Unilever released better-than-expected third quarter results on Thursday, but sparked controversy after upping product prices in the wake of the Pound’s recent devaluation.
The company saw underlying sales growth rise by 3.2 percent, with sales increasing by 4.7 percent at by constant exchange rates. CEO Paul Polman said the company was likely to meet its full-year targets, adding that it was “on track for another year of volume growth ahead of our markets, steady improvement in core operating margin and strong cash flow.”
“Our business continues to demonstrate its resilience by growing competitively and consistently in tough market conditions”, he continued.
“During the third quarter, we have made further progress in reshaping our portfolio, adding businesses in fast-growing segments with the acquisitions of Dollar Shave Club, Blueair and Seventh Generation.
“With markets remaining soft and volatile, we have continued to transform our business at an accelerated pace. We are progressing well with the fast implementation of our change programmes: net revenue management, zero based budgeting and ‘Connected 4 Growth’, making our organisation more agile and responsive to market needs.”
However the company’s strong results were largely overshadowed by its row with Big Four supermarket Tesco, which hit the headlines on Thursday. Unilever has been trying to raise prices across a wide range of goods, including Marmite, Pot Noodle and Ben & Jerry’s, by about 10 percent as a result of the devaluation of the Pound in recent weeks.
Tesco is resisting the move and has removed Unilever products from its website, although some are still available in store. Unilever’s CFO called the price rise a “normal” reaction to shifts in currency values, but many argue that since the products are made in the UK, 10 percent is an excessive increase.
Shares in both Unilever and Tesco are trading down on the news, with Unilever (LON:ULVR) hit the hardest and pushing down 4.23 percent (1418GMT). Tesco (LON:TSCO) are faring slightly better, down 2.14 percent at 196.85.