Unilever, the owner of brands ranging from Marmite and Ben & Jerry’s to Dove soap and Domestos bleach, has raised its prices by 11.2% in recent months and expects to do so again throughout the year.
The increase in prices in the three months to the end of June helped the Anglo-Dutch consumer goods group report sales growth of 8.1% in the first half of 2022, as the rises compensated for falling volumes of goods sold.
Unilever said it expected “material inflation” to remain high for the rest of the year, while the outlook for the global economy and cost inflation was “uncertain and volatile”.
However, it said it still expected to improve its profit margins next year and the year after by raising prices, making savings and shifting the mix of product it sold.
The group predicts sales growth for the year to be about 6.5%, the top end of expectations, with growth driven by price rises.
Alan Jope, the chief executive, said: “Unilever has delivered a first-half performance which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth.
“The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond.”
Prices rose most in home care products such as Persil and Domestos. The amount of food sold dropped by almost 1%, despite sales of takeaway ice-creams such as Magnums rising more than 10%, but the value of sales rose 7.3% as a result of price rises.
Unilever said its profit margins had fallen by more than two percentage points after “very high inflation in input costs” that were only partially offset by price rises and cost savings.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said raising prices had kept Unilever’s sales and profits moving in the right direction and in line with guidance.
“Having a host of strong brands is essential if any business wants to pass on rising costs, and Unilever has those up its sleeve – the ability to raise prices just shy of 10% and only have a 1.6% drop in volumes is a good place to be,” he said.
Britzman said there was a limit to how much someone would pay for a Magnum, however: “We’ve heard from supermarkets that shoppers are now starting to slide down the value chain in an attempt to keep shopping lists intact.”
