Unilever’s sales forecasts were exceeded last year due to higher prices for Magnum ice cream, Dove shampoo, and Magnum Magnum ice cream.
The FTSE 100 consumer goods company, which includes brands such as Domestos and Ben & Jerry’s icecream, reported that its turnover increased 11 percent to EUR14.6 billion over the three months to December. This was due to what it called “disciplined pricing action” to counter high inflation input costs.
The fourth quarter’s under-underlying sales saw a 9.2 percent increase, exceeding consensus estimates of an 8.2 percentage increase. The average price increase was 11.3 percent, which offsets a 2.1% decrease in sales volumes.
With an underlying growth rate of 12.3 percent to EUR3.2 billion, home care, which accounts for 21 per cent of group turnover was the best performer during the period. Unilever stated that this was due to price increases in fabric cleaning which had the greatest impact on commodity costs.
Sales of beauty and wellness rose 7.7%, personal care rose 9.1%, nutrition rose 10.1%, and ice cream rose by 2.9%
The total turnover rose 14.5 percent to EUR60.1 billion, and net profit rose 24.9 percent to EUR8.3 trillion. Input cost inflation drove an increase in operating profit by 0.5% to EUR9.7billion.
According to the company, cost inflation will continue in 2023. It also forecasts net material inflation of EUR1.5 billion in the first half.
It stated that “In the first quarter, underlying price growth will continue to be high and volume growth would be negative.” “Volume will increase as price growth slows down, but it’s too early to predict whether volume will turn positively in the second.
Investors rejected Alan Jope’s three bids to buy GSK’s health division.
Alan Jope, the incoming chief executive stated: “Despite sharp increases in material costs, we have prioritised investing in brand building and marketing. We have momentum and are ready to deliver another year of high growth in 2023. There is still much to be done.
Unilever, one of the largest consumer goods companies in the world, operates in beauty and wellness, home care and nutrition. Its sales totalled EUR52.4 billion last year. Marmite, Pot Noodle, and Knorr stock cubes are some of its brands. It has 148,000 employees and operates in 190 countries.
The company appointed Hein Schmacher, 51, its new chief executive last month. Nelson Peltz, the American activist investor and father-in-law of Brooklyn Beckham, helped recruit Schumacher, a Dutch-born restructuring expert. This fuelled talk of a overhaul for Unilever’s consumer goods business.
Jope had made three bids for the consumer division of GSK last year, which was formerly GlaxoSmithKline. However, Unilever shareholders were not happy with the move and Jope abandoned the plan. GSK’s consumer division was then spun off into a separate listed company called Haleon.
Charlie Huggins, Wealth Club’s head of equity, stated that the results were a solid end to a turbulent three-year period for Jope. He said, “All eyes now turn towards Hein Schumacher’s successor’s plans for underperforming consumer juggernaut.” “Shareholders will not be looking for evolution but revolution. Unilever’s board chose to hire an external employee, which suggests that they will likely get what they want.”
Jefferies analysts said that it felt like an update in the round. This is in contrast to the apprehensiveness at the beginning.
Investor nerves were calmed by the better-than-expected results, which lifted Unilever’s share prices by 0.5% to PS41.40.