Make clean break from Unilever

People are going to have to eat more and wash more often if Unilever is to meet its ambitious growth targets.

The Anglo-Dutch consumer products giant is on the seventh lap of what Niall FitzGerald, the company's co-chairman, calls its "20-lap race". He means the five years of four quarters of a restructuring programme. Early signs are that it may have a stitch.

Unilever, reporting yesterday on trading two months into its third quarter, warned that earnings would be no higher than the second quarter. This leaves the group with lots of ground to make up if it is to achieve its targeted full-year low double-digit earnings per share growth. It claimed to have a plan in place to get back on track, but it was vague on specifics and the market took the disappointment badly.

Unilever forecast that third-quarter organic sales growth will be 4 per cent, with its leading brands growing by 4.5 per cent. The group's strategy of culling three-quarters of its 1,600 brands to accelerate sales and boost margins appears sound, but it has raised investors' hopes and is yet to prove that it can deliver.

Although Mr FitzGerald had been pacing Unilever well in the early stages of its race, its bravado about being able to go the distance was yesterday offset by caution in the light of the terrorist attacks in the US. Sales at Unilever's prestige fragrances and US food service units – although less than 4 per cent of its total turnover – will certainly suffer as a result. A more widespread collapse in consumer spending could also hurt, despite Unilever's inherent defensive nature.

The group, whose Hellman's mayonnaise, Liptons tea and Dove soap products head the 1pack of leading brands, trades on a forward price/earnings ratio of just over 16 times. That's already toppy and defensive stocks are unlikely to lead any stock market recovery. Unilever shares, down 21.5p at 509.5p, look to have run their course. Sell.

Close Brothers

Remember the days, not that long ago, when private investors were wading into the stock market, filling their boots with the most obscure small-cap stocks, and sploshing about excitedly in all the paper wealth being created?

They were boom times, too, for Winterflood Securities, the market making arm of Close Brothers which specialises in trading these small shares. Yesterday, it was time to measure the bust: a 76 per cent slide in profits for the year to July, with the unit making practically no money at all in the past six months. Profits will be zero in the next six months, too, since the market slump is hardly inspiring investor confidence.

It all added up to a fall in Close Brothers' group earnings for the first time in its 26-year history. Overall, profits dipped 35 per cent to £94.2m.

Of course, that means the non-Winterflood businesses grew profits by 28 per cent, as the company was keen to point out. The corporate finance unit is grabbing new clients, even though the time it takes to do deals is lengthening. The asset management division still had £3.1bn of funds under management at the end of July, despite the bear market, since bonds and offshore savings flourished even as equity markets tanked.

There was a robust performance, too, from the banking division, a staple of Close Brothers' profits. Its business of loaning companies the cash to pay insurance premiums should benefit as insurance costs rise in response to the US terror attacks but otherwise the economic outlook is less clear. Provision for bad debts rose a little to 1.7 per cent, and remains the biggest unknown away from the Winterflood's roller-coaster ride.

The stock is still one to avoid, since persistent break-up rumours have kept it from sliding to truly cheap levels and there is no imminent catalyst for a re-rating. Last night it rested on a forward p/e of 13 times its broker's forecasts, the shares having jumped 62.5p to 547.5p on relief that things were not any worse. They could still be.

Oxford Glyco

Another shuffle along the road for the biotech firm Oxford GlycoSciences yesterday, with news that its Vevesca treatment for Gaucher disease is effective in long-term trials.

Gaucher, which inhibits the body's ability to store sugar, affects mainly Ashkenazi jews and is currently treated by a replacement enzyme, the most expensive treatment in the world. Vevesca could have sales of up to $140m a year. That depends on getting regulatory approval and investors should take a look in a fortnight, when the first smoke signals emerge from the Food and Drug Administration in the US.

OGS, which reported an interim loss of £7.2m, is spending money researching new proteins and the shares dipped 12.5p to 450p on disappointment that it had no antibody discoveries to report. Break- throughs in this area could trigger a rebound.