07.26.22
Underlying sales growth for Unilever in the first half of 2022 was 8.1% with 9.8% from price and 1.6% from volume, the company reported this week.
Growth was broad-based across all divisions. Price has sequentially stepped up over the past two quarters, reaching 11.2% in the second quarter, which had, as expected, some negative impact on volume. This was more pronounced in Home Care, which was particularly exposed to rising input costs and took the highest pricing action, leading to underlying sales growth of 10.7%.
Beauty & Personal Care grew 7.5%, driven by price and continued strong growth in prestige beauty and health & wellbeing, which is Unilever’s vitamins, minerals and supplements business.
Emerging markets grew by 10.0% with a 12.1% contribution from price and volume at 1.8%, including an estimated adverse impact of around 70bps from the lockdowns in China. Pricing in Latin America was strong at 19.1% with volumes contracting by 4.8%. South Asia grew strongly through both price and volume. Turkey delivered double-digit volume growth by managing dynamically through a high inflation environment. Developed markets increased by 5.5%, with 6.7% from price and 1.2% from volume. North America grew 8.7%, helped by strong performances of dressings and Unilever’s businesses in high growth areas such as Health & Wellbeing.
Turnover increased 14.9% to $29.9 billion, which included a currency impact of 5.6% and 0.6% from acquisitions net of disposals. Underlying operating profit was a little over $5 billion, up 4.1% versus the prior year. Underlying operating margin declined by 180 basis points (bps) to 17.0%. Gross margin decreased by 210bps, which reflected the very high inflation in input costs that was only partially mitigated by the strong pricing action and savings delivery.
Brand and marketing investment was stepped up by $202 million in constant exchange rates, which equated to a 40bps contribution to margin. Overheads increased by 10bps largely due to increased investment in business models with a higher overheads structure.
“Unilever has delivered a first-half performance, which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth,” said company CEO Alan Jope. “Underlying sales growth of 8.1% was driven by strong pricing to mitigate input cost inflation, which, as expected, had some impact on volume. We are now raising our sales guidance for the year. Underlying operating margin was on track at 17% for the first half.”