A-Brands

Unilever Warns Of High Inflation, Rules Out Major Acquisitions

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Consumer goods giant Unilever has forecast higher sales, but lower margins, this year as it grapples with soaring inflation, and has ruled out big acquisitions following recent investor criticism of its failed pursuit of GlaxoSmithKline's consumer health business.

The maker of Dove soap and Ben and Jerry's ice cream said it had listened to investor concerns about the potential £50 billion (€59.28 billion) deal, and had instead decided to buy back up to €3 billion of shares over the next two years.

"We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio needs to be measured," chief executive Alan Jope said in a statement.

Fourth-Quarter Sales

Unilever reported a 4.9% rise in fourth-quarter underlying sales as people continued to eat more at home. That beat analysts' mean forecast for 3.8% growth in a company poll.

For the whole of 2021, underlying sales growth was 4.5%, the strongest for nine years.

The company forecast growth of 4.5% to 6.5% this year as it pushes through more price rises to try to offset soaring input costs, but also said its underlying operating margin was likely to decline by between 140 and 240 basis points.

“We are focused on driving faster growth from our strong portfolio of brands and markets, and recently announced a major change to create a simpler, more category-focused organisation designed to further improve performance," Jope added.

"In 2022, we will manage a significant input cost inflation cycle and will continue to invest competitively in marketing, R&D and capital expenditure."

Consumer goods companies are grappling with soaring energy, commodities, labour and transportation costs.


News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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