[Asia Economy Reporter Byunghee Park] Unilever CEO Alan Jope said that the pressure from rising raw material prices is at its highest level in 10 years.
On the 22nd (local time), according to major foreign media, CEO Jope stated at the announcement of Unilever's second-quarter earnings that not only raw material prices but also packaging and transportation costs have surged, making product price increases inevitable.
CEO Jope explained that compared to the first half of last year, palm oil has risen by 70%, soybean oil by 80%, crude oil by 60%, and maritime transportation costs by 40-50%. He added that due to this sharp increase in raw material prices, the current cost pressure has risen to the highest level since 2011.
As the cost burden increased, Unilever's operating profit margin for the first half of this year fell by 1 percentage point.
Recently, Ben & Jerry's, an ice cream brand under Unilever, declared that it will no longer sell ice cream in the Palestinian territories occupied by Israel, which is also expected to be a factor lowering Unilever's profit margin. Unilever acquired Ben & Jerry's in 2000. At the time of acquisition, Unilever agreed to respect Ben & Jerry's management philosophy of actively responding to international, political, and social issues.
After Ben & Jerry's announced that it would stop selling ice cream in the West Bank and East Jerusalem occupied by Israel, the Israeli Prime Minister called CEO Jope to protest.
CEO Jope stated that the decision to stop selling ice cream in the West Bank and East Jerusalem was made by Ben & Jerry's and is in accordance with the agreement made when Unilever acquired Ben & Jerry's 20 years ago. He also emphasized that Unilever operates four factories in Israel, providing jobs to 2,000 people.
Unilever announced that its second-quarter sales increased by 5.4% year-on-year to $25.8 billion. Of the 5.4%, 1.3% was explained as sales growth due to price increases. Although sales increased, second-quarter net profit was €3.4 billion, down from €3.5 billion in the second quarter of last year.
Procter & Gamble (P&G), a competitor of Unilever, also announced last month that CFO Jo Moller expects a $600 million increase in costs this year due to rising raw material and transportation costs.
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