LONDON — Price inflation helped to bolster Unilever’s first-half turnover, which was up 14.9 percent to 29 billion euros. On an underlying basis, growth in the six-month period to June 30 was 8.1 percent.
Operating profit at the consumer giant, parent of brands ranging from Dove and Tatcha to Ben & Jerry’s and Magnum, was 4.5 billion euros, an increase of 1.7 percent, and 4.1 percent on an underlying basis.
Unilever’s chief executive officer Alan Jope said the first-half performance built on Unilever’s momentum in 2021, “despite the challenges of high inflation and slower global growth.”
He noted the underlying sales growth of 8.1 percent was driven by “strong pricing” aimed at mitigating input cost inflation. He added that higher prices ate into volume growth in some regions.
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As a result of the higher prices, Unilever said it plans to raise its sales guidance for the year. Guidance for underlying sales growth was previously at the top end of a range of 4.5 percent to 6.5 percent.
The company said it now expects underlying growth to be above that range, driven by price, with “some further pressure” on volume. Jope said net material inflation for the year is expected to remain high, at around 4.6 billion euros.
Shares in Unilever bounced 2.5 percent to 40.14 pounds in mid-morning trading on the London Stock Exchange.
Unilever’s performance in the second-quarter turnover beat analysts’ expectations. Turnover was up 17.5 percent to 15.8 billion euros on a reported basis, and up 8.8 percent underlying, compared with market expectations of 7 percent.
In the first half, overall sales in two of Unilever’s “priority” markets, the U.S. and India, grew strongly, while sales in China, its third major market, were impacted by lockdowns in the second quarter.
The company acquired Nutrafol, the hair wellness brand, during the period, while the hot Prestige Beauty and Health & Wellbeing divisions, which generate 4 percent of group turnover, grew in the double digits.
Beauty & Personal Care was the single largest division in the first half, generating 12.2 billion euros. Underlying sales growth was 7.5 percent, due entirely to price rises. Unilever said strong price increases landed across most categories, and were particularly pronounced in Latin America, South Asia and Turkey.
Skin care grew low-single digits on the back of a strong comparisons with the previous year, with Pond’s showing robust growth, especially in India. Unilever said skin cleansing returned to growth, with Dove’s strong pricing and flat volume supported by the launch of premium innovations in North America.
Prestige Beauty continued its double-digit growth momentum with Tatcha launching in the U.K. and expanding in premium channels in China.
Jope said Unilever’s planned switch to a simpler, more category-focused reorganization came into effect on July 1. He said the changes, aimed at streamlining the way the company operates, will underpin the delivery of consistent growth.
“The challenges of inflation persist, and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond,” he said.
Jope said that in the first half, Unilever increased its absolute brand and marketing investment, and it will once again invest competitively in marketing, R&D and capital expenditure in the second half.
He said that while the medium-term macroeconomic and cost inflation outlooks are uncertain and volatile, delivering growth “remains our first priority. Against this backdrop, we continue to expect to improve margin in 2023 and 2024, through pricing, mix and savings.”