Unilever price hikes offset weaker sales volumes

Unilever has reported solid half-year revenue growth after further price hikes by the Ben & Jerry’s owner made up for declining volumes.

Underlying sales at the consumer goods giant rose by 9.1 per cent for the first half of 2023, following healthy demand for its ‘billion-plus euro’ brands and strong trade across all five core business segments.

Prices increased by 9.4 per cent, offsetting a modest fall in sales volumes as the FTSE 100 consumer giant sought to counter the effects of spiralling input costs.

Its personal care division – home to brands like Dove and Rexona – registered the biggest expansion in underlying revenues of 10.8 per cent, thanks partly to rising deodorant sales in Europe and the Americas.

Sales of nutrition brands also leapt by double-digits, supported by bumper demand for Hellmann’s mayonnaise and a revival of its food service business in China.

Lockdown restrictions severely affected Unilever’s revenues the previous year in China, which is its third-largest market, but they grew by ‘high-single-digit’ levels this time around.

Total turnover at the firm ticked 2.7 per cent higher to €30.4billion (£26.2billion), held back by adverse currency fluctuations and losses related to disposals, as net profits shot up by over a fifth to €3.9billion.

The group now anticipates annual underlying sales will exceed 5 per cent, which is ahead of its multi-year range, while price increases are set to continue abating.

Hein Schumacher, who became chief executive earlier this month, said: ‘My early immersion in the business has confirmed my belief in Unilever’s strong fundamentals.

‘The task ahead is to leverage these core strengths – supported by our simplified operating model – to drive improved performance and competitiveness.

‘This is our absolute priority, and it will mean bringing greater focus and sharper execution, with science-backed innovations and investment behind our brands.’

Unilever shares were 5.1 per cent up at £42.22 on Tuesday morning, although they have flatlined over the past five years.

Schumacher’s predecessor, Alan Jope, faced investor criticism over the firm’s sluggish share price, sales performance relative to its competitors and focus on sustainability credentials.

The Scottish-born boss endured further ire after Unilever failed to acquire GSK’s consumer healthcare arm for £50billion, with one fund manager comparing failed acquisition to a ‘near-death experience’.

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said the new CEO has two major priorities ahead of him.

He explained: ‘Get margins back up to where they were pre-pandemic. And tackle the underperforming parts of the portfolio, especially Europe, to improve brand competitiveness and sales growth.

‘In Schumacher’s own words, this will require ‘greater focus and sharper execution’ which is much easier to say on paper than to do in practice.’