Unilever price hikes put squeeze on supermarkets

MARMITe owner Unilever is squeezing supermarkets by raising prices.

IN a bumper set of results that sent shares close to record levels, the Anglo-Dutch giant said revenues rose 3.1pc to £10.7bn in the first three months of the year.

This was largely due to higher prices rather than a rise in the number of products being sold – a sign that supermarkets and other retailers are being squeezed. New boss Alan Jope ( pictured

topright), who replaced Paul Polman in January, warned of price increases for shoppers even as supermarket chains fight for customers. he said: ‘ We don’t like passing on price increases to consumers. We like our brands to offer amazing quality and very good value, so our first reflex is to try to cover cost increases. The supermarket chains, like us, are not keen to take prices up. Supermarkets run on very slim margins so if we’re passing along price increases, ultimately they do end up being reflected to consumers.’

Unilever, which supplies the UK’s major supermarkets with brands such as Magnum ice cream, Domestos and PG Tips, saw revenues in europe up 2.6pc, and 7.6pc in emerging markets including South-east Asia and Brazil.

Shares rose 2.9pc, or 125.5p, to 4503.5p and it will pay a quarterly dividend of 35.46p a share.

Unilever, which sold its spreads business, including the Flora brand, for £5.9bn last year, said 1.9pc of the rise in revenues came from higher prices, with 1.2pc from an increase in the volume of goods sold. Jope said the price increases had occurred largely within its homecare division, which includes brands such as Persil and Cif.

Graham Spooner, analyst at The Share Centre, said: ‘Investors will be pleased with the increase in the quarterly dividend but will be hoping it can boost sales growth – something analysts have been increasingly concerned about.’

Unilever, which operates a duallisted structure in the UK and Netherlands, suffered a humiliating climbdown last year when it had to abandon plans to move its headquarters to Netherlands.

Jope refused to say whether the company was committed to keeping its base in the UK.

Russ Mould, investment director at AJ Bell, said: ‘Now comes the hard part. Jope needs to find a way to stop the sales growth slowing down, and adapt Unilever for the new era of retail where online shopping and the rise of discounters are driving down prices.’