‘It’s NOT business as usual’: Unilever boss warns over inflation, supply woes and threat of more lockdowns
Unilever’s boss said it was ‘far from business as usual’ as he warned over rising prices, supply issues and ongoing coronavirus lockdowns.
Highlighting ‘unprecedented cost inflation’, the FTSE 100 consumer goods giant’s chief executive Alan Jope said ‘the operating environment across our markets worldwide remains volatile’.
But he hailed the ‘resilience’ of the company as it brushed off rising costs, labour shortages and fresh outbreaks of coronavirus to deliver a 2.5 per cent rise third quarter sales.
Warning: Unilever chief exec Alan Jope (pictured) said ‘the operating environment across our markets worldwide remains volatile’
Total turnover hit £11.4billion between July and September. This, however, was achieved after Unilever raised prices on its huge stable of products – from Domestos and Dove to Hellmann’s and Marmite – by 4.1 per cent.
This offset a 1.5 per cent fall in sales volumes. The firm warned of further price hikes, with finance chief Graeme Pitkethly saying: ‘We expect inflation could be higher next year than this year.’
The group, which claims its products are used by 2.5bn people every day, said it had been able to absorb the majority of the cost increases by making £1.7billion of efficiency savings this year.
Its wage bill rose in the UK and the US, and it is battling higher costs for energy, shipping and key materials such as palm and soybean oil, crude oil and paper.
Jope said: ‘We are operating in a global environment that is far from business as usual. Many parts of the world continue to be impacted by Covid.
But Unilever manages this sort of volatility well, and our supply chain has shown the necessary resilience to adapt.’
The company announced a 36p-per-share dividend, equivalent to £928million.
Hard to swallow: Unilever has raised prices on its huge stable of products – from Domestos and Dove to Hellmann’s and Marmite – by 4.1%
Shares rose 1.2 per cent, or 44.5p, to 3863.5p following a three-month slide in the stock.
Unilever makes several household name brands found on the shelves of UK supermarkets, including PG Tips tea and Ben & Jerry’s ice cream.
The highest price rises came in its home care division, which includes brands such as Comfort, Domestos, Dove and Persil.
Prices jumped 4.8 per cent and volumes fell 3.2 per cent over the quarter, compared to last year, as the company struggled to match the heightened demand for cleaning products for hands and home at the height of the coronavirus pandemic.
The business’s beauty and personal care division, which includes brands such as Vaseline, Radox bubble bath and Lynx deodorant, grew overall sales by 2.6 per cent as price inflation of 3.9 per cent offset a 1.3 per cent slide in volumes.
Petroleum jelly brand Vaseline was a standout product, with sales jumping by more than a tenth, while its range of deodorants were up around 5 per cent.
In foods and refreshment, sales rose 3 per cent thanks to a 3.8 per cent rise in prices.
The company completed the demerger of the tea business at the start of month, and bosses are now considering whether to sell it, float it or bring in a partner to grow the business.