Unilever’s price increases compensated for weaker sales volumes
- Underlying sales growth at Unilever increased by 9.1% in the first half
- The net profit of the consumer goods giant shot up by more than a fifth to 3.9 billion euros
- Unilever brands include Hellman’s mayonnaise, Dove soap and Rexona
Unilever has reported solid half-year sales growth as further price increases by the owner of Ben & Jerry’s offset declining volumes.
Underlying sales at the consumer goods giant rose 9.1 percent in the first half of 2023, driven by healthy demand for its brands worth more than $1 billion and strong trading across all five core business segments.
Prices rose 9.4 percent, offsetting a modest drop in sales volumes as the FTSE 100 consumer giant struggled to counter the effects of rising input costs.
Results: Unilever’s underlying sales in the first half were up 9.1 per cent, driven by healthy demand for its brands worth more than €1 billion and strong trading in all five core business segments
The personal care division — home to brands such as Dove and Rexona — recorded the largest growth in underlying revenue at 10.8 percent, driven in part by rising deodorant sales in Europe and the Americas.
Food brand sales also increased by double digits, supported by huge demand for Hellmann’s mayonnaise and a resurgence in food service business in China.
Lockdown restrictions severely impacted Unilever’s revenues in China, its third-largest market, last year, but this time they grew at high-single-digit levels.
Total sales at the company ticked up 2.7 percent to €30.4 billion (£26.2 billion), held back by unfavorable currency movements and losses related to divestments, while net profit jumped more than a fifth to €3.9 billion.
The group now expects annual underlying sales to exceed 5 percent, above the multi-year range, while price increases are expected to continue to ease.
Hein Schumacher, who became CEO earlier this month, said: ‘My early immersion in the company has reaffirmed my belief in Unilever’s strong fundamentals.
“The task ahead is to leverage these strengths – supported by our simplified business model – to drive better performance and competitiveness.
“This is our absolute priority, and it means more focus and sharper execution, with science-backed innovations and investments behind our brands.”
Unilever Shares were up 5.1 per cent on Tuesday morning to £42.22, although they have leveled off over the past five years.
Schumacher’s predecessor, Alan Jope, faced criticism from investors for the company’s sluggish share price, sales performance against its peers and focus on sustainability credentials.
The Scottish-born boss took on further anger after Unilever’s failure to acquire GSK’s consumer health arm for £50bn, with a fund manager comparing the botched takeover to a ‘near death experience’.
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said the new CEO has two main priorities ahead of him.
He explained, “Get margins back to pre-pandemic levels. And address the underperforming parts of the portfolio, especially Europe, to improve brand competitiveness and top-line growth.
“This requires, in Schumacher’s own words, ‘more focus and sharper execution’, which is much easier to say on paper than in practice.”