Anglo-Dutch consumer products giant Unilever shocked investors yesterday by cutting its sales-growth target for its top 400 brands in 2003, sending its shares to their lowest in almost a year.

The sales warning from Unilever - chaired by Mr Niall Fitzgerald - followed one earlier in the day from Dutch brewer Heineken which had hit consumer goods stocks and sent stock markets tumbling around Europe.

Unilever, the maker of Knorr soups and Hellmann's mayonnaise, cut its 2003 target for its top brands to 4 per cent from 5-6 per cent after saying it expected growth of only 3 per cent in the second quarter, similar to the first quarter.

The company said its home and personal-care products such as Dove, Lux and Calvin Klein fragrances were badly hit by trade de-stocking in the United States and less demand for upmarket goods due to the reduction in international travel. The world's third-largest food group after Nestlé and Kraft said its food business held up better but saw a poor performance from SlimFast products due to a move to low carbohydrates and less-than-expected trade to restaurants.

Unilever shares in London were down 10.7 per cent at 498 pence by afternoon, their lowest since July 2002, and extending a fall from 636p in April after poor first-quarter results. In Amsterdam, the stock was off 9.9 per cent at 47.82.

"I am very disappointed, this is not what we needed. First, we had Heineken setting a bearish tone and now Unilever," said Mr Florian van Laar, fund manager at Eureffect. "Investors have not been properly informed, because Unilever had been sticking to its guns for too long, and that is something you cannot have nowadays," he added.

Unilever group, which also makes Ben & Jerry's ice cream, Lipton teas and Skippy peanut butter, said although it expected flat first-half earnings, it was still aiming for a low double-digit percentage rise in 2003 underlying earnings. Operating margins in the second quarter are expected to be flat. But the cut in sales target comes as a blow to the group's five-year "path to growth" programme which lasts up to end-2004, under which Unilever aims to boost earnings, sales and profit margins by focusing on its top 400 brands, cutting jobs and closing factories.

The group set out long-term target sales growth of 5-6 per cent from its top 400 brands, low double-digit earnings growth and operating margins above 16 per cent by 2004. - (Reuters)