Unilever reports Q3 growth, warns of cost inflation

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Unilever has reported 2.5% of underlying sales growth for the third quarter of 2021.

For the year to date, Unilever’s underlying sales growth is at 4.4%; it is confident that it will be ‘well within’ its multi-year framework of 3-5% for the full year.

“We have delivered a good quarter against strong comparators, with underlying sales growth of 2.5%,” said Unilever CEO, Alan Jope. “The combination of our strategic choices and focus on operational excellence continue to drive competitive growth.”

Jope said Unilever’s strategic choices are having a positive impact on growth and business momentum. The company achieved ‘good growth’ across its three priority markets – the US, China, and India. South East Asia continues to be impacted by COVID-19, and was the main source of volume decline in Q3. E-commerce grew by 38% and now represents 12% of Unilever’s sales.

The company’s ‘organisational agility’ has enabled it to take ‘rapid pricing actions’ in response to unprecedented cost inflation.

“Cost inflation remains at strongly elevated levels, and this will continue into next year,” said Jope. “We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs.

“We continue to expect that we will deliver in line with our margin guidance of around flat for the full year.”

The operating environment across Unilever’s markets remains volatile, and restrictions on daily life continue globally to varying degrees, impacting channel dynamics, sales mix, and consumer behaviour.

In the company’s beauty and personal care segment, underlying sales grew by 2.6%, with -1.3% from volume and 3.9% from price. Skin care grew in the high-single digits, and deodorants grew in the mid-single digits.

While skincare cleansing saw a ‘step-up’ in pricing, underlying sales declined overall as Unilever lapped significantly increased demand in 2020 due to COVID-19. Hair care grew in the low-single digits, with mid-single digit price growth and negative volumes. The firm’s Dove hair therapy innovation in North America continued to perform well.

Underlying sales in the home care division grew 1.4%, with -3.2% from volume and 4.8% from price. The organisation lapped high demand for household cleaning products during 2020, resulting in high single digit decline in home and hygiene, although it continues to trade ahead of pre-pandemic levels.

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