Speaking after a sales update that showed the maker of Ben
& Jerry’s ice-cream and Dove soap increased prices almost 11 per cent on
average last quarter, Alan Jope said Unilever was “very conscious that the consumer
is hurting”.
The financial performance of large companies has come under
scrutiny during the cost-of-living squeeze. Some central bankers have cautioned
that companies flexing pricing power could be fuelling inflation.
While Unilever did not disclose profitability figures for
the first quarter, Mr Jope on Thursday said the UK-based group’s operating
margin had declined from 18.4 per cent in 2021 to 16.1 per cent last year.
He said: “I know it’s an inconvenient truth, but we have not
been profiteering in any way, shape or form.”
“We are certainly asking the shareholder to carry a
proportion of the burden,” he added. “None of us want to pass pricing on to the
consumer.”
The update from Unilever, whose products also include Persil
laundry detergent, Sure, Dove and Lynx deodorants and Colman’s mustard, showed
shoppers – particularly in North America – were unexpectedly willing to
tolerate the price rises in the first three months of the year.
The company’s sales volumes recovered more strongly than
expected from a 3.6 per cent drop in the previous quarter and were flat year on
year. They held up better in the Americas – where they ticked up 0.6 per cent
in spite of an 11.2 per cent increase in prices in the region – than in Europe,
where they fell 3 per cent.
Unilever’s update, which followed similarly upbeat results
from several rivals in Europe and the US in recent days, sent shares in the
FTSE 100 company up 1.9 per cent in early trading.
The group recorded revenues of €14.8 billion in the period –
an increase of 10.5 per cent on an underlying basis, which excludes the effects
of acquisitions and currency movements.
Still, chief financial officer Graeme Pitkethly said
Unilever was forecasting commodity costs in the first half of the year to be
€1.5 billion higher than the same period a year ago.
He added that the company was expecting inflationary
pressures to be most acute in ice-cream and in Unilever’s nutrition products,
which include Hellmann’s mayonnaise. This was because these were especially
exposed to the costs of agricultural ingredients, for which prices were still
rising sharply.
The cost of packaging and materials derived from
petrochemicals were also still rising, although prices of palm oil were now
falling, Mr Pitkethly said.
Mr Jope added that the company “only passed through 75 per
cent of the cost increases” to consumers.
Pressed on a call with reporters on whether Unilever should
be absorbing a bigger proportion of the cost increases given its profits and
the prevalence of food poverty, Mr Jope said: “A conversation on the future of
capitalism is a longer one for another day.”
The figures are the last under Mr Jope, who is being
replaced by Hein Schumacher, head of Dutch dairy co-operative FrieslandCampina.