Unilever plc LSE, AMSTERDAM: ULVR, NYSE: UL artykuły żywnościowe, środki czystości i higieny osobistej

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Analysis-Unilever leads pack on price rises as consumer goods industry squeezed

LONDON (Reuters) - Unilever (NYSE:UL) has raised prices faster than its biggest rivals P&G and Nestle since the middle of 2021, in a replay of its strategy during the 2007-09 financial crisis.

The British maker of Dove soap, Hellmann's condiments and Marmite spread, said at the end of October that its price increases hit an all-time high of 12.5% in the third quarter.

Consumer goods firms are juggling how much they can offset rising energy and labour costs without losing consumers, many of whom are already switching to supermarkets' own label goods.

Nestle and P&G both raised prices by less than 9.5% in the same period, having roughly matched one another since mid-2021.

GRAPHIC: Unilever races ahead of P&G and Nestle in price hikes (https://graphics.reuters.com/CONSUMERGO ... _eikon.jpg)

Unilever's greater exposure to emerging markets and food, where cost and margin pressures have been most intense, partly explains the difference, analysts say.

Ratcheting up prices, however, risks damaging relationships with retailers, which are also trying to protect their margins. The last time Unilever was close to such large rises was at the height of the global financial crisis. In the final quarter of 2008, its prices rose about 9%, dwarfing P&G's 4% hikes.

Unilever said price rises vary by category and market and not all consumers were experiencing the 12.5% hikes.

"There are several levers we can pull before increasing prices on shelf, which is a last resort and carefully considered, including reducing promotional activity and offering a selection of products that have higher margins," a spokesperson for the company said.

Unilever has high exposure to regions and countries with high inflation including Latin America, Turkey and Russia, while P&G is more U.S.-focused, Bernstein analyst Bruno Monteyne said.

"These countries have high inflation, linked to weak foreign exchange. That shows up in Unilever's foreign exchange translation losses that are much bigger," he said.

TENSIONS

Unilever's cost inflation is running at more than 20% this year, compared to 14%-15% at Nestle, Barclays (LON:BARC) analyst Warren Ackerman said, although its rivals may not yet have hit the peak of their price rises.

"It's related to how much inflation they are dealing with and exposure to commodities," said Ackerman of Unilever.

Nestle acknowledged that cost pressures are intensifying.

"We are still absorbing significant cost, which has led to a notable decline in our gross profit margin," a Nestle spokesperson said.

Meanwhile, P&G is developing ranges it can sell at different price points, a spokesperson for the company said.

Unilever and Nestle are estimated to report pre-tax profit margins of about 15% this year, according to Refinitiv. P&G is expected to report a pre-tax profit margin of nearly 24%.

Chief Executive Alan Jope said last month that Unilever needed to raise prices to give it the firepower to invest in its brands. Jope cited higher labour, materials and energy costs and climate change making farming more expensive, but the company was "very mindful" of the pressure this put on consumers.

Tensions with retailers, meanwhile, are growing. Kraft Heinz (NASDAQ:KHC) products were pulled from shelves in Tesco (OTC:TSCDY) stores earlier this year as the British supermarket giant could not agree pricing terms. And Mondelez (NASDAQ:MDLZ), maker of Cadbury and Milka chocolate, stopped selling its sweets to a number of European retailers earlier this year as they negotiated on price, its CEO Dirk Van de Put told Reuters this week.

The discussions, which Van de Put said can be "relatively controversial and difficult," contributed to a measure of volume falling in that region for the first time this year.

Dutch supermarket Ahold Delhaize has also noticed price negotiations getting tougher, its finance chief Nataltie Knight told Reuters.

"The ones who are starting from stronger positions are the bigger suppliers. I'd say Unilever falls into that category," she said, adding: "It's time for the CPGs (consumer packaged goods companies) to step up and also play their role in trying to help consumers much more than they have historically."

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LONDON (Reuters) -Incoming Unilever (NYSE:UL) CEO Hein Schumacher gets seasick, according to his former boss at food group Heinz, but that never stopped him joining executive sailing trips and sticking them out.

"Every year, I'd bring nine of our most promising executives to Florida - just me and them, not their bosses. One year, we were on a catamaran on Naples Bay and Hein started turning green," ex-Heinz chief Bill Johnson told Reuters in an interview. "The water was only four feet deep and 30 feet away from the shore and he was hung over the side of the boat."

"But even though he knew he was going to be miserable he got on. He was willing to go anywhere and work any hours. Just the most adaptable person who has ever worked for me."

Schumacher, 51, is likely to need all his determination - as well as the experience he gained in food at Heinz and in retailing at Dutch grocer Ahold - when he takes the helm at Unilever from Alan Jope in July.

The Dove soap to Hellmann's mayonnaise giant needs to revive its underperforming food business, while also managing tricky price negotiations with retailers feeling the squeeze from inflationary pressures and a cost of living crisis.

Encouragingly for Schumacher, who worked as a finance manager at Unilever more than 20 years ago before heading to Ahold, he was warmly welcomed by activist investor and Unilever board member Nelson Peltz - who has a long track record of shaking up consumer goods companies, including Heinz.

"I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen," Peltz said.

"I was delighted to learn that he was among the top candidates to become the next CEO of Unilever."

Johnson told Reuters that Peltz and Schumacher "get along pretty well" and that Peltz reached out to Johnson last year, around the time Schumacher joined Unilever's board.

"Hein gets to the heart of issues very quickly - which is like Nelson. They'll get along really well, I have no doubt. Nelson respects capability, honesty, objectivity and results," Johnson said.

British businessman Allan Leighton, who also worked with Schumacher, described him as "very calm, certain, clear and a great listener."

"He's ideal for Unilever," said Leighton, a former CEO of British grocer Asda who has served on the boards of several retailers and consumer companies.

FOOD SPIN-OFF?

One of the biggest consumer companies in the world with more than 400 brands ranging from detergent to ice cream, Unilever has been trying to win back investor confidence after its stock has underperformed rivals for years, and after a failed attempt to buy GSK's consumer health business a year ago.

Analysts said Schumacher's appointment signalled Unilever was, for now, unlikely to spin off its food business, which makes Colman's condiments and Knorr stock cubes, given his experience at Heinz as well as dairy firm FrieslandCampina.

"Why hire a food exec if you are planning to sell the food business?" asked Bernstein's Bruno Monteyne, adding time would tell whether Schumacher was the right choice.

"Is he in a good position to turn around the food business? Let's give him a chance. But I am not sure that his past experience of running a dairy commodity trading business, with additional brands, is the best place. The average margin in his last business was 3 to 4% EBIT margins ... that is not what Unilever is aiming for."

Art Winkleblack, another former colleague of Schumacher and the former finance chief of Heinz, was relaxed about Schumacher's relative lack of experience in personal care.

"That wouldn't worry me a bit. The similarities between food and personal care are more than the dissimilarities - it'll take him a little while to understand all the products and categories but he'll come up to speed on that quickly."

Unilever's food business, worth 20 billion euros ($22 billion) according to Unilever's most recent annual report, has for years grown at a slower pace than other divisions and has lower margins than beauty and personal care.

In 2021, the food unit's operating profit margin was 14.7% versus 20.4% in beauty and personal care. Historically, food sales have grown at 1-3% versus 3-5% at personal care, said Tineke Frikee, a fund manager at Waverton Asset Management.

"Unilever's valuation multiples would rise if food was sold," Frikee said.

Schumacher's experience at Ahold - now Ahold Delhaize - and more than a decade at Heinz - now Kraft Heinz (NASDAQ:KHC) - could also help Unilever in price negotiations with grocers such as Walmart (NYSE:WMT), Tesco (OTC:TSCDY) and Ahold itself.

"He's been given a very tough assignment but I have every confidence that if anyone could get Unilever moving in right direction, it's Hein," Johnson said.

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Unilever (LON:ULVR) stock rose 0.3% after the consumer goods group reported sales growth that was only slightly below estimates in the fourth quarter, as higher prices helped offset inflation-linked weakness in customer demand and elevated expenses.

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Unilever says prices hikes will continue into this year, easing in H2

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(Reuters) - Unilever (NYSE:UL)'s "I Can't Believe It's Not Butter!" spray is governed by different U.S. Food and Drug Administration regulations than butter and similar products, a U.S. appeals court ruled Tuesday, defeating a long-running false advertising class action.

A split 9th Circuit Court of Appeals rejected claims that Unilever based its zero-fat, zero-calorie advertising for the spray on artificially low serving sizes.

The plaintiffs' attorney Uri Idstrom of the Eureka Law Firm said they "continue to believe that the FDA did not authorize Unilever to deceptively label its product" and are reviewing their options.

Representatives for Unilever and Upfield, the Unilever spinoff that now sells "I Can't Believe It's Not Butter" products, did not immediately respond to requests for comment.

The consumer plaintiffs sued Unilever in 2013. They claimed the FDA mischaracterized Unilever's product as a "spray" instead of butter, margarine, oil or shortening, which have larger serving sizes under FDA regulations.

The group said the listed serving sizes were too low to reflect how people actually use the spray, and that they would have paid less or not bought it at all if they had known its true fat and calorie content.

The 9th Circuit on Tuesday upheld a Northern California federal court's 2021 decision to dismiss the lawsuit.

The court said the FDA properly classified the product as a spray, and that if the plaintiffs "believe that Butter! Spray should have a higher customary usage reference amount, the proper forum in which to air that grievance is the FDA (or Congress), not the courts."

U.S. Circuit Judge Carlos Lucero said in a dissent that it was "ludicrous" that a "bottle of flavored oil containing 1,160 calories and 124 grams of fat can be transformed into zero calories and zero grams of fat by the simple act of replacing the bottle cap with a pump device."

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Unilever added 1.37%, after it reported that underlying sales growth in the first quarter had accelerated to 10.5%, beating analysts' expectations.

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Unilever CFO Pitkethly to leave company by May 2024

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Consumer goods giant Unilever gained as it reported a rise in first-half profits.

Consumer goods giant Unilever surged to the top of the FTSE 100 after saying it had delivered a 3.3% rise in interim earnings, driven by higher prices, although it expects underlying price growth to moderate through the year.

Underlying operating profit came in at €5.2bn as underlying sales grew 9.1% to €30.4bn.

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LONDON (Reuters) - Unilever (NYSE:UL), which makes Ben & Jerry's and Magnum ice creams, said on Tuesday that it hopes to sell more ice cream in Europe this summer but extreme temperatures could dent sales as consumers turn to fizzy drinks instead.

This month has seen record-breaking temperatures in southern Europe and the World Meteorological Organization has warned the heat wave in the northern hemisphere is set to intensify.

Unilever's ice cream business, which includes the Wall's brands, accounts for about 15% of group turnover.

"Will we see more ice cream sales? I very much hope so," Unilever finance chief Graeme Pitkethly said.

"There's a sweet spot for temperatures when I talk about the weather," Pitkethly said. "If it gets to be too hot - and we can see incredible temperatures around Europe at the moment, there's some data showing people perhaps move away from an ice cream and buy a cold drink instead."

In quarterly results it reported on Tuesday the company said out-of-home ice cream underlying sales grew by a double-digit percentage with positive price and volume growth.

In Europe, poor weather in April and May was largely offset by good weather in June, Unilever noted.

Unilever owns, loans and maintains 3 million ice cream freezers around the world, according to its website.

Some analysts expect the global market for impulse ice cream buying to grow 5.7% between 2023–2028.