Unilever warns prices will rise again as costs spiral
UNILEVER, owner of Marmite, Persil, Dove and other top brands, warned that it will have to raise its prices again to offset rising costs – adding to the squeeze on shoppers.
The Anglo-Dutch consumer goods giant has already pushed up prices this year due to rising energy, raw materials, commodities, and transportation costs.
Chief executive Alan Jope said its fullyear sales volumes and profit margins will be hit.
Unilever’s warning comes as Simon Roberts, Sainsbury’s chief executive, warned the City that its decision to invest in price cuts to protect shoppers from the inflationary squeeze on their incomes would hit the company’s profits.
Unilever’s first quarter sales rose 11.8 per cent to 13.8billion euros (£11.7million), with higher prices offsetting a one per cent fall in sales volumes.
It expects inflation to add £1.8billion to its costs in the first half, rising to £2.3billion in the second, due to Russia’s invasion of Ukraine and the disruption to energy and commodity markets it has caused. Mr Jope said: “This period of unprecedented inflation requires us to take further pricing action, with some impact on volume as a result.
“We currently expect the full-year underlying operating margin to be at the bottom end of the range.”
At its preliminary results, Sainsbury’s said it made a pretax profit of £854million for the 12 months to March 5, versus a £164million loss for the corresponding period last year.
Its improved performance was driven by lower Covid-19 and restructuring costs and write-offs, as well as income from settling legal disputes.
Sainsbury’s said that while the year had started well, it will be “impacted by significant external pressures and uncertainties”, such as its rising costs and inflation hitting household budgets.
As a result, it believes that its underlying profits for this year could fall by up to 13 per cent.