Higher sales prices help Unilever's turnover

Food group Unilever kicked off the year with strong figures. Turnover has grown strongly, mainly driven by higher selling prices. These higher sales prices have only slightly influenced the turnover volume. For the rest of the year, skyrocketing inflation is the main focus.

Unilever's turnover increased by 11,8% to €13,8 billion. This is partly due to exchange rate effects and acquisitions. Underlying sales increased by 7,3%. This growth is due to the sharply increased sales prices (+8,3%). A lower sales volume (-1%), probably as a result of the higher sales prices, dampened sales growth somewhat. The first quarter results have exceeded analyst expectations.

Unilever forecasts cost increases of €2,1 billion for the first half. This is in line with the previously communicated expectation. However, the war in Ukraine means that the company is likely to see costs rise more quickly for the second half of the year. The company is now taking into account that cost inflation will amount to €2,7 billion.

Focus is on inflation
Cost inflation is driving product prices up further, which could be negative for sales volumes. Revenue growth for the entire year, according to the company, is at the top of the aforementioned range of 4,5% to 6,5%. The operating margin is still expected to be between 16% and 17% in the first half of the year. In the second half of the year, the growing impact of cost inflation is driving margins to the lower end of the range.

The biggest uncertainty for Unilever at the moment is the uncertainty about cost developments. Unilever hopes that margins will recover in 2023 and 2024. This is due to normalizing market conditions, increased sales prices and savings.

Steve Wissink

Stef Wissink is an editor at Boerenbusiness and writes about current market developments in the dairy and pig market. He also follows Dutch and international agribusiness.

s.wissink@boerenbusiness. Nl

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