LONDON — Higher prices due to inflation drove growth at Unilever in fiscal 2022, and the trend looks likely to continue in the first half of the current year.
Turnover in the 12 months to Dec. 31 was 60.1 billion euros, up 14.5 percent compared with the previous year. Underlying sales grew 9 percent following an 11.3 percent hike in prices. Sales volumes for the year declined 2.1 percent.
The consumer giant’s beauty and well-being division saw annual sales increase 20.8 percent to 12.3 billion euros, with underlying sales up 7.8 percent.
Personal care, which includes mass-market brands such as Dove, Vaseline and Pond’s, rose 15.9 percent to 13.6 billion euros. Like-for-like sales were up 7.9 percent.
Related Galleries
Unilever said the growth in its beauty, well-being and personal care divisions came mainly from price hikes resulting from higher input costs.
In the beauty and well-being division, which owns brands such as Tatcha, Living Proof and Ren, sales volumes were “slightly positive.” Unilever said that its prestige health and well-being brands now account for more than 2.5 billion euros of turnover.
In the 12 months, Unilever’s net profit rose 24.9 percent to 8.3 billion euros, bolstered by increases in pricing and by disposals. Underlying earnings per share were 2.57 euros, down 2.1 percent compared with the corresponding period last year.
The shareholder dividend, payable in March, will be around 0.43 euros per share.
Shareholders have been unimpressed with Unilever’s lackluster share price growth, one reason why chief executive officer Alan Jope will be stepping down later this year. He’ll be replaced by Hein Schumacher who was handpicked by activist shareholder and board member Nelson Peltz, according to British media reports.
Jope, who will step down in July, said that underlying sales growth will be strong in 2023, “with improving volume performance and competitiveness as the year progresses. We will continue to price and drive our cost-savings programs in order to allow us to invest behind our brands and deliver improved margin.”
The company said that net material inflation in the first half of 2023 to be around 1.5 billion euros. That figure will be “significantly lower” in the second half, “though we do not expect cost deflation,” Unilever added.
In the first half, underlying price growth is set to remain high, and volume growth will be negative. Unilever said volume will improve as price growth softens, but it is too early to say whether volume will “turn positive” in the second half.
It added that 2023 underlying sales growth will be “at least” in the upper half of its multiyear range of 3 to 5 percent range.
Unilever added that it plans to deliver “only a modest improvement” in underlying operating margin in the full year, as it plans for another year of increased investment. With cost inflation remaining high, underlying operating margin will be around 16 percent in the first half, the company added.