Unilever Reports 20% Rise in Net Profits Amid CMA's Investigation into Supermarket Supply Chain Practices
Unilever, the multinational consumer goods company behind popular brands such as Marmite, Magnum, and Hellmann's, has reported a 20% rise in net profits for the first half of its financial year.
The company's underlying operating margin stood at 17.1%, reflecting a 9.4% underlying price growth for the second quarter.
However, underlying sales volumes fell by 0.2% during the same period.
Unilever's strong financial performance comes just days after the UK's Competition and Markets Authority (CMA) cleared supermarkets of making excessive profits, but announced that it would be turning its attention to the supply chain to investigate whether suppliers to supermarkets have raised their prices too much, leading to excessive margins at the expense of consumers.
Food and other producers have been raising prices largely since the end of the COVID pandemic, with leaps in costs largely reflecting higher energy, transport, and commodity prices linked to Russia's invasion of Ukraine.
As a result, the CMA will be examining whether suppliers to supermarkets have raised their prices too much, leading to excessive margins at the expense of consumers.
The spat between Tesco and Heinz, a subsidiary of Kraft Heinz, last year highlighted the tensions between supermarkets and branded goods firms over prices.
In response to the leap in food inflation, shoppers have been buying supermarket own brands, which tend to be cheaper, as an alternative.
However, this trend has resulted in a fall in sales volumes for Unilever, which reported rising sales by value in each of its main business groups, including nutrition and ice cream.
Unilever has warned earlier this year that its prices would rise again in the first half, reflecting rising input costs, but it expected stability for the rest of the year.
The company reaffirmed that position on Tuesday in its first update to the City since Alan Jope was succeeded as chief executive by Hein Schumacher earlier this month.
The CMA's investigation into the supply chain is likely to raise questions about whether suppliers to supermarkets have been raising their prices too much, leading to excessive margins at the expense of consumers.
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However, underlying sales volumes fell by 0.2% during the same period.
Unilever's strong financial performance comes just days after the UK's Competition and Markets Authority (CMA) cleared supermarkets of making excessive profits, but announced that it would be turning its attention to the supply chain to investigate whether suppliers to supermarkets have raised their prices too much, leading to excessive margins at the expense of consumers.
Food and other producers have been raising prices largely since the end of the COVID pandemic, with leaps in costs largely reflecting higher energy, transport, and commodity prices linked to Russia's invasion of Ukraine.
As a result, the CMA will be examining whether suppliers to supermarkets have raised their prices too much, leading to excessive margins at the expense of consumers.
The spat between Tesco and Heinz, a subsidiary of Kraft Heinz, last year highlighted the tensions between supermarkets and branded goods firms over prices.
In response to the leap in food inflation, shoppers have been buying supermarket own brands, which tend to be cheaper, as an alternative.
However, this trend has resulted in a fall in sales volumes for Unilever, which reported rising sales by value in each of its main business groups, including nutrition and ice cream.
Unilever has warned earlier this year that its prices would rise again in the first half, reflecting rising input costs, but it expected stability for the rest of the year.
The company reaffirmed that position on Tuesday in its first update to the City since Alan Jope was succeeded as chief executive by Hein Schumacher earlier this month.
The CMA's investigation into the supply chain is likely to raise questions about whether suppliers to supermarkets have been raising their prices too much, leading to excessive margins at the expense of consumers.
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