Consumer goods conglomerate Unilever reported higher-than-expected underlying sales growth for the second quarter but cut full-year operating margin forecasts due to rising costs.
Underlying sales rose 5% in the three months to June 30, beating the 4.8% forecast, according to a company-supplied consensus.
First half turnover was flat at €25.8bn, while underlying operating profit fell to €4.8bn from €5.08bn. Underlying first-half margins fell to 18.8% from 19.8%.
The company said it now expected full-year underlying operating margins to be flat compared to slightly up earlier.
“We have seen further cost inflation emerge through the second quarter. Cost volatility and the timing of landing price actions create a higher than normal range of likely year end margin outcomes. We are managing this dynamically and expect to maintain underlying operating margin for 2021 around flat,” the company said on Thursday.
The maker of Hellmans mayonnaise, has benefited from people stockpiling food and cooking more meals at home during Covid pandemic lockdowns as it cut back on marketing and store promotions, which boosted margins.
However, soaring commodity costs for everything from plastics to tea and nuts in the first half of 2021 have hampered ambitions to lift margins “slightly” from last year.
The company has also been in the spotlight over the decision of the group’s American ice-cream brand Ben & Jerry’s to stop marketing its products in the occupied Palestinian territories – a move that has sparked a backlash in Israel and threats of retaliatory action from the government.
