Dove owner Unilever hiked its prices over the summer as it looked to offset rising energy costs caused by the Iran war. 

The FTSE 100 consumer goods group told shareholders on Wednesday its prices rose by 2.3 per cent in its third quarter, as its volume growth slowed from 5.5 to 2.9 per cent.

The Anglo-Dutch company has been grappling with higher costs since oil prices surged following the start of the Iran war, pushing up ingredient and shipping costs. 

Chief executive Fernando Fernandez said: “We have delivered another quarter of competitive growth, led by continued strong volume delivery and a step up in price to offset the impact of higher commodity costs.”

Unilever, which agreed to offload its food arm to US firm McCormick for $45bn in March, is seeking to focus on its health and beauty products, which include brands like Dove, Tresemmé and Vaseline. 

Sales surged by nine per cent in the group’s home care arm, alongside growth of 5.7 and 6.3 per cent in beauty and wellbeing and personal care. 

Unilever suffers ‘anemic’ foods growth

The company’s growth was dragged down by its food arm, where sales grew by just 0.1 per cent in the quarter, to $3.1bn. This is slowed from 1.2 per cent growth in the first half of the year, when food was already Unilever’s worst performer. 

The firm said it is facing particular challenges in the US foods market, where it is contending with higher competition in the condiments category. Unilever said it is making targeted price cuts to boost sales of these products.

The group was also held back by a 0.9 per cent drop in sales in its developed markets, including a 1.7 per cent decline in Europe, which it blamed on a “soft market environment”. 

But Unilever posted 9.5 per cent underlying sales growth in its emerging markets, including double-digit growth in India, Turkey, Vietnam and Pakistan. Volumes grew by six per cent while prices rose by 3.3 per cent across these markets.

The firm said the sale of its food arm, which includes Marmite, Hellmann’s and Bovril, is making “strong progress” and is expected to complete in the middle of next year. 

Analysts at RBC Capital Markets said Unilever has delivered a “decent” third-quarter performance, as sales growth in emerging markets and homecare “more than compensat[ed] for anemic growth in developed markets and food”. 

“The reality is that it (and by extension its shareholders) still own a food business that is dragging down group performance,” they said.