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Unilever profit beats, shares jump

Consumer goods giant Unilever reported forecast-beating core profit on Tuesday, with strong underlying sales growth cheering investors who sent the stock higher.

Core earnings came in at 1.58 euros per share, against forecasts in a Reuters poll of 1.53 euros per share. Unilever shares rose almost 5 percent in early trade.

A slowdown in emerging markets and currency depreciation in those markets took their toll over the course of the year, resulting in a 3 percent drop in full year revenue to 49.8 billion euros ($67.4 billion). But underlying sales grew 4.3 percent in 2013 with an 8.7 percent rise in underlying sales growth in emerging markets.

Unilever chief executive Paul Polman told CNBC that the company had had another year of "profitable, consistent and competitive" growth.

"There's obviously a headwind that you've seen on currencies that you've seen in many parts of the world, but the underlying sales growth is up 4.3 percent which is very competitive for us. We also have another year of profitable growth…so that's four years now of top and bottom-line growth."

Growth continued to slow in emerging markets, Unilever said, as a result of the impact of economic uncertainty and currency depreciation on consumer demand.

"Emerging markets used to grow at a composite of 6 to 8 percent but it's now more 5 to 6 percent and we have to deal with that. We have seen significant slowdown of growth in major markets like India or Indonesia, South Africa and Brazil where obviously we have very strong businesses," Polman said.

Unilever, which has a range of brands from Dove soap to Ben & Jerry's ice cream, said it anticipated ongoing volatility in the external environment.

SeongJoon Cho | Bloomberg | Getty Images

The latest earnings come after a tough year for the company with the weak economic recovery in the U.S. and Europe weighing on consumer demand and earnings.

Polman repeated his concerns that the U.S. recovery, and its impact on consumer demand, were not evenly spread throughout the country.

"There is optimism about the U.S. and it has a very positive-thinking population so as soon as there is positive news, the place goes into overdrive. The reality is that real incomes haven't moved since 1996. The growth that is there only benefits a small part of the population. We as an organization obviously cater to the broader population that hasn't seen any progress."

Emerging markets too, on whose growth Unilever has relied, have been through a rocky period too since the U.S. Federal Reserve announced its plans to start reducing, or "tapering," its bond-buying program — stimulus measures which had caused large capital inflows into emerging markets.

In October, the Anglo-Dutch consumer goods company warned that a slowdown in emerging markets – which account for 53 percent of the group's sales –accelerated in the third quarter while developed markets remained flat to down in the same quarter.

Keith bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said that investors were "breathing a sigh of relief" following a disappointing third quarter.

"Fourth quarter sales have exceeded forecasts…[and] despite an increase in near term nerves, faith in the group's long term ability to seize expected growth in the emerging markets remains," he said in a note on Tuesday.

"Management initiatives such as product innovations and sharpened business focus continue, whilst a dividend yield in the region of 3 percent remains attractive in today's low interest rate environment."

-By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt.


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