Americans in Lockdown Buy Cleaning Products and Ice Cream, Lifting Unilever -- Update
23 July 2020 - 7:41PM
Dow Jones News
By Saabira Chaudhuri
LONDON -- Unilever PLC reported better-than-expected
second-quarter sales as a strong performance in the U.S. outweighed
coronavirus-related declines elsewhere in the world.
The consumer-goods giant's shares jumped 7% in early trading
Thursday after it said it had benefited from a rollout of
Lifebuoy-branded soap and sanitizer products to new markets, and
that grocery-store gains for its Knorr and Hellmann's brands had
helped offset weaker out-of-home ice-cream sales during
lockdowns.
Unilever also said it plans to spin off the majority of its tea
business into a stand-alone entity, capping a review it launched
earlier this year. It will retain its tea operations in India and
Indonesia, as well as its Lipton ice-tea joint venture with PepsiCo
Inc.
For the second quarter, the company said underlying sales growth
-- a closely watched figure that strips out currency movements and
deals -- declined 0.3%, well above analyst estimates for a decline
of 4.3%.
Chief Financial Officer Graeme Pitkethly on a call with
reporters described the quarter as "probably the most testing we've
ever seen," and said the results mask huge volatility in various
businesses. "Although it looks like we are flat on topline, we had
record growth and record declines just one click below that," he
said.
For instance, Unilever said sales at its food-service arm, which
provides ingredients to restaurants, declined nearly 40% over the
first six months of the year, while sales of ice cream sold for
out-of-home consumption declined nearly 30%. By contrast, hand soap
and sanitizer along with cleaning products logged
double-digit-percentage growth.
Underlying sales in home care rose 4% in the second quarter,
largely offsetting a 1.8% drop in the food and refreshment arm and
a 0.9% drop in beauty and personal care.
In North America, Unilever reported second-quarter underlying
sales growth of 9.5%, driven by a jump in sales of food --
especially ice-cream brands such as Magnum -- to be eaten at home
and hygiene products. In Europe, where Unilever's ice-cream
business is far more out-of-home focused, sold in parks and through
kiosks that are popular with tourists, the company reported an
underlying sales drop of 4.5%.
Underlying sales in emerging markets overall dropped 1.9% in the
second quarter, with declines in big markets such as India, Brazil
and the Philippines.
Overall, Unilever reported a net profit of EUR3.28 billion
($3.80 billion) for the six months to June 30, compared with EUR3
billion a year earlier. Revenue declined to EUR25.71 billion from
EUR26.13 billion.
In an indication of how big companies with multiple offices may
start to bring some employees back to work, Mr. Pitkethly said
Unilever's employees have begun returning to offices in various
parts of the world but not to its headquarters in London. He said
the company would instead encourage people to drive to satellite
offices outside the city.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
July 23, 2020 05:26 ET (09:26 GMT)
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