updated 9/20/2004 8:40:45 AM ET 2004-09-20T12:40:45

Unilever PLC, the Anglo-Dutch consumer products giant, reduced its outlook for the year on Monday, citing poor weather, weak consumer confidence in Europe and tough competition in Asia.

The company, which owns brands such as Lipton tea, Ben & Jerry's ice cream and Dove soap, said it now expects earnings growth of less than five percent this year. It had earlier forecast growth of more than 10 percent.

The company's shares fell 5.7 percent in early trading on the Euronext stock exchange and London's FTSE index, and dragged other European stocks lower in a ripple effect.

Unilever said bad weather in Northern Europe had hurt sales of ice cream and bottled tea drinks, while poor consumer confidence meant shoppers spent less on home and personal care products in Western Europe.

"In Asia competition remains intense in laundry and hair markets in a number of key countries," Unilever said, adding that in other markets, such as North America, business was "broadly in line with expectation."

The company's joint chairmen, Antony Burgmans and Niall Fitzgerald, said the performance was "unacceptable."

The company has reduced the number of brands it sells to 400 from over 1,500 to invest heavily in expanding the dominance of names like Hellman's Mayonnaise. It said Monday it now expects its biggest brands to grow less in the third quarter than they did a year earlier and company profit margins will decline.

But Unilever said it doesn't plan to change its strategy of investing in the big brands.

"The protection of the health of our brands and a return to long term profitable growth remain our overriding priorities," it said in a statement. "Planned brand support activities for the rest of the year will therefore be maintained and in certain areas reinforced."

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