Marmite to Ben & Jerry’s ice-cream maker Unilever has warned price hikes are not likely to peak until at least the second half of 2023. It gave the warning as it said rising manufacturing costs would dent its own profits over the next year.
The consumer goods giant said while inflation is set to ease back towards the end of 2023, price growth will “remain high” in the first half as it still looks to offset an extra 1.5 billion euros (£1.3 billion) of costs over the year. The group reported annual underlying operating profits edging up 0.5% to 9.7 billion euros (£8.6 billion) in 2022, while it saw sales lift 9% as it hiked prices in the face of soaring costs.
Unilever chief financial officer Graeme Pitkethly said: “We think we are past the peak of inflation, but not yet past peak pricing. If there’s a peak for pricing, it starts in the second half of this year. We all hope we get there as quickly as possible.”
It said it raised the prices of its goods by 11.3% over the year and by 13.3% in the final three months, which impacted sales by volume – down 2.1% in 2022. Unilever said sales by volume would continue to fall over the first six months of 2023 before improving in the final half as price growth eases, but said “it is too early to say whether volume will turn positive in the second half”.
The group said that as a result it expects to deliver “only a modest improvement in underlying operating margin in the full year”. Sales on an underlying basis are expected to grow in the “upper half” of its long-term goal for 3% to 5%. The group’s results showed statutory pre-tax profits rose to 10.3 billion euros (£9.1 billion) up from 8.6 billion euros (£7.6 billion) in 2021.
Outgoing chief executive Alan Jope said: “Unilever delivered a year of strong top-line growth in challenging macroeconomic conditions. Despite sharp rises in material costs, we have prioritised stepping up our brand and marketing investment. There is more to do, but the changes we have made mean that we start 2023 with momentum, setting us up well for delivering another year of higher growth, which remains our first priority.”
Subscribe here for the latest news where you live
Unilever announced at the end of last month that former Heinz executive Hein Schumacher would replace Mr Jope when he retires later this year. Mr Schumacher will take over on July 1 after a one-month handover with Mr Jope, who announced in September his plans to retire after five years at the helm.
