Marmite and Dove maker Unilever warns of further price hikes this year | Unilever
Unilever, the company behind brands such as Marmite soap and Dove, has warned it will continue to raise prices for consumers this year but denied making ‘windfall profits’ during the cost crisis of life.
The London-based company said on Thursday that while the level of inflation had likely peaked, prices had continued to rise, albeit at a slower pace compared to a year earlier. It would mean Unilever would continue to raise prices for consumers in the first half of the year, even if it meant shoppers bought fewer items as a result.
“We’ve probably passed the peak of inflation, but we’re not at the peak of prices yet,” chief executive Alan Jope said. The company warned that “underlying price growth will remain elevated” in the first half.
The consumer goods company – which also owns Hellmann’s mayonnaise, Magnum and Ben & Jerry’s ice cream – has been grappling with how to recoup its own rising costs, including ingredients for its products, which have soared due to soaring energy costs linked to Russia. invasion of Ukraine.
However, Jope said the company needed to tread carefully to avoid losing customers, who might switch to cheaper competing brands. “We are acutely aware of the pinch that households are feeling from rising costs: energy bills, food bills, everything is going up in price… We want to be a successful long-term business. We have to be very, very thoughtful and responsible in our pricing and that’s why we only passed on 75% of the costs we faced to the consumer,” he said.
He also said Unilever had had “solid conversations” with retailers selling its products before raising prices, and denied the company was making outsized profits from the cost of living crisis.
“If you’re looking for windfall profits, they’re definitely not at Unilever,” he told reporters on a Thursday morning media call.
It comes after Unilever reported underlying sales growth of 9% for 2022, higher than the 8.2% increase analysts expected.
It tracked an 11.3% rise in prices for its goods in 2022, although sales volume fell 2.1%, suggesting consumers were put off by the price hike and bought less Goods.
The company’s homecare division – which includes Domestos bleach – was one of its best performers, recording a 12.3% rise in sales, after price increases for cleaners fabrics that have experienced the greatest increase in input costs.
Unilever said it “carefully balanced price growth, volume and competitiveness” to deal with soaring inflation last year. This helped the company record a 14.5% increase in overall revenue to €60bn (£53bn), although annual operating profit only increased by 0.5% to 9.7 billion euros.
He now expects underlying sales growth of at least 3% to 5% for the full year.
Shares of Unilever rose 0.7% on Thursday morning.
Jope also defended Unilever’s decision to continue operating in Russia, saying all profits stayed in the country and were partly used to support its approximately 3,000 local employees. He said any attempt to leave the country would result in the Russian state taking over its brands and ultimately benefiting the Kremlin.
“Our brands will be appropriated by the Russian state. And we don’t think transferring our business to Putin’s regime is a better solution than running it with the restrictions we’re putting in place,” he said.