Unilever profit climbs to €6.0bn on back of fastest sales growth in nine years

Consumer goods giant Unilever on Thursday logged rising annual net profit despite soaring costs as inflation bites.

Profit after tax rose 8.4 per cent to €6 billion (£5.06bn) last year compared with €5.6bn in 2020, Unilever said in a statement but warned of “very high input cost inflation” this year.

The company has reported underlying sales growth of 4.5 per cent for 2021, their fastest in nine years. Turnover increased 3.4 per cent to €52.4bn, with a positive impact from acquisitions, but offset by negative impact from currency.

Chief executive Alan Jope said the dramatic rise of input costs has been the major challenge of 2021, adding that the firm responded with pricing actions, delivering underlying price growth of 2.9 per cent for the year, accelerating to 4.9 per cent in the fourth quarter.

“In 2022, we will manage a significant input cost inflation cycle and will continue to invest competitively in marketing, R&D and capital expenditure,” he said.

Foods and refreshment business grew fastest in 2021 with 5.6 per cent underlying sales growth as food solutions and out-of-home ice cream partially recovered from channel restrictions in 2020.

The company said it expects underlying sales growth in 2022 to be in the range of 4.5 to 6.5 per cent, with some impact on volume as a result of strong pricing.

“We currently expect very high input cost inflation in the first half of over €2 billion. This may moderate in the second half to around €1.5 billion, although there is currently a wide range for this that reflects market uncertainty on the outlook for commodity, freight and packaging costs,” Unilever said in a statement.

The company recently announced a major organisational restructure, focussing around five category-focused business groups, and this is expected to generate around €600m of cost savings over two years.

The group, which faced fierce criticism over its failed $50-billion bid for drugmaker GlaxoSmithKline’s health care unit, ruled out any major acquisitions and pledged to return €3bn to investors via share buybacks.