Unilever to appeal Brazilian court ruling

Unilever plans to appeal an adverse ruling by the Brazilian Supreme Court.

The household goods giant had advised in its third-quarter trading statement that within its estimated total contingent liabilities there was a risk adjusted amount in respect of a claim for €565m for indirect taxes in Brazil that had been determined in Unilever's favour in a prior judicial review but would be heard in a higher court in the fourth quarter.

Unilever said on Friday that it now needs to either provide a guarantee to the Brazilian government or pay a judicial deposit to the court equating to the potential amount owing, within 30 days of the official court notification.

Given any penalty payments are much reduced if a deposit is made, Unilever has decided to pay the judicial deposit of approximately €590m, which will be recognised as a non-current financial asset, meaning there will be no impact on reported free cash flow.

“As we still believe our case remains strong we are continuing to include this in our contingent liabilities and there is no charge to the P&L as a result of this latest judgement.”

At 1218 GMT, Unilever shares were up 11.4% to 3,163p.