Marmite and Dove maker’s profits soar on back of price rises

Original Article:

Source: Link

The maker of Marmite, Dove soap and Ben & Jerry’s ice-cream, Unilever, has reported rising revenues after it increased prices by nearly 10%, even as consumers squeezed by the cost of living crisis bought fewer products. The FTSE 100 company said its underlying sales rose by 9.1% in the first half of the year compared with a year earlier, in a statement to the stock market on Tuesday. Price rises accounted for the entirety of the growth, with the volume of goods sold dropping by 0.2%. Consumer goods companies have been on the frontline of inflationary pressures as material and energy costs have risen as a result of coronavirus pandemic disruption followed by Russia’s war in Ukraine. Many firms have responded by raising prices. Rising corporate profits have proved controversial as inflation has caused a cost of living crisis in many parts of the world, with some politicians accusing big business of “greedflation”. Researchers at the International Monetary Fund last month found that rising corporate profits accounted for almost half the increase in Europe’s inflation over the past two years – although that finding is disputed by some economists. Unilever’s 9.4% price rises helped sales to beat analyst forecasts and contributed to rising revenues. Operating profits for the first six months of 2023 rose to €5.5bn (£4.8bn), a 22% increase compared with the previous year. Emma-Lou Montgomery, an associate director at Fidelity International, said: “There’s no doubt that higher prices are boosting Unilever’s coffers, with the company acknowledging that volumes were virtually flat, aside from the beauty and wellbeing and personal care businesses. “The cost of living is proving profitable for this global giant, with full-year underlying sales growth expected to beat forecasts.” Unilever forecast that price growth would “moderate through the year”, but added that it expected sales growth to remain strong. The company said Europe was particularly exposed to price growth because of the popularity of ice-cream brands such as Magnum and Ben & Jerry’s and other products such as salad dressings, on which Unilever had increased prices most rapidly. Revenues in the UK rose by more than 10%, and was “price-led”. The company said brands such as Hellman’s mayonnaise, Sunsilk hair products and Rexona deodorant – known as Sure in the UK and Degree in the US – had increased sales by volume. Hein Schumacher, who was chosen as Unilever’s new chief executive in January, has been leading the business for only a month, after taking over from Alan Jope amid pressure from the activist investor Nelson Peltz. Schumacher said he wanted a simplified operating model to “drive improved performance and competitiveness”. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Schumacher will also have to decide whether to continue Unilever’s business in Russia, which accounted for 1.5% of the group’s profits in the first half of 2023. Many large companies have abandoned operations in the country but Unilever has argued that its products are essentials and that it had stopped all capital from flowing across Russia’s borders. That stance has proved controversial, with the Ukrainian government naming it as an international sponsor of war. The company was also criticised on Sunday after an executive wrote that it would comply with all laws where it operated, including a Russian law permitting conscription. Unilever has said exiting is not a straightforward prospect, given it has a physical business in the country, and if it were to abandon its business and brands there “they would be appropriated – and then operated – by the Russian state”.