Providing Consistency In Difficult Circumstances

Providing Consistency In Difficult Circumstances
Providing Consistency In Difficult Circumstances

“Despite the challenges of high inflation and slower global growth, Unilever delivered a first-half performance that builds on our momentum from 2021.”


Underlying sales growth of 8.1 percent was driven by strong pricing to offset input cost inflation, which had some impact on volume as expected. We are now increasing our sales forecast for the year. For the first half, the underlying operating margin remained stable at 17 percent.

“We’ve made more progress on our strategic priorities.” We continue to invest heavily in our brands, resulting in 9.4 percent underlying sales growth in our billion-euro brands. eCommerce sales now account for 14% of total revenue, up from 6% in 2019. The growth in our three priority markets was led by the United States and India, while sales in China were flat.

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Our previous forecast for underlying sales growth in 2022 was at the high end of a range of 4.5 percent to 6.5 percent. We now expect underlying sales growth to be above that range, driven by price and with some additional volume pressure.

We anticipate net material inflation to remain high for the year, at around €4.6 billion, with our forecast for the second half remaining largely unchanged at around €2.6 billion. We will keep investing in the health of our brands. We increased absolute brand and marketing investment in the first half, and we will invest competitively in marketing, R&D, and capital expenditure in the second half. Our underlying operating margin expectation for the full year remains at 16 percent, which is within our guided range of 16 percent.

In our markets, high input cost inflation has been widespread, and it is expected to remain high in the second half. While restrictions on Covid-19 have been lifted in most markets, the lockdown in China had a significant impact on consumers, particularly in the second quarter.

Market growth was driven by price in the majority of the markets in which we operate, which had an impact on market volumes. Food service and out-of-home ice cream channels benefited in markets that reopened following lockdowns the previous year, though tourism has yet to return to pre-Covid levels.

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In the first half, underlying sales increased by 8.1 percent, with 9.8 percent coming from price and (1.6) percent coming from volume. Growth was widespread across all Divisions. Price has risen sequentially over the last two quarters, peaking at 11.2 percent in the second quarter, which had an expected negative impact on volume.

This was more pronounced in Home Care, which was particularly vulnerable to rising input costs and took the most aggressive pricing action, resulting in 10.7 percent underlying sales growth. Beauty & Personal Care increased by 7.5 percent, driven by price increases and continued strong growth in Prestige Beauty and Health & Wellbeing, Unilever’s vitamins, minerals, and supplements business. Foods & Refreshment increased by 7.3 percent with slightly negative volume growth of (0.9) percent, excluding ekaterra. Unilever Food Solutions and out-of-home ice cream.

Home Care underlying sales increased 10.7 percent, with 14.5 percent coming from price and (3.4%) from volume. In response to extremely high increases in raw material costs, most geographies saw double-digit pricing.

Fabric cleaning maintained its momentum, registering strong double-digit growth despite a marginal volume decline. Growth was widespread across all formats, with significant contributions from OMO and Radiant. South Asia and Turkey achieved double-digit pricing and positive volumes, aided by the liquids market’s ongoing development. Fabric enhancers grew in the mid-single digits in the second quarter, with accelerated performance.

Underlying sales in Foods & Refreshment increased by 7.3 percent, with price increasing by 8.3 percent and volume increasing by (0.9) percent. Given the increases in input costs, pricing was broad-based and particularly high in dressings.

Underlying ice cream sales increased in the high single digits, owing to strong growth in the out-of-home business, which saw double-digit price and volume growth. Magnum and Cornetto maintained their growth momentum, aided by new variant innovations, while ice cream faced supply constraints in the United States. In-home sales increased slightly, but volumes fell in Europe and North America, where markets contracted due to some post-Covid channel switching by consumers.