Unilever dips 6% as rising commodity prices cut into margin outlook

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Unilever dips 6% as rising commodity prices cut into margin outlook
Reuters
  • Unilever slid as much as 6% on Thursday after the company downgraded its margin outlook for the year.
  • The stock was Thursday's biggest loser among the FTSE 100.
  • The outlook adjustment comes as Unilever finds itself caught in a brewing political row over a decision by Ben & Jerry's, its subsidiary, to cease operations in what it called the occupied Palestinian territory.
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Unilever slid as much as 6% on Thursday after the company downgraded its margin outlook for the year.

On a Thursday earnings call, Unilever announced that despite healthy sales growth, rising commodities prices had begun to eat away at its operating margins. The company has raised prices but not quickly enough to prevent margins from compressing. Unilever downgraded its margins outlook to "about flat."

The stock fell on the news, dropping sharply as British markets opened and trending down slowly thereafter. The stock was Thursday's biggest loser among the FTSE 100.

The outlook adjustment comes as Unilever finds itself caught in a brewing political row over a decision by Ben & Jerry's to cease operations in what it called the occupied Palestinian territory. Ben & Jerry's is owned by Unilever but is run by an independent board, signaling a potential conflict over control of the company.

On Thursday, a Texas official said the state's pension fund was exploring divesting from Unilever under a 2017 law banning investments in any company that boycotts Israel. Earlier on Tuesday, Israeli Prime Minister Naftali Bennett said his country would "act aggressively" against Ben & Jerry's and warned of "severe consequences."

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"Unilever remains fully committed to our business in Israel," Unilever CEO Alan Jope said during the Thursday earnings call.

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