Unilever, owner of brands ranging from Marmite and Ben & Jerry’s to Dove soap and Domestos bleach, has raised prices by 11.2% in recent months and expects to do so again throughout the year.
A price increase in the three months to the end of June helped the Anglo-Dutch consumer goods group post an 8.1% rise in sales in the first half of 2022, as increases offset a fall in volumes sold.
Unilever said it expected “material inflation” to remain high for the rest of the year, while the outlook for the global economy and cost inflation was “uncertain and volatile”.
However, she said she still expects to improve her profit margins next year and the year after by raising prices, making savings and changing the mix of products she sells.
The group forecast sales growth for the year to be around 6.5%, the upper end of expectations, with the growth driven by higher prices.
Alan Jopp, chief executive, said: “Unilever delivered a first-half performance that builds on our momentum from 2021, despite the challenges of high inflation and slower global growth.
“Inflation challenges persist and the global macroeconomic outlook is uncertain, but we remain strongly focused on operational excellence and execution in 2022 and beyond.”
Home care products such as Persil and Domestos have increased in price the most. The amount of food sold fell almost 1%, although takeaway ice cream sales such as Magnums rose more than 10%, but the value of sales rose 7.3% as a result of the price hike.
Unilever said its profit margins fell by more than two percentage points after “very high input inflation”, which was only partially offset by price rises and cost savings.
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Matt Britzman, equity analyst at Hargreaves Lansdown, said the price hike had kept Unilever’s sales and profits on track and in line with guidance.
“Having multiple strong brands is essential if any business is to pass on rising costs, and Unilever has them up its sleeve – being able to raise prices by just 10% and only have a 1.6% drop in volumes is a good place to be.” to be,” he said.
But Britzman said there was a limit to how much someone would pay for Magnum: “We’ve heard from supermarkets that shoppers are now starting to slide down the value chain in an effort to keep shopping lists intact.”
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