Fitch warns the UK is facing the highest debt interest costs in developed world, as a share of revenue
Despite Unilever’s strength, the UK’s FTSE 100 share index is basically flat in early trading (up 0.02% or 2 points at 7680).
The markets are currently split into two camps, reports Bill Blain, strategist at Shard Capital:
Reasons to be cheerful: an increasing number of folk are convinced slowing US inflation and the economy’s resilience means the Fed has achieved the improbable holy grail of central banking – a soft landing. That’s got to be good news for stocks – er, maybe.
Reasons to be fearful: Others are delving deeply into the detail of rising credit card defaults, earnings problems, a property bust, and global slowdown (particularly in China and Europe) for proofs of how unsustainable the current happy-clappy market is.
“The Unilever juggernaut rumbles on, sweeping aside any inflationary worries through the sheer scale of its pricing power.
There have been concerns that an increasingly cost-conscious consumer would switch to the cheaper, own-brand products of rivals, but this appears only to be happening at the margins. In normal circumstances, significant price rises would be accompanied by large declines in volumes as customers move elsewhere.
By product, the 14 “Billion + euro brands”, which generate annual sales in excess of €1 billion and which account for 55% of group turnover, saw underlying sales growth (USG) of 10.8%, driven by outperformance from the likes of Hellman’s, Omo, Sunsilk and Lux.
By segment, Personal Care and Nutrition each saw USG of over 10%, with Beauty & Wellbeing, Home Care and Ice Cream adding 9.1%, 8.4% and 5.7% respectively.
In Emerging Markets, USG of 10.6% was driven by price growth of 10% and an additional 0.6% boost in volumes, while in Developed Markets, a more moderate USG of 6.9% was due to price increases of 8.4%, slightly offset by volume declines of 1.4%.
