UL - Unilever projects continued price increases as inflation persists

Unilever ( NYSE: UL ) credited pricing actions for sales growth as the company continues to battle cost inflation

The British consumer staples giant notched €2.57 in earnings per share on €60.07B in revenue. Underlying sales growth rose 9.2% for the quarter, driven by strength in the Home Care and Nutrition segments.

“We delivered Q4 underlying sales growth of 9.2%, that was driven by 13.3% price, with volumes down 3.6%, and that resulted in full-year growth of 9% with price up 11.3% and volumes down 2.1%,” CEO Alan Jope told analysts. “While the volume impact was greater than in previous quarters, it is still less than we would have modeled at these levels of price growth.”

Moving forward, management expects inflation to continue through much of the year. As such, pricing actions to offset cost increases are expected to continue with a potential adverse impact on volumes.

“In the first half, we expect price growth to remain high from a combination of carryover pricing and in quarter price changes and volumes will remain negative,” CFO Graeme Pikethly told analysts. “For the full-year, underlying sales growth will be at least in the upper half of our multi-year 3% to 5% range.”

He added that the company will look to both price increases and cost savings programs to “build gross margin back up” during 2023. Though, inflationary impacts are expected to ease slightly as the year progresses.

“Net material inflation should slow as will the inflation in production and logistics costs, though we are not expecting overall cost deflation,” Pikethly explained. “We expect second half underlying price growth to moderate, but we will see an improving picture for price coverage and gross margins should then begin to improve.”

Shares of Unilever ( UL ) rose about 0.72% on Thursday.

Read the earnings call transcript .

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