The food and hygiene products giant Unilever published an increase in sales on Thursday, driven by a rise in prices to absorb soaring production costs. In contrast, sales volumes stagnated.
Revenues for the first quarter are up almost 12% to 13.8 billion euros (14.09 billion francs).
The increase in sales is marked by “significant increases in production costs which accelerated further during the first three months of the year with (…) the war in Ukraine”, summarized the general manager Alan Jope in a statement.
The group expects these costs to continue to rise sharply throughout the year, due to the conflict in Ukraine and the ‘commodity inflation’ it causes.
Unilever says it is forced to pass on this surge to its prices, ‘which has some impact on volume’. The group’s underlying sales, ie excluding the currency effect, increased by 7.3% over the quarter, with an increase in prices of 8.3% but a decrease in volume of 1%.
The group with more than 400 brands, known for Dove soaps, Ax deodorants, Knorr soups or Magnum ice cream, expects its underlying sales growth for the year as a whole to be in the high part of the previously announced 4.5%-6.5% range.
On the other hand, the acceleration of costs in the second half of the year will weigh on its margins, which the group hopes to be able to restore during 2023 and 2024 “when market conditions return to normal”.
Recently under pressure from shareholders who are questioning its strategy following an abortive takeover attempt, Alan Jope indicated that the group “continues to reshape its portfolio in high-growth sectors” and is progressing on its structural reorganization scheduled for July 1.
Unilever had unveiled a reorganization at the end of January including the elimination of around 1,500 management positions and the organization ‘around five types of activity’: beauty and well-being, personal hygiene, maintenance of the house, nutrition and ice cream .
/ATS