Unilever said on Thursday it would continue to raise prices for its cleaning, hygiene and packaged food products to offset rising input costs, but would ease those increases in the second half.
The company expects cost inflation to continue into 2023, forecasting net material inflation in the first half of around €1.5 billion.
“As far as the inflation coverage we’ve seen, we’re currently at just 75% of full cost inflation covered,” said CFO Graeme Pitkethly. “That needs to go above 100% to repair our gross margin.”
Price increases will continue into the second half “but will be lower rates of increase… we’re probably past peak inflation, but not past peak prices yet,” Pitkethly said.
Underlying price growth in the fourth quarter was a record 13.3%, while underlying volumes were down 3.6%.
Unilever had a dramatic 2022, with three rejected bids to buy GSK’s consumer health business, activist investor Nelson Peltz joining the board and chief executive Alan Jope announcing his departure.
Late last month, it named dairy executive Hein Schumacher as its new chief executive.
The expectation is that the new chief executive will start in the role at a time of reduction in input costs, allowing the company to recover its market share, said Tineke Frikkee, fund manager at Waverton Investment Management.
Unilever’s underlying sales rose 9.2% in the fourth quarter, beating the company’s analyst estimate of an 8.2% increase.
Underlying operating margin dropped 230 basis points to 16.1% and is expected to remain at around 16% in the first half.
Source: CNN Brasil
I am an experienced journalist, writer, and editor with a passion for finance and business news. I have been working in the journalism field for over 6 years, covering a variety of topics from finance to technology. As an author at World Stock Market, I specialize in finance business-related topics.
