Unilever sales top estimates, but inflation casts shadow

NEW YORK: Unilever Plc on Thursday topped expectations with second-quarter sales growth, helped by higher prices and strong sales of ice-cream and teas, but warned surging commodity costs would squeeze its full-year operating margin.

The warning dragged shares of the FTSElisted company down 4.2 per cent making it the biggest loser on the index in morning trading.

Underlying sales for the maker of Dove soap and Hellmann’s mayonnaise rose 5 per cent in the three months that ended June 30, beating the 4.8 per cent analysts had expected, according to a company supplied consensus.

Half-year sales came in 5.4 per cent higher, above the 5.3 per cent forecast, propelled by 8.1 per cent growth in its Foods and Refreshment division, as living restrictions began to ease in many markets.

In Europe, ice-cream eaten out of home grew double-digits while it also saw strong consumption in markets like Turkey, China and India. Sales of teas, including Lipton and PG Tips, also generated strong volume growth in North America, Turkey, Europe and India.

“We believe full-year outlook will land well within the 3-5 per cent growth range with our biggest focus on competitive growth, Chief Financial Officer Graeme Pitkethly said on a media call.

He played down, however, expectations for margin growth due to a strong jump in prices of commodities including crude, palm and soybean oil, that hit margins in its personal and home care business.