Unilever chairman Alan Jope relapsed on Tuesday at the presentation of the figures for the second quarter. Again, it was about inflation, higher purchasing costs and price increases.
“We don’t like price increases from our suppliers, and our buyers don’t like price increases from us,” says Jope. “But everyone understands that we live in times of unparalleled cost inflation.”
In the past six months, the food giant has increased the price of its products by 11.2 percent. Partly because of this, Unilever’s turnover (with brands such as Magnum, Dove, Knorr and Ben & Jerry’s) increased by almost 15 percent in that period, to 29.6 billion euros. Net profit for the half year amounted to EUR 3.2 billion. This is slightly less than the same period last year (3.4 billion).
Unilever was confronted not only with high inflation, but also with a decrease in sales volume: the group sold 1.6 percent less this year than in the first half of 2021. This contraction is mainly due to corona lockdowns in China, according to Jope. “If we disregard that, the sales volume is comparable to the previous quarter.” Households did buy slightly less because of inflation, Jope thinks, an effect that Unilever expects to continue in the coming period.
Private label competition
Particularly in Europe, Unilever feels competition from (cheaper) private labels. Ice cream, yogurt and coffee are losing some market share. That is why the multinational invested 200 million euros in advertising.
The company passes on about 70 percent of the inflation to consumers, Jope said, and absorbs the rest itself with budget cuts and lower margins. According to Jope, Unilever takes ‘social responsibility’ in this way. “Part of that is also remaining a healthy business to create jobs and contribute to economic prosperity. At the same time, it must be in balance with the current financial situation of consumers.”
Also read: Unilever: we live in an age of ‘unparalleled inflation’‘
Unilever’s performance was better than expected. After the announcement, the stock rose 3.9 percent on the stock exchange.
Milieudefensie previously stated that a number of Dutch companies, including Unilever Netherlands, have insufficient insight into their own emissions. According to the environmental organization, this was apparent from research that it had carried out by the German New Climate Institute. According to Milieudefensie, Unilever emits 61 megatonnes of CO . annually2 equivalent to the emissions of three million Dutch households. Unilever does not want to confirm that.
Milieudefensie’s criticism is not a direct reason for Unilever to adjust the current climate plans, a spokesperson for Unilever Netherlands said. Unilever does not agree with all the conclusions of the report, but the spokesperson says it is in talks with the New Climate Institute to “better understand that perspective”.
A version of this article also appeared in the newspaper of July 27, 2022
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