Unilever plc (NYSE: UL) shares rise around 2% in early session on Thursday as the company exceeded quarterly sales predictions as another major price increase from the creator of Dove soap and Ben & Jerry’s ice cream resulted in only a slight drop in volumes, sending its shares up over 2% in early trade.
However, the 10.7% growth in prices was smaller than in previous quarters, adding to hints that inflationary pressures may be receding as input costs fell.
Packaged goods firms have raised prices in response to rising expenses for everything from sunflower oil and transportation to packaging and grain.
Consumers have fared better than many experts had predicted, but others warn that corporations’ profitability may suffer if buyers begin moving to cheaper goods in the future.
According to a company-provided consensus, Unilever reported a 10.5% growth in underlying first-quarter sales to 14.8 billion euros ($16.4 billion), exceeding analysts’ average expectation of a 7.2% gain.
Prices increased by 10.7%, while volumes fell by 0.2%. Price increase was slower than in the previous two quarters and down from a record 13.3% recorded in February, but volume decline was better than the 3.6% reported at the time.
A fund manager at Sarasin & Partners, Neil Denman said that they expected volumes to be down about 4%, so that very slight decrease was very nice to see.
Looking ahead, Unilever finance Chief Graeme Pitkethly said, “We think it (price hikes) will step down from there… it will start to taper off over the quarters,” adding that price increases will be eased at varying rates across the group’s diverse businesses.
“Beauty, wellbeing, and personal care – they are seeing much lower inflation, hence the lower pricing rates… homecare is a bit of a mixed bag given the emerging market footprint and foreign exchange evaluations.”
P&G and Nestle have also recently announced higher-than-expected quarterly revenues, with price increases offsetting reduced volume.
