Price hikes help Unilever achieve 8.4% Q1 growth

Consumer goods giant Unilever has reported an 8.4% rise in first-quarter sales, helped by price hikes and emerging market growth.

The Anglo-Dutch maker of brands like Dove and Knorr is battling high input costs from rising commodity prices such as crude and vegetable oils, and slow growth in developed nations. It also cautioned that emerging market growth has started to slow, especially in eastern Europe and Russia.

“The competition is intense, we have seen some moderation in emerging market growth while developed markets remain muted, but we have had a good start to the year and we are becoming more competitive,” finance director Jean-Marc Huet told a briefing.

Unilever, the world’s third-biggest consumer goods group, is holding to its forecast for modest profit margin expansion this year, albeit weighted towards the second half of the year.

“Despite the one-off tailwinds, this reads as a still-strong quarter to us,” said analyst Martin Deboo at brokers Investec.

The company, with annual sales of €46.5bn, reported that first-quarter underlying sales rose 8.4% compared to growth of 6.5% in 2011.

Emerging markets, which make up 56% of Unilever’s business, grew 11.9%.

Within categories, personal care led the field with growth of 10.4%. The group’s Clear anti-dandruff shampoo, recently launched in the US, was the fastest growing overall brand.

Unilever’s 8.4% growth was ahead of the world’s No 1 food group Nestle, which showed first-quarter sales growth of 7.2%, and France’s Danone, at 6.9%. &&

Unilever saw its commodity cost bill rise 15% last year. It expects around a 5% increase this year but that is showing signs of starting to creep higher again.

The competitive environment is also getting more intense: plans by P&G to cut costs by $10bn are fuelling concerns about heightened competition in home and personal care products.

“The external macro-environment remains difficult and high input cost headwinds persist,” said Unilever chief executive Paul Polman.

— Reuters