INSUBCONTINENT EXCLUSIVE:
Unilever reported underlying operating margins of 18.5 per cent in 2020.Unilever's first-half results should give a sign of how the
consumer goods giant is coping with soaring commodity and transport costs - whether it has managed to lift prices without hitting sales
volumes, or whether margins are being squeezed.But Thursday's results will also be vying for an attention with an ongoing row over the
decision of the group's American ice-cream brand Ben - Jerry's to stop marketing its products in the occupied Palestinian territories -
a move that has sparked a backlash in Israel.Analysts expect the Dove soap and Hellmann's mayonnaise maker to report a 1.2 percentage
point drop in underlying operating margins from a year ago, according to a company supplied consensus.Pantry stocking and a surge in
eating-at-home during pandemic lockdowns last year allowed Unilever to cut back on marketing and store promotions, boosting margins
But soaring commodity costs for everything from plastics to tea and nuts in the first half of 2021 have put a question mark over its
full-year goal to lift margins "slightly" from last year
ethylene oxide and palm oils used in manufacturing and packaging its beauty and personal care products
significant cost challenge to the industry since 2011," Deboo said
analysts say the impact is expected to be felt only later this year, leaving it with a hefty first-half commodities bill.Unilever is
expected to raise prices further, but its initial hikes are already weakening sales volumes in countries such as Brazil, Morgan Stanley
analysts noted in a research report earlier this month
exact actual impact on margins will have been hard to estimate so poses an additional risk to coming results, not just for the impact of
this quarter but also what it means for the second-half," said Tineke Frikkee, head of UK Equity research at Unilever shareholder Waverton
Investment Management.Despite the pressures, Unilever said in April it was confident of delivering full-year underlying sales growth within
its mid-term target range of three-five per cent, with the first half around the top of the range.Some analysts are less bullish, however,
citing suppressed consumption of ice-cream outside the home due to a cold April and wet May in northern Europe
operating margins are seen at 18.6 per cent, down 1.2 percentage points.* Unilever shares have lost 1.6 per cent year-to-date, while the
consumer packaged goods stocks, including Nestle and Procter - Gamble, this year.* 12 out of 21 analysts rate the stock "buy" or similar,
while three have it as a "hold" and six a "sell" or similar.* The median price target is 48 pounds versus Tuesday's close of 43.2 pounds.
