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Inflation gives Unilever sales a surprise lift

Thursday, April 20, 2017 - 01:40

Consumer goods maker Unilever has reported a surprise acceleration in quarterly sales, helped by price increases. But, as Ivor Bennett reports, its Swiss rival Nestle hasn't yet felt the benefit from inflation - it's been hit by weak consumer demand for packaged foods in North America and weaker prices in western Europe.

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At the time, it was thought 'Marmitegate' might cost Unilever. Especially when Tesco delisted several of its products in a disagreement over rising prices. But 6 months on, inflation is clearly more palatable. Price hikes across Unilever's product range have helped drive a surprise jump in quarterly sales up 2.9 percent compared to last year. SOUNDBITE (English) JANE FOLEY, SENIOR CURRENCY STRATEGIST, RABOBANK, SAYING: "Certainly if we look towards the beginning of this year, then the European economy has been more resilient than most economists had anticipated it would do. And we are now seeing that come through in these sales targets." The company's targeting 3-5 percent growth this year. Based on confidence in the global economy. But for some, rising inflation comes with a warning. SOUNDBITE (English) JANE FOLEY, SENIOR CURRENCY STRATEGIST, RABOBANK, SAYING: "We've seen for instance the size of chocolate bars etc. shrink as inflation eats into the potential profits of these. so it depends very much on how inflation is handled." For Nestle though, what should be sweet is turning sour. Sales at its confectionary business fell nearly 3 percent In part because of a later Easter, but also an increasingly health-conscious consumer. SOUNDBITE (English) JANE FOLEY, SENIOR CURRENCY STRATEGIST, RABOBANK, SAYING: "The canny large operators have been moving towards health type products and away from fatty, sugary products. so it very much depends on how they're structuring their business." There'll be no dramatic shift just yet. Although quarterly growth slowed to its lowest in more than a decade, the company is still on course to meet its annual target of 2-4 percent.

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Inflation gives Unilever sales a surprise lift

Thursday, April 20, 2017 - 01:40