Unilever, the company behind brands including Marmite and Dove soap, has warned it will continue increasing prices for consumers this year but denied it was making “windfall profits” during the cost of living crisis.
The London-headquartered company said on Thursday that while the level of inflation had likely peaked, prices had continued to rise, albeit at a slower pace compared with a year earlier. It would mean that Unilever would continue increasing prices for consumers in the first half of the year, even if it meant shoppers bought fewer items as a result.
“We’re probably past peak inflation, but we’re not yet at peak prices,” the chief executive, Alan Jope, said. The company warned that “underlying price growth would remain high” in the first half of the year.
The consumer goods company – which also owns Hellmann’s mayonnaise, Magnum and Ben & Jerry’s ice-cream – has been grappling with how to recover its own rising costs, including ingredients for its products, which soared as the result of surging energy costs linked to Russia’s invasion of Ukraine.
However, Jope said the company had to tread carefully to avoid losing customers, who could turn to cheaper rival brands. “We’re acutely conscious of the pinch that households are feeling from rising costs: energy bills, food bills, everything’s going up in price … We want to be a successful long term business. We have to be very, very thoughtful and responsible in how we price and that’s why we’ve only passed along 75% of the cost that we’ve faced to the consumer,” he said.
He also said Unilever had “robust conversations” with retailers which carried its products before raising prices, and denied that the company was making outsize profits from the cost of living crisis.
“If you’re looking for windfall profits, they’re certainly not in Unilever,” he told journalists during a media call on Thursday morning.
It comes after Unilever reported underlying sales growth of 9% for 2022, higher than the 8.2% increase that analysts had expected.
It followed an 11.3% rise in the prices of its goods over 2022, though the volume of sales fell 2.1%, suggesting consumers were put off by the higher prices and bought fewer goods.
The company’s home care division – which includes Domestos bleach – was one of its strongest performers, recording a 12.3% rise in sales, after price increases for fabric cleaners which experienced the largest increase in input costs.
Unilever said “it carefully balanced price growth, volume and competitiveness” to navigate surging inflation last year. It helped the company report a 14.5% rise in overall turnover to €60bn (£53bn), though annual operating profit only grew 0.5% to €9.7bn.
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It is now expecting underlying sales growth of at least 3%-5% for the full year.
Unilever shares rose 0.7% on Thursday morning.
Jope also defended Unilever’s decision to continue operating in Russia, saying that any profits stayed in the country and were used in part to support its roughly 3,000 local staff. He said any attempt to leave the country would result in the Russian state taking over its brands and ultimately benefiting the Kremlin.
“Our brands will be appropriated by the Russian state. And we do not believe that transferring our business to Putin’s regime is a better solution than us managing it with the restrictions that we put in place,” he said.
