Unilever raises full-year sales guidance after impressing Q2 performance

UK – Unilever, one of the biggest consumer companies in the world, has raised its full-year sales guidance after posting underlying sales growth of 8.8% in Q2 results, amid “the challenges of high inflation and slower global growth”.

The maker of Hellman’s mayonnaise and Knorr stock cubes reported a turnover of €15.8 billion (US$16.03B) for its second quarter and a rise of 14.9% totaling €29.6 billion (US$30.25B) in its first half(H1).

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Meanwhile, underlying sales growth for H1 stood at 8.1% beating analyst expectations of 7.2% growth, according to a company-provided consensus for the half to June 30.

In Q2, underlying sales grew across Unilever’s Asia/AMET/RUB, Americas, and Europe segments, by 9%, 11.7%, and 4.6% respectively.

The company revealed that out of its three priority markets, the US and India again grew strongly, while sales in China were affected by the lockdowns in the second quarter.

Unilever’s foods and refreshment business grew its underlying sales by 8.1% in the second quarter and by 7.3% in H1.

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Ice cream underlying sales grew high-single-digit during the first half of the year, driven by strong growth in the out-of-home business.

The company said that its Magnum and Cornetto brands continued their growth momentum, supported by new variant innovations, while ice cream suffered from supply issues in the US.

In addition, Unilever’s first-half operating profit margin fell to 17% from 18.8% a year earlier, even as Unilever raised prices by 9.8%.

Unilever CEO, Alan Jope, said: “Unilever has delivered a first half performance that builds on our momentum of 2021, despite the challenges of high inflation and slower global growth.”

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.”

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He explained that the underlying operating margin was on track at 17% for the first half.

The company is maintaining strong investment in its brands, supporting 9.4% underlying sales growth in its billion+ Euro brands.

Jope noted that eCommerce sales have now represented 14% of turnover, up from 6% in 2019.

The British firm’s chief financial officer Graeme Pitkethly commented that the company expects peak inflation to come in the second half of the year which could hinder it from catching up with the current quarter results.

Unilever said it sees net material inflation at about 4.6 billion euros this year, including a 2.6 billion euro hit in the second half.

However, the company said that it now expects to beat its previous forecast for full-year underlying sales growth of 4.5% to 6.5%.

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