Key facts
- Unilever anticipates accelerating price growth in the second half of the year.
- The company's underlying sales rose 5.8% in the second quarter.
- Turnover increased by 3.8% to €13bn in the second quarter.
- Consumers have shown brand loyalty, opting for branded products over cheaper alternatives.
- Rising oil prices are a significant factor contributing to increased costs for manufacturers.
Unilever, the multinational consumer goods company behind brands such as Marmite, Dove, and Hellmann’s, has signaled that further price increases are likely in the coming months. The company stated that while the rate of price hikes slowed in the second quarter due to temporary factors like World Cup-related discounts and competitive pricing in Brazil, these will not last.
Unilever expects underlying price growth to accelerate in the latter half of the year as the impact of commodity-driven pricing continues. This strategy aims to recoup the company's own rising costs for ingredients and services. Despite cost-of-living pressures, consumers have demonstrated strong brand loyalty, continuing to purchase Unilever's products rather than switching to cheaper, unbranded alternatives, according to Victoria Scholar, head of investment at Interactive Investor.
In the second quarter, Unilever reported a 5.8% increase in underlying sales, with turnover rising by 3.8% to €13 billion (£11.1 billion). The company's factories are located across the UK, producing items like Pot Noodle, Hellmann’s, and Marmite.
The broader economic environment sees manufacturers grappling with higher costs, partly influenced by oil prices. Although oil prices have fluctuated, sustained increases could impact manufacturers' margins. Economists are warning that if oil prices remain above $90 a barrel, it could force the Bank of England to reconsider its economic forecasts and potentially raise interest rates later this year, as noted by Mohamed El-Erian, a professor at the University of Pennsylvania.