Unilever lifts lead but falls in Europe, Chinese consumer sentiment | So Good News
Unilever On Thursday it issued a dire assessment for consumers in Europe and China, its two most important markets, but raised its full-year forecast as it raised prices to combat rising costs.
Like all other goods companies, Unilever’s margins have been reduced since the beginning of the war in Ukraine which has raised the cost of energy and utilities. As a result, the company has raised prices significantly.
“We are amazed at how well the volumes are doing [given] The price increases we’ve been forced to take,” CEO Alan Jope told CNBC after the results were published. “It’s a testament to the strength of our sales and our execution.”
Global consumers paid 12.5% more for Unilever’s products in the quarter – the company’s biggest price increase – while sales fell 1.6%. The company reported a better-than-expected increase in third-quarter sales.
Shares were up about 1% in morning trading.
“Consumer sentiment in Europe is at an all-time low,” Chief Financial Officer Graeme Pitkethly told reporters, warning of fears of a “mix of events” in Europe with energy prices and inflation rising and consumer spending declining.
“Both market segments and value segments in the market are growing rapidly, at the same rate,” Pitkethly told reporters.
But rising prices and promising economies in some countries have created a cost crisis that is forcing some people to switch to cheaper alternatives, such as private label goods produced by retailers.
“The needs of our European consumers have many pockets – things like utilities, transport and food – and are often reduced to non-food items.”
Unilever makes more than 400 brands from Persil detergent to Ben & Jerry’s ice cream.
In China, Unilever’s third-largest market which has been experiencing a surge in Covid-19 lockdowns, sales grew by 1%.
“The China figure, 1%, was a good performance in the Chinese market that is still there because of the confinement in China,” said Pitkethly, adding that confidence in China is lower than in the past and that Unilever was not like. capable of raising prices in the country.
Unilever said it now expects sales growth for the full year 2022 to be above 8%. In July, the company said it expected to beat its previous forecast of 4.5% to 6.5%.
“As we’ve seen with other names in many companies, raising prices and keeping prices high has become a big problem,” said Matt Britzman, market analyst at Hargreaves Lansdown. “A 1.6% decline in volumes in Q3 is not bad.”
— CNBC’s Hannah Ward-Glenton contributed to this report