Unilever annual profits jump on higher prices

British consumer goods group Unilever said Thursday that 2022 profits soared as sales of its food and hygiene products leapt on higher prices fuelled by inflationary pressures.

Profit after taxation jumped 26 per cent to €7.6 billion (£6.74bn) last year from 2021, as turnover spiked 14.5 per cent to €60.1bn, it said in a results statement.

Underlying sales growth accelerated to 9 per cent, with price growth of 11.3 per cent and volumes declining 2.1 per cent.

“Unilever delivered a year of strong topline growth in challenging macroeconomic conditions,” said departing chief executive Alan Jope.

Sales growth was “driven by disciplined pricing action in response to high input cost inflation”, he added.

The group faced “significant input cost inflation across our markets” on sky-high inflation and global supply-chain strains.

Price growth has now risen in each of the past eight quarters.

Turning to the outlook, Unilever warned that those pressures will persist, forecasting net material inflation in the first half of around €1.5 billion.

The packaged goods industry has raised prices sharply over the past year to cope with surging costs of everything from cocoa and sunflower oil to wheat. The industry had already been battling high COVID-era supply chain and raw material expenses when Russia invaded Ukraine, driving up the prices of energy and several other commodities.

“In the first half, underlying price growth will remain high, and volume growth will be negative,” Unilever said in a statement. “Volume will improve as price growth softens, but it is too early to say whether volume will turn positive in the second half.”

Thursday’s results come after Unilever last week named Hein Schumacher, the current head of Dutch dairy and nutrition firm Royal FrieslandCampina, as new CEO.

The Dutchman, who had joined Unilever in October as a non-executive director, will succeed Jope in July.

Scotland-born Jope will depart Unilever after coming under fierce pressure from activist investors.

Jope oversaw Unilever’s failed $50-billion bid at the start of 2022 for the former health care unit of drugmaker GlaxoSmithKline.

In response, Jope slashed around 1,500 management jobs in a global restructure widely seen as a bid to appease unhappy investors.

He also offloaded its global tea business, including brands Lipton and PG Tips.

And the group bought a majority stake in hair wellness company Nutrafol.

“We continue to improve our growth profile,” noted Jope.

“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.”

Schumacher, 51, has been head of Royal FrieslandCampina since 2018, and was formerly held various roles at US food giant Heinz.

He faces a battle to revive Unilever’s underperforming food business, while also managing tricky price negotiations with retailers feeling the squeeze from inflationary pressures and a cost of living crisis.

Jope spent 37 years in total at Unilever and has held the top job since 2019.

Under his tenure, Unilever became a wholly British company at the end of 2020 after it completed a merger of its Dutch and British corporate entities.