.AS), the world's third-biggest food and consumer goods group, said all regions and categories showed growth while it was on track to restore volume growth for 2009, without hitting margins or cash flow.

"We expect volume growth in the fourth quarter and we don't see anything to slow up our underlying momentum," said Finance Director Jim Lawrence at a quarterly results briefing.

He added conditions for the maker of Ben & Jerry's ice cream, Knorr soup and Dove soap remained challenging with world unemployment still rising and consumer confidence low, but he said it sells affordable products to a range of consumers.

"A good third-quarter for volumes, margins and cash flow. The results provide further evidence of Unilever's improved performance," said Panmure Gordon analyst Graham Jones.

Unilever Plc shares dipped 2.8 to 17.78 pounds by 9:40 a.m. after a strong run up to results over the last month, and after outperforming the DJ European Food and Beverage index .SX3P by 3 percent this year since starting 2009 around 15.50 pounds.

"Excellent Q3 results indicate that Unilever is doing what it said it would do. This is our favourite stock in the consumer sector and increasingly looks to be leaving the old Unilever shortcomings behind," said James Edwardes Jones at Execution.