Materials costs bug Unilever boss

London – Rising raw materials costs are worrying Unilever CEO Paul Polman, despite him delivering a sturdy set of figures (see panel) in the group’s first quarter results statement.

The markets for our input materials remain volatile,” said Polman. As a result of the continued rise in crude oil, we now expect the impact of commodity cost inflation to be around 500-550bps of turnover in 2011. This is leading to further upward pressure on prices.

“Price increases are lagging cost increases and this means that we expect the movement in underlying operating margin to be down in the first half before improving in the second half of 2011.”

Unilever has, however, accelerated its cost reduction programmes and now expected full-year savings of around €1.3 billion, the CEO added.