×
482
Fashion Jobs
BHARTI AIRTEL LIMITED
Territory Manager- Dth Sales -Koppal And Gadag
Permanent · Koppal
BHARTI AIRTEL LIMITED
Territory Manager- Dth Sales -Gadwal
Permanent · Gadwal
URBAN AVENUES LLP
Immediate Joiner in Real Estate Sales Executive/ Sales Manager
Permanent · Noida
OPPO
Area Sales Manager _Asm up East
Permanent · Jhansi
OPPO
Area Sales Manager _Asm up East
Permanent · Jhansi
INDIA SHELTER FINANCE CORPORATION LIMITED
Area Branch Manager
Permanent · Chennai
JOB INDIA
Area Sales Manager- Operations (Garment Retails)
Permanent · Gurugram
PEOPLE ALLIANCE WORKFORCE PRIVATE LIMITED
Merchandising Manager/Quality Manager - Garments Manufacturing Company
Permanent · Bhiwandi
PEOPLE ALLIANCE WORKFORCE PRIVATE LIMITED
Officer Hrbp / Business HR For Garment/Textile/Apparel Industry
Permanent · Bengaluru
AAVAS FINANCIERS LIMITED
Area Sales Manager | Home Loan | Mumbai
Permanent · Bengaluru
BHARTI AIRTEL LIMITED
Territory Manager- Dth Sales - Rajahmundry
Permanent · Rajahmundry
ZYDUS WELLNESS
Zydus Wellness - Factory Manager - Sikkim Plant
Permanent · Atlanta
ANUSHÉ PIRANI
Social Media & Fashion Communications
Permanent · MUMBAI
HARSH CLEAN DHAN PVT. LTD
Area Sales Manager (Modern Trade Sales) For North East
Permanent · Guwahati
RANDSTAD INDIA PVT LTD
Area Sales Manager (Consumer Durable Industry)
Permanent · Mumbai
AVRO INDIA LIMITED
Area Sales Manager- Ludhiana, Amritsar/ mP-Indore, Bhopal
Permanent · Ludhiana
AVRO INDIA LIMITED
Area Sales Manager- Ludhiana, Amritsar/ mP-Indore, Bhopal
Permanent · Ludhiana
SOSYO HAJOORI BEVERAGES PRIVATE LIMITED
Area Sales Manager
Permanent · Mumbai
VIKRAM TEA PROCESSOR PVT LTD
Area Sales Manager
Permanent · Ahmedabad
HERITAGE FOODS INDIA
Area Sales Manager(Hyderabad & Vijayawada) @ Hfl
Permanent · Hyderabad
NASH INDUSTRIES (I) PVT. LTD.
Production Manager Position With Nash Industries-Pune
Permanent · Pune
ACCELERATE SOCIAL WELFARE FOUNDATION
Area Sales Manager
Permanent · Noida
By
Reuters API
Published
Oct 20, 2021
Reading time
3 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Unilever margins in spotlight as inflation surges

By
Reuters API
Published
Oct 20, 2021

Unilever's battle with rising costs will take centre stage at its third-quarter results on Thursday, with investors focused on whether the consumer goods giant will cut its profit margin forecast for the second time this year.




Crude oil prices hit three-year highs on Monday, vegetable oil prices are at multi-year highs, and packaging, transport and labour costs are also rising as economies recover from the pandemic - a headache for central bankers and companies alike.

Tide detergent maker Procter & Gamble (P&G) on Tuesday hiked its full-year forecast for commodity and freight costs by about $400 million, or more than 20%.

Analysts warn Unilever could be particularly exposed because, unlike household goods specialist P&G, it also has a big food business selling products including Knorr soups, Magnum ice-cream and Hellmann's mayonnaise.

That means exposure to edible oils, milk and crude derivatives, such as caustic soda (used in making ice-cream), whose prices have also surged over the past three months.

Unilever also makes about 60% of its turnover in emerging markets, where inflation is fiercest.

"Since the second quarter, inflation has continued to creep up and another (margin) revision is possible," Barclays analyst Warren Ackerman wrote in a note.

In July, Unilever cut its operating margin forecast to "about flat" from "slightly up."

In contrast, packaged food rival Nestle kept its full-year operating margin guidance on Wednesday, helped by strong coffee sales and price hikes.

Analysts expect Unilever to report a 0.2 percentage point drop in full-year underlying operating margins, according to a company-supplied consensus. That margin was 18.5% in 2020.

Unilever has tried to offset costs by raising average prices by 2.2%, but Ackerman said that was hard in places like South East Asia where pandemic-hit consumers are switching to cheaper brands and local competition is tough.

JPMorgan Cazenove analysts estimate Unilever may need to raise prices by as much as 13% over the next two years to offset raw material and packaging pressures, which they say could reach 16% this year, at constant currencies and including hedging.

Packaging and raw materials represent about 70% of Unilever's total annual cost of goods of about 23 billion euros ($26.7 billion). A 15% increase translates to about 3.5 billion euros in additional costs.

Despite the pressures, Unilever said in July it was confident of delivering full-year underlying sales growth within its mid-term target range of 3-5%.

Some analysts are less bullish, though, saying recent lockdowns in Indonesia, Vietnam and Thailand will have curbed spending. Jefferies cut its third-quarter underlying sales growth forecast to 2.1% from 3.7%. Analysts on average expect a 2.2% rise.

There are other potential catalysts for Unilever's shares, as it works to sell a big part of its 2 billion euro tea business and is also reportedly in the sights of a top activist investor.

But for now, the attention is on whether it can transfer rising costs onto customers.

"The shares have been weak, suggesting the market does not think Unilever can pass them all on and that therefore the margin is at risk," said Tineke Frikkee, head of UK Equity research at Unilever shareholder Waverton Investment Management.
 

© Thomson Reuters 2021 All rights reserved.