Consumer goods giant Unilever PLC/NV raised its prices sharply in the second quarter to offset higher commodity costs, helping it beat forecasts with a 7.1 percent increase in quarterly sales growth.
The Ben & Jerry’s ice cream and Dove soaps group suffered a fall in margins because of the time lag between the increase in costs and the rise in its own prices, but chief executive Paul Polman forecast an improvement in the second half as the higher prices and costs savings take effect.
Growth was driven by the group’s big emerging market presence in Asia, Africa and Latin America, and helped by hot weather in Europe for its ice cream and beverage business, as well as its decision to increase prices more than 5 percent.
Unilever maintained its forecast that commodity costs would be 15 percent higher this year and said cost savings would be “in excess” of its previous target of 1.3 billion euros (US$1.85 billion).
“We have very good oversight for commodity costs for 2011 and we are around 90 percent covered while most of our price rises have been made,” finance director Jean-Marc Huet said in a conference call after yesterday’s results were announced.
The group stuck to this year’s goals of profitable sales volume growth ahead of its markets and higher profit margins despite cost inflation and tough trading in the mature markets of Western Europe and the US.
The Anglo-Dutch firm posted second-quarter underlying sales growth of 7.1 percent, beating a company compiled consensus of 5.5 percent, but coming in below rival Groupe Danone SA, which posted growth of 8.8 percent last week.
Unilever, which counts Knorr, Lipton, and Sunsilk among its biggest brands, reported half-year earnings up 10 percent to 0.77 euros a share, beating a consensus of 0.71 euros per share, while six-month operating margin fell 0.2 percentage points compared with a forecast for a 0.5 percentage point fall.
It paid a quarterly dividend of 0.225 euros a share, up 8 percent.