Unilever PLC: announces results for the first half 2022

London / UK. (ul) British Unilever PLC announced its results for the first half of 2022 or, with own words, «consistency in challenging conditions.» Highlights of the period:

  • Underlying sales growth of 8.1 percent, with 9.8 percent price and (1.6) percent volume
  • Turnover increased 14.9 percent, including a currency impact of 5.6 percent
  • Underlying operating margin of 17.0 percent, a decrease of 180bps driven by input cost inflation
  • Underlying earnings per share up 1.0 percent, including a currency impact of 4.9 percent
  • The billion+ Euro brands, accounting for more than 50 percent of Group turnover, grew 9.4 percent
  • EUR 750 million share buyback tranche completed on 22 July, intention to launch second tranche in third quarter

Chief Executive’s Summary

CEO Alan Jope: «Unilever has delivered a first half performance which builds on our momentum of 2021, despite the challenges of high inflation and slower global growth. Underlying sales growth of 8.1 percent was driven by strong pricing to mitigate input cost inflation, which, as expected, had some impact on volume. We are now raising our sales guidance for the year. Underlying operating margin was on track at 17 percent for the first half.

«We have made further progress against our strategic priorities. We are maintaining strong investment in our brands, supporting 9.4 percent underlying sales growth in our billion+ Euro brands. eCommerce sales now represent 14 percent of turnover, up from 6 percent in 2019. Of our three priority markets, the USA and India again grew strongly, while sales in China were affected by the lockdowns in the second quarter. We continue to reshape our portfolio, completing the sale of the global tea business ekaterra, and the acquisition of Nutrafol, a leading provider of hair wellness products. Prestige Beauty and Health + Wellbeing, now 4 percent of Group turnover, again grew double-digit.

«Our simpler, more category-focused organisation came into effect as planned on 1 July. This major change to Unilever’s operating model is an important further step that will underpin the delivery of consistent growth, which remains our first priority. The challenges of inflation persist and the global macroeconomic outlook is uncertain, but we remain intensely focused on operational excellence and delivery in 2022 and beyond.»


Our guidance for underlying sales growth in 2022 was previously at the top end of a range of 4.5 percent to 6.5 percent. We now expect underlying sales growth to be above that range, driven by price with some further pressure on volume.

We expect net material inflation for the year to remain high at around EUR 4.6 billion with our forecast for the second half largely unchanged at around EUR 2.6 billion. We will continue to invest in the health of our brands. In the first half, we increased absolute brand and marketing investment, and we will again invest competitively in marketing, R+D and capital expenditure in the second half. Our full year underlying operating margin expectation remains at 16 percent, which is within our guided range of 16 percent to 17 percent.

The medium-term macroeconomic and cost inflation outlooks are uncertain and volatile, but delivering growth remains our first priority. Against this backdrop, we continue to expect to improve margin in 2023 and 2024, through pricing, mix and savings.

Our market context

High input cost inflation has been widespread across our markets, and it is expected to remain elevated in the second half. While Covid-19 restrictions have been eased in most markets, the lockdown in China affected consumers particularly in the second quarter.

In the majority of markets in which we operate, market growth was driven by price which had an impact on market volumes. Food service and out-of-home ice cream channels benefitted in markets which reopened after lockdowns in the prior year, although tourism has not yet returned to pre-Covid levels.

Unilever overall performance

Underlying sales growth in the first half was 8.1 percent with 9.8 percent from price and (1.6) percent from volume. Growth was broad-based across all Divisions. Price has sequentially stepped up over the past two quarters, reaching 11.2 percent in the second quarter, which had, as expected, some negative impact on volume.

This was more pronounced in Home Care, which was particularly exposed to rising input costs and took the highest pricing action, leading to underlying sales growth of 10.7 percent. Beauty + Personal Care grew 7.5 percent, driven by price and continued strong growth in Prestige Beauty and Health + Wellbeing, which is Unilever’s vitamins, minerals and supplements business. Foods + Refreshment grew 7.3 percent with slightly negative volume at (0.9) percent, although volumes were flat excluding ekaterra. Ice cream out-of-home and Unilever Food Solutions showed strong double-digit growth in the first half, compensating for lower growth of in-home ice cream.

Emerging markets grew by 10.0 percent with a 12.1 percent contribution from price and volume at (1.8) percent, including an estimated adverse impact of around 70bps from the lockdowns in China. Pricing in Latin America was strong at 19.1 percent with volumes contracting by (4.8) percent. South Asia grew strongly through both price and volume. Turkey delivered double-digit volume growth by managing dynamically through a high inflation environment. Developed markets increased by 5.5 percent, with 6.7 percent from price and (1.2) percent from volume. North America grew 8.7 percent, helped by strong performances of dressings and our businesses in high growth areas such as Health + Wellbeing.

Turnover increased 14.9 percent to EUR 29.6 billion, which included a currency impact of 5.6 percent and 0.6 percent from acquisitions net of disposals. Underlying operating profit was EUR 5.0 billion, up 4.1 percent versus the prior year. Underlying operating margin declined by 180bps to 17.0 percent. Gross margin decreased by 210bps which reflected the very high inflation in input costs that was only partially mitigated by the strong pricing action and savings delivery.

Brand and marketing investment was stepped up by EUR 0.2 billion in constant exchange rates, which equated to a 40bps contribution to margin. Overheads increased by 10bps largely due to increased investment in business models with a higher overheads structure.

We completed the announced sale of our global tea business, ekaterra, on 1 July 2022. On 7 July, we completed the acquisition of a majority stake in Nutrafol, a leading provider of hair wellness products, which had been announced on 30 May 2022.

On 23 March, we commenced the first tranche of EUR 750 million of the share buyback programme of up to EUR 3 billion. As at 30 June, total consideration for the repurchase of shares was EUR 648 million. This tranche completed on 22 July. It is our intention to launch a second EUR 750 million tranche of our planned share buyback during the third quarter of 2022. This will be confirmed with a launch announcement in due course.

In January 2022, we announced a new, simpler, more category-focused operating model for Unilever organised around five Business Groups and a technology-driven backbone, Unilever Business Operations. The reorganisation is on schedule with the new structure in place on 1 July. We expect it to be achieved within existing restructuring plans, and to generate around EUR 600 million of cost savings over two years, with the majority in 2023.