Mumbai: Unilever Plc will likely increase prices for cleaning sprays and laundry detergents in emerging markets due to costs linked to the war in Iran.
Home care products are susceptible to higher commodity prices because they include ingredients derived from petrochemicals and are sold at lower margins than Unilever’s beauty and other categories.
“Pricing is really our last resort,” Chief Financial Officer Srinivas Phatak said Thursday, declining to say when prices would rise and by how much. Unilever will take “small measures” that won’t hurt performance, he said.
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The comments come after Unilever reported better-than-expected sales and volume growth in the first quarter, in part on strong demand for products including OMO detergent in Brazil and India, where it’s known as Surf Excel.
Shares of Unilever rose as much as 2.1% in London.
Unilever also kept its full-year sales outlook, though it plans to revisit that next quarter when the impact of the conflict in the Middle East is clearer. It expects added costs of as much as €500 million ($585 million) linked to the war.
“There could be a potential, larger impact on consumer and consumer sentiment and the way inflation is going to land given the dynamics — it could also be different in different parts of the world,” Phatak told analysts earlier.
Overall costs are expected to be up between 2.7% and 3.3% this year due to inflation and other factors, which Phatak described as “manageable.”
The conflict is increasing the costs of goods from plastic packaging and to freight costs for companies. Unilever is looking at ways to reduce costs in its supply chains, including potentially reformulating products.
Most of Unilever’s home care products are sold in emerging markets, Phatak said, with the US in particular not impacted.