Unilever warns of high inflation, rules out big M&A

Unilever reported a 4.9% rise in fourth-quarter underlying sales as people continued to eat more at home

Unilever forecast higher sales, but lower margins, this year as it grapples with soaring inflation, and ruled out big acquisitions following recent investor criticism of its failed pursuit of GlaxoSmithKline's consumer health business.

The maker of Dove soap and Ben and Jerry's ice cream said on Thursday it had listened to investor concerns about the potential £50 billion ($68 billion) deal, and had instead decided to buy back up to €3 billion ($3.4 billion) of shares over the next two years.

"We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio needs to be measured," Chief Executive Alan Jope said in a statement.

Unilever reported a 4.9 per cent rise in fourth-quarter underlying sales as people continued to eat more at home. That beat analysts' mean forecast for 3.8 per cent growth in a company poll.

For the whole of 2021, underlying sales growth was 4.5 per cent, the strongest for nine years.

The company forecast growth of 4.5-6.5 per cent this year as it pushes through more price rises to try to offset soaring input costs, but also said its underlying operating margin was likely to decline by between 140 and 240 basis points.

Consumer goods companies are grappling with soaring energy, commodities, labour and transportation costs.

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