Prices hikes help Unilever top sales forecast, keep margin goal

[BENGALURU] Consumer goods giant Unilever beat third-quarter sales growth forecasts on Thursday (Oct 21) and kept its full-year profit margin guidance as it raised prices to cope with rising costs.

The maker of Dove soap and Knorr soup said underlying sales rose 2.5 per cent in the 3 months ended Sep 30, above the 2.2 per cent forecast by analysts in a company supplied consensus.

Growth was helped by good demand in the United States, India, China and Turkey, while a 4.1 per cent increase in prices more than offset a 1.5 per cent decline in volumes.

Consumer goods companies face soaring prices of raw materials such as energy, edible oils and packaging, as well as higher transport costs as economies recover from the pandemic.

KitKat and Nescafe maker Nestle raised its full-year sales target on Wednesday (Oct 20) as it also hiked prices to cope with the extra costs.

Analysts say Unilever faces a tougher task as it makes about 60 per cent of turnover in emerging markets, where inflationary pressures are fiercest. In July, the group cut its full-year operating margin forecast to "about flat" from "slightly up".

The company said on Wednesday that, despite cost inflation remaining at strongly elevated levels, it was sticking with that latest forecast, defying some analysts' fears of a cut.

Unilever's shares are down around 13 per cent this year.

REUTERS