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Multinational company Unilever warns of even higher inflation next year

Multinational company Unilever warns of even higher inflation next year
October 21, 2021 Reuters

LONDON (Reuters) - Unilever warned inflation was likely to accelerate next year, keeping the pressure on consumer goods companies as they hike prices to try to offset surging energy and other costs.

The maker of Dove soap and Knorr soup beat third-quarter sales growth forecasts on Thursday and kept its full-year profit margin guidance, defying some analysts' fears of a cut.

However, finance chief Graeme Pitkethly saw little let up in inflationary pressures, in a potential blow to central bankers who are hoping the current spike in prices will be transitory.

"We expect inflation to be higher next year than this year," he said on a media call.

Unilever said its underlying sales rose 2.5% in the three months ended Sept. 30, above the 2.2% forecast by analysts in a company supplied consensus.

Growth was helped by demand in the United States, India, China and Turkey, while a 4.1% increase in prices more than offset a 1.5% decline in volumes.

Consumer goods companies face soaring prices of raw materials such as energy, edible oils and packaging, as well as higher transport costs as economies recover from the pandemic.

KitKat and Nescafe maker Nestle raised its full-year sales target on Wednesday as it also hiked prices to cope with the extra costs.

But analysts say Unilever faces a tougher task as it makes about 60% of turnover in emerging markets, where inflationary pressures are fiercest. In July, the group cut its full-year operating margin forecast to "about flat" from "slightly up."

The company said on Thursday that, despite cost inflation remaining at "strongly elevated levels," it was sticking with that latest forecast.

Unilever's shares are down around 13% this year.