Unilever warns of high inflation, rules out big M&A
Unilever soap is purchased by a customer who purchases a Dove soap bar at Sainsbury’s London supermarket.
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UnileverIt expects higher sales but lower margins this year, as it faces soaring inflation. The company also ruled out large acquisitions after recent criticisms from investors about its unsuccessful pursuit of GlaxoSmithKline’s consumer health division.
Dove soap and Ben and Jerry’s Ice Cream maker stated on Thursday that they had heard investor concerns regarding the proposed 50 billion-pound deal ($68 billion). Instead, the company decided to buy back 3 billion euros ($3.4 million) shares in the future.
Alan Jope, chief executive of the company said that “we have been engaging extensively with our shareholders over recent weeks and received an overwhelming message that our portfolio evolution needs to be measured.”
Unilever recorded a 4.9% growth in fourth-quarter underwriting sales due to people continuing to eat healthier at home. This beat the 3.8% average growth forecast by analysts in a company survey.
In 2021 the underlying growth in sales was 4.5%. It is the largest increase for nine years.
As it increases prices to compensate for rising input costs, the company expects growth to be between 4.5-6.5%. However, its operating margin will likely decline to 140 to 240 basis points.
Companies that produce consumer goods are facing rising energy, commodity, labor, and transport costs.