Unilever warns of rising costs as profits rise

By AFP

British consumer goods group Unilever on Thursday logged a rising net profit in 2021 but warned that soaring inflation would ramp up costs again this year.

Profit after tax rose 8.4 percent to six billion euros ($6.9 billion) last year, Unilever said in a statement.

The group, which has faced fierce criticism over its recent failed $50-billion bid for the health care unit of drugmaker GlaxoSmithKline, ruled out any major acquisitions and pledged to return three billion euros to investors via share buybacks. 

Unilever, whose brands include Magnum ice cream, Cif surface cleaner and Dove soap, said revenues advanced 3.4 percent to 52.4 billion euros last year.

“The major challenge of 2021 has been the dramatic rise of input costs,” said chief executive Alan Jope, in reference to items such as raw materials.

“We responded with pricing actions,” he added, noting that prices of Unilever goods were hiked by an average 2.9 percent over the past year — but accelerated to 4.9 percent in the fourth quarter.

Surging global inflation is hurting consumers, just as virus-battered economies recover from Covid lockdowns.

As a result, Unilever warned that it expected “very high input cost inflation… of over 2.0 billion euros” in the first half of this year.

“This may moderate in the second half to around 1.5 billion euros, although there is currently a wide range for this that reflects market uncertainty on the outlook for commodity, freight and packaging costs,” it added.

Thursday’s results come as Jope faces growing pressure from investor activists over his leadership in the wake of the failed GSK bid.

Glaxo revealed last month that it had received three unsolicited Unilever offers for the unit, which is owned by GSK and US peer Pfizer, but rejected them all as too low.

In response, Unilever said it planned to cut around 1,500 management jobs worldwide in a major restructure for the company.