Unilever warns of price increases as Iran war weighs on retailers
Unilever warned it will raise prices to offset higher costs related to the war in the Middle East.Chief financial officer Srinivas Phatak said that there would be ‘frequent price increases but in small doses’, most likely with its cleaning and laundry goods.These products - which include well-known names including Cif and Comfort - are likely to see price rises because the division is seeing ‘a lot of impact’ from higher oil prices, he said.The group expects annual total cost inflation between £648.5million to £780million - which is £303million to £433.1million more than it expected at the start of the year.It is also facing higher costs within logistics and manufacturing.Phatak said the business wants to ‘ensure that there is great consumer value’ still and that price hikes are ‘really our last resort’.It came as chief executive Fernando Fernandez said the group is on track to ‘build a simpler, sharper’ business as its quarterly sales beat expectations. Unilever wants to focus on its beauty and personal care products, such as Dove and VaselineThe group believes the future of Unilever now lies with its beauty and personal care brands after the spin-off of its food business earlier this month.Sales at the group rose 3.8 per cent in the first three months of the year, beating analyst expectations of 3.7 per cent.It came as its beauty and well-being division - one of its key focuses - saw sales climb 3.6 per cent, driven by 'continued strength' in Dove and Vaseline. Its personal care arm saw sales growth of 3.7 per cent. A decline in sales across Europe was offset by stronger performances in Latin America and Asia Pacific. But the Anglo-Dutch conglomerate said its turnover fell 3.3 per cent to £10.9billion as currencies offset booming sales. 'Pricing power remains weak at just 0.9 per cent, developed markets are still subdued, and a heavy FX drag masked much of the underlying strength,' said Adam Vettesse, market analyst at eToro. 'Management struck a measured tone, expecting volume to drive the bulk of growth amid softer consumer conditions.' Full-year guidance was reconfirmed, albeit at the lower end of the range of 4-6 per cent. Fernandez said: ‘We continue to move at speed to build a simpler, sharper Unilever with a structurally higher growth profile and a brand portfolio fit for the future.’It comes as the group is set to create a major food powerhouse, when it merges its brands with US rival McCormick in a £11.9billion deal. This will combine brands including Unilever's Hellmann's and Marmite, with McCormick's French's mustard and Schwarz.Unilever announced plans to cut 7,500 jobs in April last year and has more recently sold British healthy snack brand Graze to the owners of Candy Kittens.It has also been acquiring trendsetters like British deodorant seller Wild and soap brand Dr Squatch.Last year, it spun off its ice cream division, The Magnum Ice Cream Company, which floated in Amsterdam in December.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
Share or comment on this article:
Unilever warns of price increases as Iran war weighs on retailers
