Unilever, the company behind many popular brands such as Marmite and Magnum ice creams, has revealed a surge in profits as the UK’s competition regulator seeks evidence on whether shoppers have become victims of greed.
According to Sky News, the manufacturer reported a 20% rise in net profits to €3.9bn (£3.4bn) over the first half of its financial year.
It reported on its progress just days after the Competition and Markets Authority (CMA) cleared supermarkets of making excessive profits – who look at whether customers are being charged too much amid the cost-of-living crisis.
Underlying price growth for the second quarter was 9.4%, while underlying sales volumes fell by 0.2%, the company said.
Food and other producers have been raising prices to counter inflation, with leaps in costs largely reflecting higher energy, transport and commodity prices.
For example, there have been several disagreements between supermarkets and branded goods recently, with some chains refusing to stock some items temporarily over their pricing – including a public row between Tesco and Heinz last year.
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As a result, shoppers have responded to soaring in food inflation by buying supermarket own brands, which tend to be a cheaper alternative.
Chief financial officer at Unilever, Graeme Pitkethly told Sky News: “We’re past peak inflation now, but there will continue to be a high level of pricing growth within our reported numbers.
“The majority of pricing you’ll see is carry forward pricing as we roll through the quarters.”
Portfolio manager at Wealth Club, Charlie Huggins commented that the results were “solid but uninspiring”, adding that investors would want to see a higher margin.
“The question is – should Unilever be doing better? The answer is almost certainly yes.
“Margins remain well below pre-pandemic levels and below the bonnet of that robust underlying sales growth.”
He added: “Only 41% of Unilever’s business is winning market share which means more than half the portfolio is losing out to competitors and performance in Europe is exceptionally poor, with volumes falling 10% in the second quarter.”
