Consumer giant Unilever raises prices by 10%
The consumer giant makes brands including Cif and Domestos, Hellmann's, Magnum and Cornetto ice creams, Sunsilk shampoo, Omo and Persil, as well as Knorr food stuffs.
Unilever, which makes 400 food and grocery brands commonly found in supermarkets, raised its full-year sales guidance after beating first-half underlying sales forecasts as it hiked prices to counter soaring costs.
Unilever's first-half operating profit margin fell to 17% from 18.8% a year earlier, even as Unilever raised prices by 9.8%.
The price hikes come despite retailers pushing back against consumer product suppliers, worried about ceding margins and alienating shoppers.
The consumer giant makes brands including Cif and Domestos, Hellmann's, Magnum and Cornetto ice creams, Sunsilk shampoo, Omo and Persil, as well as Knorr food stuffs.
One of the biggest consumer companies in the world, making products from detergent to ice cream, Unilever's costs have surged since the start of the Covid-19 pandemic created global supply chain logjams.
War in Ukraine has since boosted energy costs and sent prices of raw materials such as wheat, sunflower oil and pulp used in packaging to record highs.
Unilever said it sees net material inflation at about €4.6bn this year, including a €2.6bn hit in the second half.
US giant Walmart, the world's biggest retailer, earlier this week slashed its profit forecast as surging prices for food and fuel prompted customers to cut back on spending.
"We did see their news this morning, but I think there are many, many aspects to that don't fully connect with Unilever," the firm's chief financial officer Graeme Pitkethly said on a call with journalists, noting that Walmart's announcement was related more to general merchandise and clothing, and that inflation would vary by region.
However, Mr Pitkethly added: "We expect peak inflation to come in the second half of the year. I don't think we'll be able to catch up in the current quarter."
"We're not going to go back to the previous low inflation environment - we're going to be stuck in this environment for a significant amount of time," said Andy Searle, a partner at consultancy Alix Partners.
Unilever this year made room on its board for activist investor Nelson Peltz, whose Trian investment vehicle had built up a 1.5% stake as of last month.
Mr Peltz "is making a very constructive contribution as a board member", CEO Alan Jope said.
Underlying sales grew 8.1% and Unilever said it now expects to beat its previous forecast for full-year underlying sales growth. Bernstein analysts in a note described the results as "good".
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