Unilever plans $7.4 billion buyback as pricing faces squeeze

Unilever is buying back shares and raising its dividend, joining other consumer-goods giants adopting investorfriendly measures as they lose the pricing power that’s historically driven sales.

The €6 billion ($7.4 billion) buyback, using proceeds from the sale of the Anglo-Dutch giant’s spreads business, will begin in May, the maker of Dollar Shave Club razor blades and Ben & Jerry’s ice cream said in a statement Thursday.

The move comes after Unilever last year fended off a takeover approach from Kraft Heinz Co.

Unilever’s product shipments have been rising faster than prices amid deflationary pressure in the US, emerging markets and European countries, where discount grocers are making gains.

The company has added fastgrowing businesses such as Pukka Herbs tea to its roster of brands to accelerate growth, as activist investors and acquisition-minded giants like Kraft Heinz circle the consumer sector.

Unilever expects pricing pressure to ease somewhat in the second half, chief financial officer Graeme Pitkethly said by phone.

That comes after the company was able to squeeze out gains of only 0.1% in underlying pricing in the first quarter, down from a 0.7% increase in the previous three months.

“We’ve still got negative pricing in North America and Europe—you’ve got Amazon, with a lot of promotional intensity in deodorants,” Pitkethly said, referring to the e-commerce giant’s discounted offers.

“I’ve never felt bold enough to say we’ll get back to an inflationary environment again in Europe.”

On an underlying basis, sales rose 3.4% in the first quarter, matching a company-compiled estimate.

Unilever has pledged more cost savings and greater profitability after its successful defense against Kraft Heinz. It sold the spreads unit, which included the Flora brand, to investment firm KKR & Co.

LONDON: