Unilever indicates further price increases during full year 2021 results reveal

By Julia Wray 10-Feb-2022

The FMCG giant also ruled out large acquisitions after failed GSK consumer health takeover bid

<i>Unilever global headquarters in London, UK</i>

Unilever global headquarters in London, UK

Unilever has signalled that consumers should expect further price increases as it passes on soaring commodity, freight and packaging costs.

Chief Executive Alan Jope had warned as far back as October that elevated cost inflation levels would continue into 2022.

The Dove owner commented in its outlook for 2022: “We currently expect very high input cost inflation in the first half of over €2bn.

“This may moderate in the second half to around €1.5bn, although there is currently a wide range for this that reflects market uncertainty on the outlook for commodity, freight and packaging costs.”

Jope told investors: “The major challenge of 2021 has been the dramatic rise of input costs.

“We responded with pricing actions, delivering underlying price growth of 2.9% for the year, accelerating to 4.9% in the fourth quarter, with full year underlying operating margin down 10bps and underlying earnings per share up 5.5%.”

In the wake of Unilever’s abandoned move on GlaxoSmithKline’s consumer health business last month, which rattled shareholders, Jope added: “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.

“We therefore do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback programme of up to €3bn over the next two years.”

Despite these challenges, Unilever enjoyed underlying sales growth of 4.5% in full year 2021, its fastest in nine years, according to the company, with net profits rising 9% to €6.6bn.

Underlying sales for its beauty and personal care business segment grew 3.8% last year, including a 3% rise in prices.

Skin care exhibited particularly good growth amid strong sales of Unilever’s Vaseline brand, while deodorants continued to recover in line with the category generally and amid the US launch of the Dove refillable deodorant.

However, it was far from being the strongest performing category for Unilever, which saw underlying sales of Foods & Refreshment jump 5.6%.

The 2021 full year results announcement follows a turbulent period for Unilever during which Nelson Peltz’s Trian Partners acquired a stake in the personal care group following the GSK rebuff.

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It subsequently announced it was slashing 1,500 jobs amid a corporate shake up that saw its businesses regrouped into Beauty & Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream.