Unilever passes on rising costs

Price hikes at the end of last year enabled consumer products giant Unilever to deliver a 7% rise in annual pre-tax profits today.

The company, which makes Hellmann’s mayonnaise and Dove soap, posted a better-than-expected 6.1% rise in underlying sales for the fourth quarter of the year, with almost half of the improvement stemming from higher prices.

Unilever said the price hikes were the result of “sharply higher” commodity costs, which it also offset through cost savings. Pre-tax profits for the group were €5.18bn, up 11% at constant exchange rates.

The company reported a marked improvement in trading in Europe, with underlying sales growth of 2.8% across 2007 lifted by an upturn of 5.5% in the final three months of the year.

Unilever described consumer demand in the region as steady and said it boosted performance through product innovation and improved quality.

The operating margin in Europe was lower at 11%, reflecting charges for restructuring, disposals and one-off items. Without these items, margins benefited from reduced overheads and lower costs of advertising and promotions.