Unilever hikes profit forecast after price rises

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  • Mayonnaise maker Hellman’s reported a 17.8% increase in total turnover.
  • Outgoing CEO Alan Jope: ‘Global macro outlook remains mixed’
  • Unilever has warned that current inflationary pressures will continue into next year

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Consumer goods giant Unilever raised its full-year guidance after higher prices helped offset a drop in sales in the last quarter.

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Mayonnaise maker Hellman’s said total turnover rose 17.8% year-on-year to €15.8 billion in the three months ended September, with underlying sales growth of 10.6%.

Revenue rose by at least one-fifth in four of the company’s five business units after Unilever introduced the biggest quarterly price hike in its history of 12.5% ​​in response to rising commodity and energy prices.

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Extension: Unilever reported total turnover rose 17.8% to €15.8 billion in the three months ended September, with underlying sales growth of 10.6%.

Although this resulted in a slight decrease in sales volumes, trading continued to be much better than expected given worsening economic and commercial uncertainties.

Unilever, which also owns Vaseline, Lipton Tea and Dove shampoo, now expects core revenues to rise more than 8% in 2022, up from a previous estimate of 4.5% to 6.5%.

The FTSE 100’s health and beauty division posted the strongest third-quarter revenue growth, with hair care brands supported by strong demand in Latin America and South Asia.

However, he warned that current inflationary pressures, such as increased commodity and energy costs and a weaker euro, will continue into the next year, even as prices for some commodities are down from recent peaks.

Outgoing CEO Alan Jope said: “The global macro outlook remains mixed and we expect high inflation concerns to continue into 2023. Ensuring consistent growth remains our top priority.”

Unilever shares closed trading 0.1% lower on Thursday, meaning its value remains about 6% lower than it was in January 2019, when Jope, 59, was promoted to the top position 34 years after initially joining the corporation.

The Scottish-born businessman is set to step down as head of ice cream maker Magnum at the end of next year amid investor disappointment at the firm’s low share price.

Major shareholders blamed the company’s sluggish sales growth relative to other consumer products businesses and a failed takeover of GSK’s consumer health division in 2021.

Charlie Huggins, head of equity at investment service Wealth Club, said Unilever’s next boss “has a monumental task ahead of him.”

He added: “Unilever’s main problem is that it’s too big, with over 400 brands sold in over 190 countries. This makes Unilever much less flexible and entrepreneurial than smaller competitors.

“One solution is to get rid of the brand. Unilever has been rather reluctant to reduce its portfolio so far. Don’t be surprised if the next leader, Unilever, takes a tougher approach to culling weaker brands.”

Under Jope’s leadership, the group sold its tea business, which includes big names like PG Tips and Pukka, for £3.8 billion to CVC Capital Partners, but also acquired numerous companies such as healthy snack box distributor Graze and health care firm behind the skin. Paula’s choice.

Unilever’s results come a day after another consumer goods retailer, Reckitt Benckiser, similarly raised its full-year revenue forecast after seeing lower sales of its hygiene products offset by rising prices.

Condom maker Durex and Dettol also said third-quarter turnover far exceeded market forecasts despite the easing of lockdown restrictions, which led to lower demand for Lysol and Dettol brand cleaners and disinfectants.

Credit: www.thisismoney.co.uk /

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