Unilever says inflation set to ease as higher prices drive up sales

It set out an “action plan” to ignite growth, which will focus on its 30 most profitable brands.

It came as the group reported a 5.2 per cent rise in underlying sales in the third quarter, compared with last year, to 15.2 billion euros (£13.3bn).

This was driven by prices rising by 5.8 per cent while the volume of sales dipped by 0.6 per cent, meaning that people paid more money for fewer items.

Beauty, personal care and home care brands such as Simple, Vaseline, Radox and Comfort performed strongly, while ice creams including Cornetto and Magnum, and nutrition brands such as Marmite and Hellmann’s saw reduced sales.

In Europe, prices surged by 13.2 per cent, offsetting a 10.7 per cent decline in the volume of sales.

Ice cream sales were impacted by bad weather over the period and more people choosing to buy supermarket own-brand versions.

Consumers in Europe have been affected by inflation more than other regions such as the US, where sentiment is stronger, Unilever’s finance chief Graeme Pitkethly said.

But it is anticipated that some relief could be on the way for squeezed shoppers with price growth beginning to moderate as inflation eases, the company revealed.

“We are now starting to exit the period of, certainly in my case, once-in-a-lifetime levels of cost inflation – it really has been an amazing 18-month period of inflation like we’ve never seen before,” Mr Pitkethly said.

Cost inflation should return to normalised levels next year for the group, he added.

Meanwhile, Unilever announced that Fernando Fernandez will take over as chief financial officer from the start of next year, after Mr Pitkethly said he plans to retire.

Mr Fernandez is currently the president of the firm’s beauty and wellbeing division.

It it also shaking up the leadership of the different divisions across the group.

Hein Schumacher, Unilever’s chief executive, said the company has a “portfolio of great brands used by 3.4 billion people each day”.

“Despite these strengths, our performance in recent years has not matched our potential. The quality of our growth, productivity and returns have all under-delivered,” he said.

“We will drive faster growth by stepping up innovation and investment behind our power brands; we will drive simplicity and productivity, leveraging the full strength of our operating model; and we will sharpen our performance culture through strong leadership and stretching goals.”

Matt Dorset, equity research analyst at Quilter Cheviot, said: “Unilever delivered mixed results, with price rises helping to drive sales growth in line with expectations, but unfortunately volumes were down. As inflation continues to moderate, passing on price rises is going to become more difficult so Unilever will want to address those volumes.

“It has announced a new action plan to improve performance and value creation, which includes targeting faster growth via innovation and investment in key brands, increased productivity and simplicity, and the creation of a performance culture.”