Status: 02/09/2023 2:31 p.m
Unilever and Nestle products are becoming more expensive again. The consumer goods companies are reacting to rising energy and raw material prices on the one hand, but also to falling sales.
British consumer goods giant Unilever pushed through price increases for its wide range of products from its customers and thus performed better than expected in the fourth quarter. The group with more than 400 brands – from Ben & Jerry’s ice cream, Knorr packet soups to the Domestos cleaning product – expects consumers to have to dig deeper into their pockets in the coming months. Unilever announced today.
Prices will continue to rise in the second half of the year, “but the rates of increase will be lower,” said CFO Graeme Pitkethly. “We’re probably past the peak of inflation, but not the peak of pricing yet.”
Margins under pressure due to cost increases
Grocery and consumer goods companies such as Unilever, Nestle, Danone and Henkel have raised prices in order to cope with rising energy and raw material prices. This has sometimes led to difficult negotiations with supermarket chains and other retailers.
So far, Unilever has only covered around 75 percent of the cost increases with the price increases, said Pitkethly. “That has to be more than 100 percent so that we can catch up again in terms of gross margin.” The management currently expects sales growth of between three and five percent in 2023 and only a moderate improvement in the margin.
In the fourth quarter of 2022, Unilever increased its revenue by 9.2 percent, beating analysts’ expectations. The group was able to push through price increases of 13.3 percent, according to its own statements a record value. Operating margin fell 230 basis points to 16.1 percent and is expected to remain around 16 percent in the first half, it said.
Nestle also wants to raise prices again
The products of the world’s largest food manufacturer Nestle are also likely to become more expensive again. “We have not yet fully passed on the additional costs incurred by us. There will therefore be further price increases,” said CEO Mark Schneider of the “Frankfurter Allgemeine Sonntagszeitung” (“FAS”).
“Even if inflation is no longer as high as it was in 2022, we still have some catching up to do – seen as a whole,” said Schneider, explaining the upcoming price increases. The level of price increases depends, among other things, on how labor and energy costs develop.
“Hit like everyone else”
The company raised prices for its range by an average of 7.5 percent in the first half of last year. When asked whether Nestlé was taking advantage of the situation to increase the margin, Schneider said: “That’s not true. We are not the cause of this inflation, we are affected by it like every consumer.”
Inflation in Germany at the beginning of the year did not rise as much as feared, but remains at a very high level. Goods and services rose in January by an average of 8.7 percent compared to the same month last year, as the Federal Statistical Office announced today.