(Adds survey on falling confidence among British food makers)
By Martinne Geller
LONDON Oct 13 Price increases at Unilever
, which have sparked a row with British supermarket
Tesco, helped the maker of Ben & Jerry's ice cream and
Dove soap report a smaller-than-expected slowdown in
third-quarter sales on Thursday.
Unilever said it was on track to meet its full-year targets,
but the results were overshadowed by the dispute with Tesco
which has pulled dozens of the company's brands from its
website, including popular products such as Marmite and PG Tips
In Britain, one of the home markets for Anglo-Dutch
Unilever, it is grappling with the fallout of the vote to quit
the European Union, which caused a steep drop in the pound.
Unilever has been trying to raise the prices it charges
Britain's big four supermarkets - Tesco, Sainsbury's,
Asda and Morrisons - across a wide range of
goods by about 10 percent, saying it needs to offset the higher
cost of imported commodities, two people with knowledge of the
situation told Reuters on Wednesday.
Chief Financial Officer Graeme Pitkethly told Reuters that
devaluation-led price increases were normal, but declined to
comment specifically on the row with Tesco.
A survey published on Wednesday said more than two-thirds of
British food makers have become less confident about the
business environment since the Brexit vote.
Three-quarters of British food manufacturers have seen an
increase in the price of imported ingredients due to the fall in
the value of the pound since the vote, and 63 percent reported a
decrease in profit margin, according to the poll by Britain's
Food and Drink Federation (FDF) between Sept. 16 and Oct. 7.
Unilever's Pitkethly was speaking after Unilever posted
underlying sales growth of 3.2 percent for the latest three
months. Analysts on average expected growth of 2.9 percent,
according to a company-supplied consensus, a slowdown from 4.7
percent in the first half of the year.
The company in July flagged a worsening of performance, due
largely to tougher comparisons with an unusually strong third
quarter last year and deterioration of economic conditions in
markets such as Brazil and Argentina.
Devaluation of a range of currencies in Latin America has
led Unilever to raise prices, which in turn, has curbed demand,
while many mature European markets continued to see deflation,
fuelled by intense price competition between retailers.
In the third quarter, sales volume, or the amount of goods
sold, fell 0.4 percent, but pricing was up 3.6 percent.
Pitkethly said the company was on track to meet its
full-year goals, which call for sales to grow 3-5 percent, with
margins improving in the historical range of 0.3-0.4 percentage
Unilever shares were down 1.6 percent at the open in London.
(Editing by Alexander Smith)