Unilever declares the cost hikes will persist into this year, easing in H2

February 14, 2023: -Unilever Plc declared it would continue raising prices for its detergents, soaps and packed food to offset rising input costs and ease those hikes in the double half of 2023.

The London-based firm, which makes products such as Fairy washing-up liquid, Dove soaps, meals spread Marmite and Ben & Jerry’s ice cream, anticipates cost inflation to keep going in 2023, forecasting net material inflation in the first half of nearly 1.5 billion euros ($1.6 billion).

The packaged goods industry has increased costs regarding the previous year to cope with rising costs of everything from cocoa and sunflower oil to wheat. The firm had been fighting Covid-era supply chain problems and raw material expenses when Russia invaded Ukraine, more than promoting energy prices and other commodities.

Chief Executive Alan Jope said it had been a “good year,” with the quickest growth in over a decade and a strong performance by its big brands.

He said on price rises in 2023: “We’re very conscious that the consumer is squeezed, and to remain competitive, we want to minimize the number of costs. I would characterize where we are currently as past peak inflation but not at peak pricing. There will be some modest fresh cost increases still to come.”

But he added the firm needed clear visibility in the second half of the year.

“When it comes to covering the inflation that we’ve seen, we’re currently sitting at 75% of the total cost inflation covered,” stated finance chief Graeme Pitkethly. “That must go above 100% to repair our gross limit.”

The underlying price increase for the fourth quarter was a record 13.3%, while underlying volumes decreased by 3.6%.

Some European companies have said they may unwind price hikes introduced in recent years as zooming energy costs and other raw materials have eased, potentially providing some relief to consumers.

Unilever had a dramatic in the previous year, featuring three rejected bids to purchase GSK’s consumer health business, activist Nelson Peltz joining and Chief Executive Alan Jope, who announced his departure.

In the previous month, it named dairy executive Hein Schumacher its incoming CEO.