Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Unilever – Inflation Takes A Bite Out Of Volumes As Management Warns Of More Trouble Ahead

By Anna Peel. Originally published at ValueWalk.

Unilever Beating Worst-Performing Mega-Cap Stocks Nonfinancial Corporations Personal Care Stocks Stock Splits J D Wetherspoon recession Link REIT Stock picking worst performing small cap stocks in January 2022

Unilever plc (LON:ULVR)’s first quarter sales adjusted for the impact of exchange rates rose 7.3% to €13.8bn, above expectations. This was driven by an 8.3% increase in prices, most notably in Home Care. Higher prices caused a 1% decline in volumes, though food solutions and out-of-home ice cream continued to improve as pandemic restrictions eased.

Inflation is expected to increase costs by €2.1bn in the first half and €2.7bn in the second half. Unilever plans to raise prices to combat this, which is seen hurting volumes.


Q1 2022 hedge fund letters, conferences and more

First half revenue growth is now expected at the top end of guidance for 4.5%-6.5% and operating margins between 16-17%. In the second half, margins are forecast to be at the bottom of that range due to the impact of inflation.

The group spent €750m of the €3bn earmarked for share buybacks and announced a €0.4268 quarterly dividend.

Shares were broadly flat following the announcement.

Unilever’s Earnings

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“Price hikes on everything from detergent to food’s is hitting consumers hard and Unilever is expecting things to get worse as the year progresses. The group’s already raised prices more than 8% to the detriment of volumes, but more hikes are on the agenda as inflation continues to bite. It seems we’re willing to pay more for the things we missed in lockdown, like going out for ice cream, but beyond that Unilever’s seen consumers pull back as their wallets are squeezed.

This is expected to put a damper on margins moving forward as the group tries to find a balance between covering rising input costs and keeping customers from abandoning branded products altogether. Consumers are becoming increasingly comfortable with private label brands, and generic replacements are going to start looking a lot more acceptable as the pressure on household budgets continues to build. That’s bad news for companies like Unilever, that rely on familiarity and consumer trust in order to charge a premium for their products.

For now it seems the trade-off between volume and price is working, but that won’t last forever. Plus, this opens the door for private labels and own-brands to pinch long-term consumers. If they’re happy with their swap, they may never return even if they can afford to.”


About Hargreaves Lansdown

Almost 1.7 million clients trust us with £141.2 billion (as at 31 December 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

Updated on

Sign up for ValueWalk’s free newsletter here.


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!