By Geoffrey Smith
Investing.com -- Unilever (NYSE:UL) posted strong increases in revenue in the three months through March but warned that its problem with input costs will get worse in the second half of the year, hitting its margins.
It now expects full-year sales growth at the top end of its 4.5% to 6.5% but said operating margins would be at the bottom end of its guided range of 16-17%, due to an additional 2.7 billion euro rise in operating costs in the second half.
“This period of unprecedented inflation requires us to take further pricing action with some impact on volume as a result,” Unilever said in a statement. It follows other consumer giants such as Nestle (OTC:NSRGY) and Procter & Gamble (NYSE:PG) in pushing through chunky price increases in the last quarter, a reflection of the strong inflationary trend all over the world.
"We expect to restore margin through pricing, mix and savings delivery during 2023 and 2024, as market conditions normalise," the company added.
Unilever's sales volumes actually fell 1.0% in the quarter, but revenue rose 7.3% due to an 8.3% average rise in prices. That was ahead of analysts' expectations. It raised prices in its food division by an average of 6.5%, but pushed through a thumping 9.2% rise in for its home care products.
Overall revenue grew about 12% to 13.8 billion euros ($14.5 billion), some 3.5 percentage points of that was down to the euro’s depreciation from a year earlier. Revenue grew strongest in the Americas and Asia, where underlying sales growth jumped over 9%.
The group raised its prices by 8.5% in North America, but by only 5.4% in Europe. As a result. European sales grew less than 1%.