Unilever PLC Reports Strong Performance, Predicts Growth in 2023
Unilever PLC (LSE:ULVR) reported underlying sales growth of 9% for 2022, higher than the 8.2% increase that analysts had expected. The strong performance was attributed to disciplined pricing action in response to high input cost inflation in the middle of challenging economic conditions. Furthermore, underlying price growth will remain high in the first half of 2023, with volume growth expected to be negative. Unilever predicts 2023 underlying sales growth to be at least in the upper half of its multi-year range of 3 – 5%.
Beauty & Wellbeing grew underlying sales by 7.8%, driven by price. Volume levels showed a slight increase, due in part to another successful year of growth in Prestige Beauty and Health & Wellbeing categories, resulting in over €2.5 billion in revenue. The underlying sales for Personal Care rose 7.9%, which was driven by strong pricing. Deodorant sales increased, whereas other categories saw a decrease. Home Care, being especially vulnerable to increasing input expenses, saw the most significant price increase and a slight decrease in volume, resulting in underlying sales increasing by 11.8%.
Unilever has systematically raised prices for eight consecutive quarters, taking the full-year underlying price growth to 11.3%. However, in order to protect consumers, Unilever has chosen not to fully offset the cost of inflation through pricing. This has resulted in a turnover increase of 14.5% to €60.1 billion, with 6.2% attributed to currency and (1.0)% from disposals net of acquisitions.
Unilever also announced that they will deliver only a modest improvement in underlying operating margin in the full year as they plan for another year of increased investment. Given the continued high cost inflation, the underlying operating margin is anticipated to be roughly 16 percent during the initial half of the period.
Outgoing CEO Alan Jope is set to be replaced by Hein Schumacher in July, who will be leading Unilever’s simpler, more category-focused operating model for Unilever, which is expected to generate around €600 million of cost savings over the first two years after 1 July 2022.
Brand and marketing investment was stepped up by €0.5 billion in constant exchange rates, which equated to a 10bps contribution to the margin in current exchange rates.
0. “Higher prices help boost sales at Unilever” ShareCast, 9 Feb. 2023, https://www.sharecast.com/news/news-and-announcements/higher-prices-help-boost-sales-at-unilever–12266666.html
1. “Cost of living: Consumer goods giant Unilever expects price growth throughout 2023” Sky News, 9 Feb. 2023, https://news.sky.com/story/cost-of-living-consumer-goods-giant-unilever-expects-price-growth-throughout-2023-12806567
2. “Unilever's record price hikes bolster 2022 results” Cosmetics Business, 9 Feb. 2023, https://cosmeticsbusiness.com/news/article_page/Unilevers_record_price_hikes_bolster_2022_results/206725
3. “Unilever posts strong sales growth and continued progress against strategy” Asia Food Journal, 9 Feb. 2023, https://asiafoodjournal.com/unilever-posts-strong-sales-growth-progress-strategy/
4. “Unilever Upped Marketing Spend By €500m In 2022 To Justify Price Hikes” The Drum, 9 Feb. 2023, https://www.thedrum.com/news/2023/02/09/unilever-upped-marketing-spend-500m-2022-justify-price-hikes
5. “Unilever Q4 sales narrowly miss estimates amid inflation pressures By Investing.com” Investing.com Canada, 9 Feb. 2023, https://ca.investing.com/news/stock-market-news/unilever-q4-sales-narrowly-miss-estimates-amid-inflation-pressures-2897764
6. “Marmite and Dove maker Unilever warns of more price rises this year” Business MattersBusiness Matters, 9 Feb. 2023, https://bmmagazine.co.uk/news/marmite-and-dove-maker-unilever-warns-of-more-price-rises-this-year/
7. “Unilever warns price hikes not yet past their peak” The Independent, 9 Feb. 2023, https://www.independent.co.uk/business/unilever-warns-price-hikes-not-yet-past-their-peak-b2278812.html
8. “Earnings: why Unilever shares just keep on going” Motley Fool UK, 9 Feb. 2023, https://www.fool.co.uk/2023/02/09/earnings-why-unilever-shares-just-keep-on-going
Leave a Comment
You must be logged in to post a comment.