Last year, British Unilever experienced its strongest underlying growth in nine years. In the context of the annual results, however, CEO Alan Jope announced that he would not be pursuing any major acquisitions for the time being.
Higher prices
Reported sales increased by 3.4 per cent to 52.4 billion euros. On an organic basis, however, growth amounted to 4.5 per cent: the best result in nine years, according to the company. Almost two-thirds of this was thanks to higher prices, while only one-third came from volume growth.
All of the group’s divisions contributed to the growth, but the most substantial progress came from the food division, with underlying growth of 5.6 per cent. The easing of Covid measures enabled the out-of-home channel to make a slight recovery. This meant a significant bonus for brands like Ben & Jerry’s and Knorr. Also notable, e-commerce sales increased by 44 per cent and now represent 13 per cent of total Group revenues.
Costs continue to rise
Unilever expects underlying growth between 4.5 per cent and 6.5 per cent in 2022. However, the high inflation rate means that the cost for raw materials, shipping and packaging will increase by around 2 billion euros in the first half of the year. Consequently, the group expects a decline in the underlying margin of 140 to 240 basis points.
On the other hand, the recently announced restructuring, organising the company around five separate business units and eliminating 1,500 jobs, should yield savings of 600 million euros over the next two years.
Following the failed takeover of GlaxoSmithKline’s consumer division earlier this year, CEO Alan Jope stated that he does not plan to make any major acquisitions in the near future. “We have received a strong message [from our shareholders] that the evolution of our portfolio needs to be measured.” However, the company will buy back up to three billion euros worth of its own shares in the next two years.
