Unilever sales volumes show robust recovery despite price rises

Unilever has defied investor concerns that shoppers will balk at higher prices after its latest results showed they are willing to pay more for its branded packaged food and everyday household items.

A sales update from the UK-based maker of Ben & Jerry’s ice cream, Dove soap and Lynx deodorant for the first three months of the year showed prices increased almost 11 per cent on average.

Yet shoppers — particularly in North America — proved unexpectedly willing to tolerate the price rises. Sales volumes recovered more strongly than expected from a 3.6 per cent drop in the previous quarter and were flat year on year.

Unilever’s stronger than forecast figures, which followed similarly upbeat results from several rivals in Europe and the US in recent days, sent shares in the FTSE 100 company up 1.9 per cent in early trading.

Historic increases in input costs have left packaged goods groups such as Unilever with a dilemma in how much of the financial pain to pass on to retailers and consumers during the cost-of-living squeeze.

Chief financial officer Graeme Pitkethly said Unilever was forecasting commodity costs in the first half of the year to be €1.5bn higher than the same period a year ago.

He added the company was expecting inflationary pressures to be most acute in ice cream and in Unilever’s nutrition products, which include Hellmann’s mayonnaise. This was because these were especially exposed to the costs of agricultural ingredients, for which prices were still rising sharply.

He said Unilever, whose products also include Persil laundry detergent and Colman’s mustard, had been increasing prices “responsibly” and “with precision”.

Volumes held up better in the Americas — where they ticked up 0.6 per cent in spite of a 11.2 per cent increase in prices in the region — than in Europe, where they fell 3 per cent.

Unilever recorded revenues of €14.8bn in the period — an increase of 10.5 per cent on an underlying basis, which excludes the effects of acquisitions and currency movements.

“The message remains constant: CPG companies can keep raising prices, without much impact on volumes,” said Bruno Monteyne, analyst at Bernstein, in a note.

The figures are the last under chief executive Alan Jope. He is being
replaced by Hein Schumacher, head of Dutch dairy co-operative
FrieslandCampina.

Read the full article Here

Leave a Reply

Your email address will not be published. Required fields are marked *

DON’T MISS OUT!
Subscribe To Newsletter
Be the first to get latest updates and exclusive content straight to your email inbox.
Stay Updated
Give it a try, you can unsubscribe anytime.
close-link