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Unilever has recorded underlying sales growth of 5% in its second-quarter results but has cut its operating margin outlook to “around flat” amid rising commodity costs.

The owner of Ben & Jerry’s, Marmite and Hellmann’s reported turnover of €13.5 billion in Q2 and €25.8 billion in its first half. Meanwhile, underlying sales growth for Unilever’s first half stood at 5.4%.

However, the company warned that surging commodity costs would squeeze its full-year operating margin and revised its outlook to “around flat”.

In Unilever’s second quarter, the company’s foods and refreshment unit grew its underlying sales by 6.8%, ahead of beauty and personal care (up 4.2%) and home care (up 3.2%).

Following a strategic review process announced early last year, Unilever has said that the operational separation of its tea business is “substantially complete” and is due to conclude in October. The next phase for the business is expected to be either an initial public offering, sale or partnership.

In the first half of the year, Unilever’s ecommerce business grew 50% and the channel now represents 11% of sales.

Ice cream sales grew across both in-home and out-of-home products in the first half, and performed strongly in Turkey, China and India. Out-of-home ice cream in Europe grew double digit with a gradual easing of living restrictions, although sales have not returned to pre-pandemic levels.

Overall, Unilever’s food solutions business grew double digit in its first half, with sales in China exceeding pre-Covid-19 levels, while most other markets continued to see adverse effects from out-of-home channel restrictions.

In-home foods grew low single digit, even as Unilever lapped a spike in demand in the prior year. Unilever says that it took pricing action across food and ice cream to counter rising input costs.

Meanwhile, underlying sales in functional nutrition – which includes Unilever’s vitamins, minerals and supplements brands and nutrition brands Horlicks and Boost – grew high single digit in Q2.

Underlying sales grew across Unilever’s Asia/AMET/RUB, Americas and Europe segments in its second quarter, by 5.7%, 4.8% and 4% respectively.

In Europe, recovery in out-of-home ice cream in the second quarter, particularly in Italy and Spain, led volume growth in Unilever’s first half.

Although renewed restrictions in India impacted the market in Q2, they were less severe than in the same period last year. In Indonesia, large parts of the country have entered lockdown following a sharp increase in coronavirus cases, impacting Unilever’s performance in that market.

Unilever CEO, Alan Jope, said: “Unilever has delivered a strong first half, with underlying sales growth of 5.4% driven by our continued focus on operational excellence.”

He continued: “Competitive growth is our priority, and we are confident that we will deliver underlying sales growth in 2021 well within our multi-year framework of 3-5%, despite more challenging comparators in the second half.

“We have seen further cost inflation emerge through the second quarter. Cost volatility and the timing of landing price actions create a higher than normal range of likely year-end margin outcomes. We are managing this dynamically and expect to maintain underlying operating margin for 2021 around flat.”