Unilever, the consumer goods giant that owns brands ranging from Ben & Jerry’s ice cream to Dove skin care, raised prices by more than 11% between April and June as inflation surged around the world.
That shored up revenue in the first half of the year, with the London-based company on Tuesday reporting underlying sales growth of 8.1% that is being driven by higher prices to offset the costs of making its products.
Unilever owns about 400 consumer brands, including Hellmann’s, Axe, Vaseline, Knorr, Breyers, Popsicle and Lipton.
Russia’s war in Ukraine has exacerbated rising prices for almost everything, from wheat and cooking oil, to natural gas and crude oil, making it more expensive to produce goods.
Those costs are being passed on to customers, either through reduced sizes or higher prices.
“The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond,” CEO Alan Jope said.
Uniever reported revenue of 29.6 billion euros ($30 billion) in the first half of 2022, up 14.9% from a year ago, with an operating profit of 4.5 billion euros. Revenue reached 15.8 billion euros in the second quarter, up 17.5% from the previous year.
Sales in the U.S. and India grew strongly from April to June, while they were weighed down in China by lockdowns, the company said.
Unilever raised its outlook for the year, saying it expects sales growth to exceed the previous forecast of 4.5% to 6.5% even as prices remain high for the materials and ingredients it needs.
Industry say companies like Unilever are being forced to walk a fine line between covering costs and losing customers.
“We’ve heard from supermarkets that shoppers are now starting to slide down the value chain in an attempt to keep shopping lists intact,” said Matt Britzman, equity analyst at Hargreaves Lansdown, a British financial service company. “Juggling higher prices and weaker consumers is a tough act to nail, so far Unilever looks to be doing a decent job.”
The report from Unilever comes a day after Walmart Inc. lowered its profit outlook for the second quarter and the full year, saying rising prices on food and gas are forcing shoppers to cut back on discretionary items, particularly clothing, that carry higher profit margins.