Unilever raises revenue guidance after price hikes helped it beat guidance

Unilever Plc raised its full-year sales forecast after beating underlying first-half sales forecasts as the maker of Dove soap and Knorr bouillon cubes hiked prices to counter rising costs and its shares on Tuesday sent up 2.7 percent.

As one of the largest consumer goods companies in the world, making everything from laundry detergent to ice cream, Unilever’s costs have skyrocketed since the onset of the COVID-19 pandemic caused global supply chain lockdowns.

The war in Ukraine has since pushed up energy costs and pushed the prices of commodities such as wheat, sunflower oil and pulp for packaging to record highs.

The operating profit margin fell to 17 percent in the first half from 18.8 percent a year earlier, even as Unilever raised prices by 9.8 percent.

The price hikes come even as retailers lash out at consumer goods suppliers for fear of giving up margins and unsettling shoppers.

US giant Walmart Inc, the world’s largest retailer, lowered its earnings guidance on Monday as rising food and fuel prices prompted shoppers to cut spending.

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

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

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

Underlying revenue rose 8.1 percent, beating analysts’ expectations of 7.2 percent growth, according to consensus provided by the company for the half through June 30.

Unilever announced on Tuesday that it now expects to beat its previous forecast for underlying revenue growth of 4.5 percent to 6.5 percent for the full year.

Its shares cheered the results, rising 2.7 percent as of 0742 GMT.

“Underlying revenue growth of 8.1 percent was driven by strong pricing to mitigate input cost inflation, which as expected had some impact on volume,” said CEO Alan Jope. “Inflation challenges remain and the global macroeconomic outlook is uncertain.”

Half-year sales rose 14.9 percent to 29.6 billion euros ($30.25 billion), although sales volume fell 1.6 percent.

CFO Pitkethly said Unilever increased spending on advertising and brand marketing by 200 million euros in the first half to prevent shoppers from switching 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, part of a €3 billion plan announced last year.

https://www.independent.ie/business/world/unilever-ups-sales-guidance-after-price-hikes-help-it-beat-forecast-41867629.html Unilever raises revenue guidance after price hikes helped it beat guidance

Fry Electronics Team

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