Unilever vows to up adspend after issuing profit warning

LONDON - Unilever has vowed to spend more money on advertising and promotions, after issuing a profit warning that sent its share price tumbling.

The Anglo-Dutch consumer goods giant, owner of brands including Persil, Lipton, Dove and Wall's ice cream, warned yesterday that it only expected low single-digit earnings-per-share growth for the year. It had previously predicted earnings-per-share growth in double digits.

The company blamed the fall on lower sales of ice cream and ready-to-drink tea due to poor weather in Northern Europe, as well as declining home and personal care markets in Western Europe.

Outgoing chairman Niall FitzGerald, along with his Dutch counterpart Antony Burgmans, issued a joint statement saying that adspend would be increased for the rest of the year.

"We are stepping up our market place activity, including putting additional advertising and promotions funds behind a number of high-priority marketplace initiatives.

"Top-line growth is key to long-term sustainable value creation, and here the recent performance is unacceptable. We are determined to put this right and we are therefore moving forward with the simplification of our operations and, most importantly, increasing investment behind our brands," they said.

Unilever retains numerous agencies including Bartle Bogle Hegarty, Lowe and DDB London on the creative side and Initiative for media.

It was reported last month that some of Unilever's investors were concerned that the company was not spending enough on advertising and marketing, and that some of its brands are suffering against competing brands that are spending more.

Shares in Unilever lost 5% of their value yesterday but this morning had climbed back by 0.4% to 461.5p.

US consumer giant Colgate-Palmolive also issued a profit warning yesterday, saying that increased marketing spend outweighed growth in market share.

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