Commodity price rises hit Unilever

4 November 2011

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4 November 2011 | Angeline Albert

Unilever has seen a 2.5 billion (£1.7 billion) rise in commodity costs this year, in comparison to 2010.

According to the group, which published its ThirdQuarter 2011 Trading Statement yesterday, commodity price increases were felt most intensely in the first and second quarters of this year. The rise in the price of crude oil - currently $110 a barrel (£68.61) - is one key commodity cost impacting the group, whose brands include Dove, Persil, Knorr, Hellmann’s and Slim-Fast. Packaging and food price rises were also felt.       

The trading statement said the group’s third quarter’s sales rose by 7.8 per cent to a turnover of €12.1 billion (£10.4 billion) but rising input costs led it to increase the prices it charges retailers. They rose by 5.8 per cent in the third quarter of 2011, in comparison to the same quarter last year.

A spokesman for Unilever said: “Commodity costs in 2011 will be €2.5 billion higher than they were in 2010. We have sought to mitigate this impact by pricing to recover cost, rather than maintain margin.”

When asked what the company’s procurement team would do to reduce costs, the spokesman said he could not disclose details. He added: “As part of our savings programme, we continue to take out any costs in our business which the consumer is not willing to bear.”

CEO Paul Polman said in the statement: “I am pleased to report another good quarterly performance. These results are especially encouraging against the backdrop of very uncertain consumer demand, hugely volatile commodity markets, natural disasters and geo-political uncertainty in many parts of the world.”

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