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Unilever PLC on Thursday warned on annual margins, as it predicts costs will be chunkier than expected in the second half of 2022, with the consumer goods firm facing inflationary pressure.
For the first-quarter of 2022, Unilever's revenue increased 12% year-on-year to €13.78 billion from €12.33 billion. Underlying sales growth was 7.3%, with prices rising 8.3% but volumes falling 1.0%.
‘We are executing well in a very challenging input cost environment. Underlying sales growth of 7.3% was driven by strong pricing, with a limited impact on volume in the quarter. This performance was delivered against the backdrop of significant rises in input costs that have further accelerated through the first three months of the year, and the human tragedy of the war in Ukraine,’ Chief Executive Alan Jope commented.
‘There is more to do as we navigate our business through unprecedented cost inflation, but we are making good progress. We are committed to sustaining this step-up in our growth and competitiveness.’
Unilever owns brands such as bleach products maker Domestos, household cleaner Cif and Ben & Jerry's ice cream.
Unilever on Thursday said second-half costs will be higher than initially expected, at around €2.7 billion.
The consumer goods firm explained: ‘We continue to expect input cost inflation of around €2.1 billion in the first half, but the outbreak of war in Ukraine and the related increase in raw material inflation have raised our cost forecast for the second half of 2022.’
It added that ‘unprecedented inflation’ will mean it must take ‘further pricing action’, which it said will hit volumes.
‘We now expect underlying sales growth in 2022 to be towards the top end of the previously guided range of 4.5% to 6.5%,’ Unilever predicted.
It is less bullish on margins, however. It expects full year underlying operating margin to be at the bottom end of a 16% to 17% range.
‘The greatest area of uncertainty and volatility is around the costs, and we will update with our half year results. We expect to restore margin through pricing, mix and savings delivery during 2023 and 2024, as market conditions normalise,’ Unilever added.
Unilever declared a first-quarter dividend of €0.4268 per share, unchanged annually.
In addition, it expects the sale of its global tea business to be completed in the second half of 2022.
Shares in the company were 0.3% lower at 3,567.00 pence each in London on Thursday morning.
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