Unilever boss backs David Cameron on Europe

The chief executive of Unilever, one of the world’s biggest consumer goods groups, has backed David Cameron’s stance on Britain’s role in the European Union.

Paul Polman, the boss of the Anglo-Dutch company, said that it is “better to be part of than against” Europe, but conceded that the common market needed to be reformed.

The Prime Minister has pledged to call a referendum on Britain’s membership of the EU in 2007 unless the Government can renegotiate better terms.

The move has drawn a mixed response from businesses, with the CBI leading the case for Britain to remain in the EU.

Mr Polman was speaking as Unilever reassured the City by posting annual results that were slightly better than expected.

“It is better to be part of than against,” Mr Polman said of Europe “But having said that the current PM is right in saying we need to reform the common market.

“We are very concerned with the overall competitiveness of Europe vis-à-vis the rest of the world.”

Mr Polman, who warned last year that Europe faces a “challenging decade”, said that the continent’s biggest problem is “social cohesion” and pointed to high youth unemployment.

Unilever employs 7,000 staff in the UK across 19 sites, including it headquarters in London and a major facility in Port Sunlight in Merseyside.

Unilever, the maker of Dove soap, Marmite and PG Tips tea, reported a 4.3pc rise in underlying sales growth for 2013, with pre-tax profits rising 9pc to €7.1bn (£5.9bn).

The underlying sales growth was the slowest reported by Unilever for three years, but shares in the company rose by 2pc on the back of the results.

Unilever warned on profits for the first time in a decade last September because of concerns about a slowdown in emerging markets, with investors concerned the company’s performance may have been dragged down further in the final quarter of the year.

But despite the slowdown in sales, the company’s core operating margin grew by 40bps as Mr Polman said that Unilever had “taken a lot of costs out of the business”.

The Unilever boss said the company is “continually looking at rationalising”, meaning jobs could be at risk in Europe.

The company’s underlying sales grew by 8.7pc in emerging markets, which account for 60pc of Unilever’s revenues.

In contrast, European sales dropped by 1.1pc. Mr Polman said that emerging markets will remain “very, very important” to Unilever and that the lack of growth in Europe is “not going to change quickly”.

By sector, Unilever’s home care business, which includes Cif and Domestos, grew 8pc, while personal care, which includes Dove and Lynx deodorant, increased underlying sales by 7.3pc.

Keith Bowman, equity analyst at Hargreaves Lansdown, said: “Investors appear to be breathing a sigh of relief.

“Following a disappointing third quarter, fourth quarter sales have exceeded forecasts.

Importantly, sales in the emerging markets have seen a rebound, with Russia, Turkey, China and Indonesia notable performers. In all, faith in the group’s long term ability to seize expected growth in the emerging markets remains.”

James Edwardes Jones, analyst at RBC Capital Markets, called the results “refreshingly dull, doubly so in view of the amount of second guessing by analysts and investors over the last couple of weeks”.

Shares in Unilever rose 43p to £24.80. The company will pay a final quarterly dividend of 22p on March 12.