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Unilever’s underlying growth fell back to 2.5% in the third quarter as sales volumes fell back as the consumer giant hiked prices.

Underlying sales growth of 2.5% in the three months to the end of September was down from 4.4% for the first nine months of the year.

Underlying volumes were down by 1.5% in the quarter, with a 4.1% uplift in prices driving growth.

Total turnover increased 4% to €13.5bn, with a positive impact of 1.6% from acquisitions net of disposals and a negative impact of 0.1% from currency-related items.

Unilever said the 4.1% jump in pricing represented a step up from the first half of the year as it took pricing action to offset rising commodity and other input costs.

CEO Alan Jope commented: “”We have delivered a good quarter against strong comparators, with underlying sales growth of 2.5%. The combination of our strategic choices and focus on operational excellence continue to drive competitive growth. Underlying sales growth is now at 4.4% for the year to date and we are confident that we will be well within our multi-year framework of 3-5% for the full year.

“Cost inflation remains at strongly elevated levels, and this will continue into next year. We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs. We continue to expect that we will deliver in line with our margin guidance of around flat for the full year.”

Unilever said it saw strong growth in its three priority markets of the US, India and China.

In the US food solutions, functional nutrition and prestige beauty businesses all contributed to growth, whilst in-home food and ice cream declined as it continues to see a trend of increased eating away from home and greater offline shopping.

China grew high single digit led by volume with broad based growth across divisions. India grew double digit as the country continued to recover from Covid-19 related impacts.

On a category basis, foods & refreshment underlying sales grew 3%, with negative 0.8% from volume and a 3.8% uplift from price.

Out of home ice cream grew with Asia and Europe both growing well as countries re-opened, while in-home ice cream declined as it lapped very strong growth. Food solutions grew double digit with China and markets across Europe and Latin America delivering sales above 2019 levels. Knorr and Hellmann’s both grew mid-single digit, while tea grew “slightly” led by pricing.

Beauty & personal care had underlying sales growth of 2.6%, with negative 1.3% from volume and 3.9% from price.

Skin care grew high single digit, with double digit growth from its Vaseline brand, and deodorants grew mid-single digit. While skin cleansing saw a step up in pricing, underlying sales declined overall as the category lapped significantly increased demand in the prior year related to Covid-19. Hair care grew low single digit, with mid-single digit price growth and negative volumes, while oral care declined amidst challenging market conditions in South East Asia.

Home care sales were up 1.4%, driven by a 4.8% rise in prices as volumes fell 3.2%.

Fabric cleaning grew low-single digit, with mid-single digit underlying price growth and negative volumes and low single digit growth in fabric enhancers was driven by ongoing market development in South Asia. The group lapped high demand for household cleaners during the prior year resulting in high single digit decline in home and hygiene, although it continues to trade ahead of pre-pandemic levels.

Unilever shares are up 1.4% to 3,874p so far this morning.

Morning update

Sales roared back at Pernod Ricard in its first quarter the global hospitality reopens post-Covid and travel and leisure begin to recover.

Sales for the first quarter of its 2022 financial year totalled €2.7bn, with an organic growth of more than 20%.

Pernod said it had made a “very dynamic” start in all regions, with robust demand and strong shipments ahead of festive season.

Its off-trade sales remained resilient, while markets supported by on-trade were boosted by reopenings.

Travel Retail still “very subdued”, but benefitting from low basis of comparison.

Reported Sales growth was up 22%, with an overall favourable foreign exchange impact, mainly from Chinese yuan.

The group’s strategic international brands were up 24% in the quarter, with broad-based growth, in particular for Martell, Jameson, Ballantine’s, Chivas Regal and Absolut and positive price/mix momentum.

Strategic local brands were up 15%, driven by strong double-digit growth of Seagram’s Indian whiskies

Specialty brands grew by 21%, thanks in particular to Malfy, Avion, Del Maguey, Aberlour, Monkey 47, US whiskeys and Lillet

Strategic wines fell back 7% against strong 9% growth in the comparative period, due in particular to New Zealand supply constraints.

Reported Sales growth was +22%, with an overall favourable FX impact, mainly from Chinese yuan.

CEO Alexandre Ricard said: “We have had a very dynamic start to the year, as expected, with strong demand in most markets. The Off-trade remains resilient and I am particularly pleased to note the continued recovery of the On-trade.

“We expect good sales growth to continue through FY22, albeit moderating vs. Q1. We will continue to implement our strategy, notably accelerating our digital transformation and reinvesting to seize present and future growth opportunities.”

Elsewhere, Clayton, Dubilier & Rice has issued tender offers for to buy back £1.1bn of corporate bonds issues by Morrisons after its successful bid for the supermarket.

The private equity firm has made offers to redeem in full four series of notes issued by Morrisions: £250m for 4.625% notes due December 2023, £250m of 3.5% notes due July 2026, £250m of 4.75% notes due July 2029 and £350m of 2.5% notes due October 2031.

CD&R will also pay unpaid interest for all notes accepted for purchase. The offer will expire on 19 November.

On the markets this morning, the FTSE 100 has dipped 0.3% to 7,200.4pts.

Early fallers include Just Eat Takeaway, down 2.6% to 5,897p, Glanbia, down 2.1% to €13.61 and Naked Wines, down 1.8% to 672.7p.

Risers so far today include Bakkavor, up 2% to 125.6p, PayPoint, up 1.1% to 719p and Parsley Box, up 1% to 55.6p.

Yesterday in the City

The FTSE 100 edged up 0.1% to 7,223.1pts yesterday.

Nestlé ended the day up 2.7% to CHF 115.96 as rising prices, continued elevated demand at supermarkets and a recovery in the out-of-home channel helped boost its organic growth by 7.6% in the first nine months of 2021.

Deliveroo was up by 3.8% to 301.5p as it increased its guidance for the year after demand remained strong in the third quarter despite societies reopening as lockdown restrictions eased.

Elsewhere, risers included Coca-Cola Europacific Partners, up 7.9% to €50.00, Nichols, up 3.1% to 1,240p, THG, up 1.4% to 330p, Kerry Group, up 1.4% to €116.55, Imperial Brnads, up 1.3% to 1,578.5p, PZ Cussons, up 1.1% to 223p and Finsbury Food Group, up 1.1% to 94p.

The day’s fallers included McBride, down 6.8% to 63.2p after it warned of the impact of rising costs on Tuesday, SSP Group, down 3.8% to 242p, McColl’s Retail Group, down 3.7% to 20.2p, Bakkavor, down 3.5% to 123.2p, C&C Group, down 3.4% to 245.6p and Parsley Box, down 2.7% to 55p.

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