Unilever hikes prices by more than 8% as cost pressures build

LONDON (Reuters) -Unilever beat first-quarter sales forecasts as the maker of Dove soap and Ben & Jerry's ice cream hiked prices by more than 8% to offset higher supply chain and energy costs, more than outweighing a dip in sales volumes.

The company warned on Thursday it expected to raise prices further, increasing its forecast for cost inflation in the second half of the year to 2.7 billion euros ($2.8 billion) due to "the outbreak of war in Ukraine and the related increase in raw material inflation."

It now expects full-year underlying sales growth to be towards the top end of its 4.5-6.5% guidance range, but the full-year underlying operating margin towards the bottom end of its 16-17% range.

Consumer goods makers around the world have been raising prices to make up for soaring energy, commodities, labour and transportation costs, with the Ukraine conflict exacerbating inflationary pressures already building in the recovery from the COVID-19 pandemic.

Rivals Procter & Gamble and Nestle have also reported strong sales growth in recent days after lifting prices, but some analysts are concerned consumers may increasingly switch to cheaper own-brand products as their incomes are squeezed.

Unilever's first-quarter underlying sales rose 7.3%, beating analysts' average forecast of 4.4% in a company-supplied poll.

Prices rose 8.3%, while volumes fell 1%. Analysts had expected a 6.3% rise in prices and a 1.7% decline in volumes.

($1 = 0.9511 euros)

(Reporting by Richa NaiduEditing by Mark Potter)