Higher prices boost Unilever sales

Price rises continue to boost sales at Unilever, the FMCG giant behind popular brands like Dove soap, Marmite and Magnum ice-cream.

Unilever has reported underlying sales growth of 5.2 per cent for the third quarter of the year, after it hiked its prices again. Average prices rose by 5.8 per cent year-on-year in the quarter, while sales volumes fell by 0.6 per cent – suggesting some customers shifted to cheaper brands instead.

That’s a slowdown in price rises – in the first half of 2023, Unilever lifted its prices by 9.4 per cent. Unilever, which has been passing on its higher costs to consumers, reports that price continued to moderate as inflation eased.

Underlying sales volumes were positive in Unilever’s Beauty & Wellbeing, Personal Care and Home Care while sales volumes fell again in Nutrition and Ice Cream.

Unilever’s sales volumes of ice cream – such as Magnum and Ben & Jerry’s – fell by 10.1 per cent in the last quarter, majorly due to “consumer downtrading and unfavourable weather, particularly in Europe”.

It raised its ice cream prices by 8.2 per cent, meaning underlying sales fell by 2.8 per cent, suggesting it sold less, but at higher prices.

Unilever still expects to spend an extra £1.74 billion buying raw materials this year, but hopes to widen its profit margins slightly.

“We continue to expect underlying sales growth for the full year to be above 5 per cent, ahead of our multi-year range, with underlying price growth continuing to moderate.

“Our expectation for net material inflation (NMI) for 2023 remains unchanged at around €2 billion. We are confident in delivering a modest improvement in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind our brands,” The Guardian quoted Unilever’s statement.

It is also reported that Unilever has also signed a deal to sell Dollar Shave Club, the men’s grooming brand it acquired for $1bn in 2016 as part of a push into direct sales to consumers.

Unilever’s newish chief executive, Hein Schumacher, has outlined his action plan to drive growth at the company.

Schumacher, who took over this summer, said that Unilever is a company of many strengths, including, its category positions, the strength of its brands, its unmatched geographic reach and talented and passionate people.

“However, there has been a disconnect between these intrinsic strengths and the quality of our performance. Remedying this underperformance is our top priority and with Unilever’s strong fundamentals and the many opportunities across the five Business Groups, we are confident that we can achieve that.”

The plan includes focusing on Unilever’s “30 Power Brands”. which make up 70 per cent of its sales today, and building back its gross profit margins – which were hit by rising costs – through higher productivity.