Unilever PLC’s sales report showed that most shoppers are willing to pay more for products like Dove soap and Axe deodorant, but the company warned that might change as the war in Ukraine exacerbates raw material inflation.
First-quarter sales growth was 7.3 percent on an underlying basis, Unilever said yesterday, with full-year sales growth at the top end of its 4.5 to 6.5 percent forecast.
However, Unilever said that profitability would probably be at the bottom end of its forecast range this year, as shoppers start to balk at new price increases.
Photo: Reuters
Unilever is one of the few major European consumer goods companies that have been reporting a decline in shipments, even though the drop was less than expected in the first quarter.
Nestle SA has said it does not yet see signs of shoppers switching to cheaper products.
“There is more to do as we navigate our business through unprecedented cost inflation, but we are making good progress,” chief executive officer Alan Jope said in the statement.
Unilever boosted pricing almost 13 percent on homecare products, which include Omo detergent and Domestos cleaners, resulting in a 2.9 percent drop in volume.
The maker of Ben & Jerry’s ice cream and Dove soap earlier this year said that it was facing the worst inflation since the financial crisis and that it would take two years for the company to return to last year’s profitability level.
“It’s extremely hard to predict where we end up” on inflation in the near term, chief financial officer Graeme Pitkethly said on a call with reporters.
“We still expect to restore our margins in 2023 and 2024, but we’re seeing about 6 billion euros [US$6.3 billion] of costs increases since last year and that’s quite extraordinary for us,” he added.
Unilever expects raw material cost inflation of 2.7 billion euros in the second half, up from 2.1 billion euros in the first half.
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