Unilever Plc on Thursday took a critical assessment of consumer sentiment in its two key markets, Europe and China, but raised its full-year sales forecast as prices hiked to counter rising costs.
Like the rest of the consumer goods industry, Unilever’s margins have been squeezed since the start of the war in Ukraine, which has driven up energy and key materials costs. As a result, the company has increased the prices rapidly.
“Consumer sentiment in Europe is at an all-time low,” Chief Financial Officer Graeme Pitkethley told reporters.
Worldwide buyers paid 12.5% more for Unilever products in the quarter, with sales volume down 1.6%. The company posted better than expected growth in third quarter sales.
“Both the premium segment of the market and the value segment of the market are actually growing quite rapidly at a similar rate,” Pitkethley told reporters.
But inflation and the promise of austerity in some countries have created a cost-of-living crisis that is pushing some toward cheaper alternative products, such as private label goods made by retailers.
“The basic needs of our European consumers are occupying a high share of the wallet – things like utilities, transportation and food – and discretionary non-food items are cut into.”
Unilever makes more than 400 brands, from Persil detergent to Ben & Jerry’s ice cream.
In China, Unilever’s third largest market, sales increased 1%.
“The China number, 1%, was actually a competitive performance in a Chinese market that is still well below the ongoing lockdown in China,” Pitkethley said, adding that confidence in China is low relative to historical norms and that Unilever was not in the country. Can increase the price.
The maker of Knorr Stock Cubes reported underlying sales growth of 10.6%. Analysts were expecting 8% growth, a consensus provided by the company showed.
Unilever said it now expects underlying sales growth to be above 8% for full-year 2022. In July, the company said it expected full-year underlying sales growth to beat its previous forecast of 4.5% to 6.5%.
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