Unilever hints at offloading Ragu and SlimFast brands as food sales fall short

Unilever hints at offloading Ragu and SlimFast brands as food sales fall short

Food and consumer goods giant Unilever has hinted at the sale of brands including Ragu and SlimFast as growth from its food business struggles to compete with better-than-expected Q1 results in other divisions.

The food, drink, personal care and home goods giant reported underlying sales growth 3.6%, with emerging markets up 6.6%, across the whole of its business during the first quarter of 2014. However, turnover was down by 6.3% to €11.4bn, including a negative impact from currency exchange rates of 8.9%.

Despite positive growth in other areas of its portfolio, the firm also saw a 1.7% decrease in underlying sales within its food business, as market growth continued to slow in the emerging markets and developed markets remained weak.

"The decline in Foods was largely explained by the later timing of Easter and I am confident that we are now taking the right actions to improve performance," said Unilever CEO Paul Polman. "We are now gaining market share in margarines in Europe and North America in response to our investment in communicating the improved taste and naturalness of our brands."

Unilever saw the strongest growth in terms of underlying sales in its refreshment division, with the business witnessing a 5.9% rise. Personal care and home care saw underlying sales growth of 4.2% and 2.2% respectively.

Sale on the horizon?

In line with the UK-Dutch company's 'commitment to rigorously review our portfolio', Unilever said it will be undertaking a strategic review of its North America pasta sauces business - including the Ragu brand - and the SlimFast brand.

"It may lead to a disposal but it doesn't necessarily have to," commented Chief Financial Officer Jean Marc Huet. "We're looking at all options."

However, speculation has been mounting over a possible sale in recent weeks, with reports that firms including Heinz, Kraft, Pinnacle, Hormel Foods, and Hillshire Brands may be in contention for the purchase of the Ragu brand.

Unilever has already offloaded its Bifi and Peperami brands as it focuses on its health and beauty business.

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