Unilever raises sales forecast after price hikes help it beat forecast


  • Revenue up 14.9%
  • Inflation peak expected in H2 -CFO
  • The future of Ben & Jerry’s is part of Unilever -CEO
  • Shares rise up to 3.2%

LONDON, July 26 (Reuters) – Unilever Plc (ULVR.L) has raised its full-year sales forecast after beating underlying first-half sales guidance as soap maker Dove and cubes of Knorr shares raised prices to counter soaring costs, boosting its shares on Tuesday.

One of the world’s largest consumer companies, with more than 400 brands ranging from detergent to ice cream, Unilever’s costs have risen since the start of the COVID-19 pandemic, creating traffic jams in the global supply chain.

Since then, the war in Ukraine has driven up energy costs and pushed the prices of raw materials such as wheat, sunflower oil and pulp used in packaging to record highs. Unilever said it expects net material inflation of around 4.6 billion euros this year, including 2.6 billion euros in the second half.

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Unilever’s first-half operating profit margin fell to 17% from 18.8% a year earlier, even as Unilever raised prices by 9.8%.

The price hikes come as retailers fend off suppliers of consumer goods, worried about ceding their margins and alienating shoppers.

U.S. giant Walmart Inc (WMT.N), the world’s largest retailer, cut its profit forecast on Monday as soaring food and fuel prices prompted customers to cut spending.

“We saw their news this morning, but I think there are many, many aspects that are not entirely related to Unilever,” said the British company’s chief financial officer Graeme Pitkethly in a call with reporters, noting that Walmart’s announcement was tied more to general merchandise and apparel, and that inflation would vary by region.

However, Pitkethly added: “We expect the peak in inflation to be in the second half of the year. I don’t think we will be able to catch up in the current quarter.”

“We’re not going to go back to the old low inflation environment – we’re going to be stuck in that environment for a considerable time,” said Andy Searle, partner at consultancy Alix Partners.

INCREASED SALES PROSPECTS

Unilever this year made room on its board for activist investor Nelson Peltz, whose investment vehicle Trian had amassed a 1.5% stake last month.

Peltz “brings a very constructive contribution as a board member,” CEO Alan Jope said in a call with reporters, but declined to elaborate.

The Unilever logo is seen on a Dove soap box in this illustration taken January 17, 2022. REUTERS/Dado Ruvic/Illustration

Underlying sales rose 8.1%, beating analysts’ expectations of 7.2% growth, according to a company-provided consensus for the six months to June 30.

Unilever said on Tuesday it now expects to beat its previous full-year underlying sales growth forecast of 4.5% to 6.5%.

In a note, Bernstein analysts called the results “good,” with better-than-expected pricing and in-line volumes boding well for the company’s ability to continue investing in growth.

Investors cheered the results, with shares of Unilever rising nearly 3.2% at their high. The stock was up 2.0% at 10:19 GMT, still among the top gainers on the FTSE 100 Index (.FTSE).

“Underlying sales growth of 8.1% was driven by high prices to mitigate input cost inflation, which as expected had some impact on volume,” Jope said. “Inflation challenges persist and the global macroeconomic outlook is uncertain.”

Its half-year revenue rose 14.9% to 29.6 billion euros ($30.25 billion) even as sales volumes fell 1.6%.

Chief Financial Officer Pitkethly said Unilever increased advertising and brand marketing spending by 200 million euros in the first half to stop shoppers turning to private label products.

The company kept its quarterly dividend steady at €0.4268 per share and said it completed a €750 million share buyback tranche on July 22, as part of a €3 billion plan. announced last year.

Swiss chocolate maker Lindt & Spruengli (LISN.S) also raised its sales forecast on Tuesday after its first-half net profit jumped 36%. Read more

Unilever, owner of Vermont-based Ben & Jerry’s, has struggled over the past year to prevent the ice cream maker’s independent board from publicly voicing its views on policy issues.

This month, Ben & Jerry’s sued parent company Unilever to block the sale of its Israeli business to a local licensee, saying it was inconsistent with its values ​​to sell its ice cream in the occupied West Bank.

“The long-term future of Ben & Jerry’s is squarely part of Unilever,” Jope said, adding that “there’s a lot for Ben & Jerry’s to do in their social justice mission without getting lost in geopolitics. “.

($1 = 0.9787 euros)

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Reporting by Richa Naidu; edited by Jason Neely

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