Unilever raises profit forecast after price hikes help owner of Dove shampoo offset falling sales volumes
- Mayonnaise producer Hellman’s revealed its total revenue increased by 17.8%
- Outgoing CEO Alan Jope: “The global macroeconomic outlook remains mixed”
- Unilever has warned that current inflationary pressures are likely to last into next year
Consumer goods giant Unilever raised its full-year outlook after price increases helped offset a drop in sales volumes in the last quarter.
Mayonnaise producer Hellman’s revealed that its total revenue increased 17.8% year-on-year to 15.8 billion euros in the three months to September, thanks to underlying growth sales of 10.6%.
Revenue rose by at least a fifth in four of the company’s five business divisions after Unilever instituted the largest quarterly price increase in its history of 12.5% in response to rising material costs raw materials and energy.
Expansion: Unilever revealed that its total revenue increased by 17.8% to 15.8 billion euros in the three months to September, thanks to underlying sales growth of 10, 6%
Although this led to a slight drop in sales volumes, trading was still much better than expected given the worsening economic and trade uncertainty.
Unilever, which also owns Vaseline, Lipton Tea and Dove shampoo, now expects underlying revenue to grow more than 8% in 2022, up from a previous estimate of 4.5% to 6.5%.
The FTSE 100 group’s beauty and wellness business saw the strongest revenue growth in the third quarter, with haircare brands driven by strong demand from Latin America and South Asia. South.
However, he warned that current inflationary pressures, such as high commodity and energy costs and a weaker euro, are likely to last into next year, although some commodity prices have moderated. from recent highs.
Outgoing chief executive Alan Jope said: “The global macroeconomic outlook remains mixed and we expect the challenges of high inflation to persist in 2023. Achieving consistent growth remains our top priority.”
Unilever shares closed 0.1% lower on Thursday, meaning their value remains around 6% lower than it was in January 2019 when Jope, 59, was promoted to the first place 34 years after initially joining the company.
The Scottish-born businessman is set to step down as boss of ice cream maker Magnum at the end of next year following investor disappointment with the company’s lackluster share price.
Major shareholders blamed this on the company’s weak sales growth relative to other consumer staples and the failure to take over GSK’s consumer healthcare arm in 2021.
Charlie Huggins, head of equities at investment service Wealth Club, said Unilever’s next boss “faces a monumental task”.
He added: “Unilever’s fundamental problem is that it is too big, with over 400 brands sold in over 190 countries. This makes Unilever far less nimble and entrepreneurial than its smaller competitors.
“One of the solutions is to sell brands. Unilever has so far been rather reluctant to significantly reduce its portfolio. Don’t be surprised to see Unilever’s next leader taking a more brutal approach to weeding out weaker brands.
Under Jope’s tenure, the group sold its tea business, including famous names like PG Tips and Pukka, for £3.8 billion to CVC Capital Partners, but also acquired numerous businesses, such as the retailer of Graze healthy snack boxes and a skincare company. Paula’s choice.
Unilever’s results come a day after fellow consumer goods salesman Reckitt Benckiser also raised its full-year revenue forecast, after seeing falling sales volumes of its personal care products offset by higher prices.
Condom maker Durex and Dettol also reported third quarter sales well above market forecasts, despite the easing of lockdown restrictions which lowered demand for cleaning and disinfecting brands Lysol and Dettol. .