Colman’s Mustard owner Unilever reports revenues rise thanks to price hikes
- Credit: Archant
Colman's Mustard owner Unilever has reported a jump in first quarter revenues, helped in part by price hikes in countries including the UK.
The consumer goods giant said turnover climbed 6.1% to €13.3bn (£11.1bn) in the first quarter when accounting for currency fluctuations, which provided a 2.4% boost.
The company reported a 2.9% rise in underlying sales growth, which was primarily due to price increases as the amount of goods sold dropped 0.1%.
Unilever, which has a factory at Carrow Works, in Bracondale, Norwich, explained sales growth in Africa and Russia 'was entirely driven by price as a result of substantial currency devaluations', and that rising prices in Asia came 'in response to rising commodity costs'.
It has also embarked on price hikes in the UK, following the post-Brexit vote collapse of the pound.
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Unilever said in its trading update that it has observed price deflation in a number European countries 'apart from the United Kingdom where we have taken price increases to recover the additional costs from the sterling devaluation'.
A number of companies have increased the price of their products, or changed the size of consumer goods in recent months in response to the weaker pound.
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However, the revenue-boosting effects of Unilever's price hikes could draw criticism over whether the increases have been necessary in certain markets.
In November, Tesco boss David Lewis took a swipe at global suppliers, saying price increases should be 'justified' and not be made in an effort to prop up profits so that they look appealing to investors.
He added that exchange rate volatility is normal in many markets.
Mr Lewis' comments come just months after Unilever's stand-off with Tesco over a 10% hike that temporarily left Britain's largest supermarket grappling with a shortage of store cupboard stables including Marmite, Pot Noodle and Persil.
The dispute was later resolved.
Unilever chief executive Paul Polman later defended the company's decision to raise prices in the UK, saying in January that Britain should 'get used to' price increases.
Commenting on the first quarter trading update, Mr Polman said: 'The first quarter shows growth once more ahead of our markets.
'This reflects our continued investment in both innovations and brand support, and reconfirms the strength of our long term sustainable compounding growth model.'
Unilever's London-listed shares were up 1.5% in morning trading.
It is the first quarterly report released by Unilever following the failed £115bn Kraft Heinz bid which was called off in February but would have marked the biggest acquisition of a British company on record, based on offer value.
Unilever has since launched a comprehensive review of its business in a bid to deliver more value to shareholders, and is now looking to offload its spreads unit.
Mr Polman said in the trading update that Unilever is now on track to report a 3% to 5% rise in annual underlying sales growth for 2017, and that the company is hiking its dividend by 12%, 'reflecting the confidence in our outlook'.