Unilever expects the strongest cost inflation in decades to hit profitability for two years, adding to pressure on chief executive Alan Jope, who ruled out large acquisitions after a failed bid for GlaxoSmithKline’s consumer health unit (The Financial Times £)
Unilever’s move to repair City relations with a €3bn share buyback and a pledge to take big takeovers “off the agenda” is unlikely to be enough to appease activist investors, analysts have warned. (The Times £)
The Daily Mail focusses on Unilever’s boss has ruling out any blockbuster takeovers weeks after a botched attempt to buy a chunk of Glaxosmithkline for £50bn (The Daily Mail).
Alistair Osborne in The Times writes: “Inflation is hardly Jope’s fault. And he hopes to offset most of it with higher prices, describing RBC analyst claims that Unilever had a “lack of pricing power” as “absolute nonsense”. Yet it hardly helps his post-Glaxo comeback. Only reliably quality performance will keep Jope off the ropes.” (The Times £)
Also looking at inflation, The Daily Mail’s Alex Brummer comments: “Soaring US consumer prices, up 7.5 per cent year-on-year in January, show the scale of the inflation challenge not just for households but for global corporations too. For Unilever boss Alan Jope, it is out of the bid frying pan into the commodity price and margins fire… Even if Jope is able to bolster revenues, which by growing at 4.5% matched Proctor & Gamble last year, there is no way of avoiding the huge hit to margins.” (The Daily Mail)
Nils Pratley in The Guardian writes: “Unilever’s plan A was to make a huge acquisition; plan B is not to make one, or at least not “for the foreseeable future”. Boardroom U-turns do not come much more screeching… Drawing a line under the GSK misadventure won’t be easy, and will require more than a peace offering in the form of a two-year €3bn share buyback.” (The Guardian)
The Telegraph’s Ben Marlow comments: “Analysts have pointed out that this is a company that somehow wants to focus on its health and beauty brands rather than food and drink yet the latter is where the growth is. On the other hand, they have also talked about selling off the low-growth stuff, so which is it? It can’t be both.” (The Telegraph)
The FT’s Lex colums writes: “Shares in the FTSE 100 company have trailed peers such as Nestlé, P&G and even Danone in the past year. Investors such as Fundsmith’s Terry Smith can expect Unilever to continue trying their patience. Margins will keep eroding amid difficult supply conditions.” (The Financial Times £)
The two great rivals of the fizzy drinks industry have reported higher sales than had been expected after they increased their prices, but both Coca-Cola and PepsiCo warned yesterday that inflation threatened to dent their profits, an alert that sent the share prices of each into the red. (The Times £)
Almost 1.5 billion fewer pints were sold in British pubs in 2021 than in 2019, according to the British Beer and Pub Association (Sky News). Beer sales plunged in the UK during the Covid pandemic as people avoided pubs and drank wine and spirits at home instead, industry analysis found (The BBC).
Delivery Hero lost more than a quarter of its value on Thursday morning after the food delivery company disappointed on this year’s profitability outlook and investors worry it lags behind global rivals such as Uber and DoorDash. (The Financial Times £)
Jollibee Foods will ramp up spending and open more stores as hungry fast-food consumers in the Philippines and the world emerge from almost two years of Covid-19 lockdowns, the company said, as its fourth-quarter earnings surged back to pre-pandemic levels. (The Financial Times £)