Consumer goods giant Unilever to update on cost-of-living impact

Unilever, the consumer goods giant behind Persil, Wall’s ice cream and Hellmann’s mayonnaise, will update investors on rising costs and prices when Scots-born chief executive Alan Jope unveils first-quarter figures this week.

Russ Mould, AJ Bell investment director, said the group’s impressive collection of brands and global reach mean it will be able to provide a valuable snapshot of inflation and the impact on consumers.

“If any firm can give investors a feel for how companies are managing input costs, pricing and margins, as well as ongoing disruption to global trade flows and the war in Ukraine, then surely Unilever can,” he said.

The group already warned of margin pressure in February’s full-year results, but it has also forecast underlying sales growth of between 4.5 per cent and 6.5 per cent for this year overall, helped by higher prices.

For the first quarter, analysts are looking for a headline sales figure of €13.2 billion (£11bn). Although that would represent an increase of 7.4 per cent year on year, once currency movements and acquisitions are stripped out, the underlying growth rate is seen reaching 4.4 per cent – the bottom end of the target range.

Mr Mould said Unilever has acknowledged that higher prices could cost it some volume growth along the way and the mix will therefore also be of interest.

“Unilever only releases profit figures at the first-half and full-year stages, but analysts and shareholders will look to see whether Jope is sticking to his forecast of a drop in underlying operating margin to between 16 per cent and 17 per cent.”

Unilever's global reach means its Q1 figures will provide insight into the impact of cost and price rises on manufacturers and consumers. Picture: Getty Images.

He also said investors will be focused on cash returns. Unilever paid out four quarterly dividends totalling 146p a share last year, and for this year analysts are looking for 141.8p a share at current exchange rates.

Investors will also be keen to hear a strategic update. Following its failed offer for GlaxoSmithKline and Pfizer’s consumer goods arm, Unilever announced a new, five-division structure based on beauty and wellbeing; personal care; home care; nutrition, and ice cream.

Refine

“Any detailed breakdown here should be interesting, especially as there is a strong feeling that Unilever is looking to further refine its portfolio and focus on what it sees as the faster-growing areas of personal care and beauty,” Mr Mould said.

Last week, Unilever said it planned to stop advertising food and drink to children under the age of 16 from next January.

Matt Close, president for Unilever’s ice cream division, said: “Recognising the power that social media and influencer marketing can have on children’s choices, we believe it’s important to raise the bar on responsible marketing to a minimum age of 16 years old across both traditional and social media.

“By making these changes, our goal is to continue to reduce children’s exposure to advertising from the food and beverage industry, and instead support parents to select appropriate treats, to be enjoyed from time to time.”

University of Edinburgh graduate Mr Jope joined Unilever in 1985 as a marketing trainee and took over the top spot in 2019.