Unilever PLC (LSE:ULVR) reported strong growth in full-year sales but falling margins meant underlying operating profits only improved slightly.
Underlying sales growth accelerated to 9.0% in 2022, driven by all business groups, with price growth of 11.3% and volumes declining 2.1%, the owner of Marmite and Persil said.
Turnover increased 14.5% to €60.1bn and underlying operating profit edged 0.5% higher to €9.7bn despite a fall in underlying margins of 230bps to 16.1%, driven by input cost inflation.
Its billion+ Euro brands, which accounted for 53% of turnover, delivered underlying sales growth of 10.9%, led by strong performances from OMO, Hellmann's, Rexona, Sunsilk and Magnum.
Underlying EPS fell 2.1% to €2.57 while diluted EPS rose 28.8% to €2.99 helped by profit on disposals.
Unilever said cost inflation is set to continue in 2023 and expects net material inflation (NMI) in the first half of 2023 of around €1.5bn.
“We anticipate significantly lower NMI in the second half, with a wide range of possible outcomes, though we do not expect cost deflation,” it added.
Looking ahead, the company forecast in the first half, underlying price growth will remain high and volume growth will be negative.
“We expect 2023 underlying sales growth to be at least in the upper half of our multi-year range of 3% to 5%,” Unilever said.
It forecast a modest improvement in underlying operating margin in the full year, reflecting another year of increased investment, and estimated underlying operating margin will be around 16% in the first half.
The FTSE 100-listed firm paid a dividend of €0.4268.
“We are increasingly realising the benefits from the reshaped portfolio, accelerated savings delivery and improved execution,” outgoing chief executive Alan Jope said.