The consumer goods giant sees profits rise by a fifth based almost entirely on increasing its prices.
Image source, PA MediaMagnum and Marmite-maker Unilever has reported profits rose by a fifth over six months, based almost entirely on raising its prices.
The consumer goods giant said that across the business, pre-tax profit rose 21% to €5.2bn (£4.4bn) but the number of goods that it sold fell.
Supermarkets, such as Tesco, have been critical of suppliers lifting their prices amid high inflation.
Unilever’s boss said it had not passed on higher costs to its customers.
Chief executive Hein Schumacher added that he believes that the peak of inflation – the rate at which prices rise – had now passed: “We do see inflation moderating by the end of the year and that will lead to more moderated pricing our end.
“We’ve seen high volatility because of drought in Europe and rice shortages in India, as well as geopolitical issues so we’ve had a lot to contend with,” he said, referring to the costs the company has to pay for raw materials.
Supermarkets – who themselves have been accused of so-called “greedflation” – have accused suppliers of hiking prices.
Greedflation is the idea that companies are exploiting high inflation to increase their profits.
Mr Schumacher said: “We have not passed inflation on to customers and as you can see we have felt higher costs through lower margins as a group.”
A profit margin is calculated by taking away all the costs of doing business, such as wages and energy bills, from the total sales a company generates.
Unilever’s profit margin edged higher to 17.1% in the six months to June compared with a year ago, but is lower than margins seen pre-pandemic. In 2019 the figure hovered around 19% for the company.
A recent investigation into grocers’ pricing by the regulator, the Competition and Markets Authority, said it had found no evidence of profiteering by supermarkets but said it was important to keep the market “under review” and would now look into the wider supply chain.
Overall, Unilever’s total turnover rose by 2.7% to €30.4bn.
In its home care division, which includes brands such as Persil, Domestos and Cif, sales rose by 8.4% to €6.2bn.
The number of goods – or volume – that Unilever sold fell by 2.5% in the six months to the end of June but its prices rose by 11.2%.
The Cornetto-maker saw the same trend in its ice cream business, where the value of sales rose but it was due to price increases as the volume of products it sold fell by 5.2%.
In its other food division, which includes names such as Hellmann’s, sales rose by 10.4% to €6.6bn. Prices increased by 12.6% but volumes declined by 1.9%.
Its other businesses such as personal care, and beauty and wellness – which includes luxury make-up brands such as Hourglass – saw both prices and volumes rise over the six months.
Food costs have been one of the biggest drivers behind high UK inflation, which measures the pace at which prices are rising.
In the year to June, food and soft drink price inflation slowed to 17.4% but remains close to historically high levels. Overall UK inflation eased to 7.9% in June, said the Office for National Statistics.
Last week, Premier Foods, the maker of Mr Kipling cakes and Oxo stock cubes, said it believed recent input cost inflation was “past its peak”. It added that it would not raise prices for the rest of the year.