The owner of Marmite, Hellmann’s, Magnum and Ben & Jerry’s ice cream has warned of further price hikes after raw material, labor and energy costs drive the biggest quarterly increases of its history.
Unilever said revenue rose 10.6% in the three months to September, driven by a 12.5% rise in prices, while the volume of goods sold fell 1. 6%.
Alan Jope, the group’s chief executive, said he expected high inflation to continue in the first half of 2023 due to rising commodity prices, a weak pound and other currencies against the dollar and higher processing costs passed on to Unilever by suppliers. .
He added that Unilever had also entered into fixed price agreements with some suppliers which were due to expire next year.
The company said it expected inflation to add €4.5bn (£3.9bn) to its full-year costs and around €2bn to its costs in the first half of next year.
Despite the price increases, Jope said there were few signs consumers were switching to cheaper brands on value or health and beauty.
“We see that the consumer is going to come under more pressure,” he said, but added that this was offset by “high employment levels”. “Things have to be bad enough in homes before they start to compromise the quality of the kinds of brands we sell,” Jope said.
In a potential sign consumers are indulging in small treats while limiting their spending on big items such as furniture, Jope said sales of higher-priced, higher-end products are increasing sales at the same rate as items. at discounted price.
Ice cream and deodorant were among the top-selling items. It was a hot summer for much of Europe, during which takeaway ice cream sold particularly well.
Jope said deodorants and shampoos were selling well due to the return to socializing. However, he said scratch cooking ingredients such as bouillon cubes, which proved popular when restaurants were closed to diners during the Covid shutdowns, continued to sell well as eating at home was now a “economic choice”.
Jope said Unilever brands such as Magnum were still on sale in Russia, but added that the company was not making any new investments in the country or receiving dividends or other profits.
He said the goods on sale were made in Russia for Russians and were linked to 3,000 jobs in the country. He said the company had no plans to change that position but would “watch it closely”.
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