Unilever PLC (LSE:ULVR), the maker of Vaseline, Dove, Lifebuoy, Lynx, Hellman's, Knorr and Ben & Jerry's, will serve up an update on first-quarter trading on Thursday 27 April, with shares around a two-year high and investors keen to hear how its price-rising strategy is playing out.
Although new chief executive Hein Schumacher takes over in July, the board has already outlined a €600m of cost-savings target, though this is expected to mostly impact the second half.
Before then, prices will be the theme.
The FTSE 100-listed consumer goods giant upped prices in Europe by 13.2% and 8.9% in the fourth and third quarters respectively, while cutting volumes. Across the group, underlying price growth was 13.3% in the quarter.
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Barclay’s analysts suggested hikes will continue be a key tool for the company in battling cost pressures that continue to spill over from last year’s rampant increase in fuel and raw material costs.
Analysts at Jefferies see both profits margins and volumes as set to rise, while noting that Unilver's India arm has actually started lowering products.
With shrinkflation from big brand owners an issue in the spotlight, Unilever's Magnum ice creams were singled out recently.the company has struggled to maintain volumes amidst price hikes and a cost-of-living crisis.
"We expect more rises over the first half as the group aims to grow underlying sales toward the top end of 3-5% over the year," he said.
He said the group's brand power has helped to offset some of the volume declines.
"That makes protecting the quality of their brands a top priority. To that end, brand and marketing spend is crucial, and we saw a €0.5bn increase in investment over the last year. It's a non-negotiable expense for a brand machine like Unilever, and markets will be watching the volume picture closely.
"We'll also be on the lookout for any commentary on how the €600m cost-saving program is going. It's expected to be weighted toward the second half, but early progress would be well received.”