Unilever has announced its results for the first quarter of 2020, which show flat underlying sales with developed markets growing 2.8% whilst emerging markets declined 1.8%
“COVID-19 is having an unprecedented impact on people and economies worldwide. Unilever has moved at speed to support our multiple stakeholders and maintain our operations through the crisis, and prepare for growth in a new normal. We have structured our immediate response into five areas: supporting our people; protecting supply; serving demand; contributing to society; and maintaining our financial strength,” said Alan Jope, CEO, Unilever.
Jope said the company will continue to adapt throughout this crisis. “However, the unknown severity and duration of the pandemic, as well as the containment measures that may be adopted in each country, mean that we cannot reliably assess the impact across our markets and our business. We are therefore withdrawing our previous growth and margin outlook for 2020,” he said.
The company stated that most major markets, outside China, saw normal sales patterns in January and February with COVID-19 impacting in March. The Chinese market slowed significantly during the lock-down period, which began in January, whilst Europe and North America, saw a positive impact of household stocking in March. The Indian market had slowed even before the strict lock-down began at the end of March. Conditions in Latin America remain challenging, as they were before COVID-19, although the company has seen some household stocking at the end of the quarter.
Unilever overall performance
Underlying sales growth was 0.0% with 0.2% from volume and negative 0.2% from price. Developed markets grew 2.8% whilst emerging markets declined 1.8%. China declined as a result of the downturn in food service, out of home ice cream and retail sales during the lock-down. Growth in India was impacted by both the slowing market and the lock-down implemented at the end of March, which stopped production and shipping for a number of days. Latin America grew 4.9% whilst South East Asia was mixed, following the introduction of strict restrictions in the Philippines. North America and Europe benefitted from household stocking, despite a decline in food service and ice cream. E-commerce grew as shoppers moved from offline to online channels.
Turnover increased 0.2%. There was a positive impact of 0.6% from acquisitions net of disposals and a negative impact of 0.4% from currency.
Beauty and personal care
Beauty and personal care underlying sales grew 0.3%, with volume growth of 0.7% and negative pricing of 0.5%. Growth in key categories was driven by both consumption and household stocking.
“Skin cleansing saw mid-single digit volume-led growth as we responded to the critical need for hygiene products to prevent the spread of COVID-19. Through our Lifebuoy hygiene brand we continued to raise hand-washing awareness, introducing lifebuoy products to 43 new markets, as well as working quickly across brands to expand our range of formats to support the pandemic response,” said Jope.
Skin care declined, as travel restrictions impacted the Carver portfolio and India was impacted by lock-down conditions. Vaseline continued to perform well, with mid-single digit growth, and the company launched anti-bacterial hand cream in the UK as well as a new Pro Derma Clinical range in China. The Prestige portfolio was impacted by health and beauty channel closures in many markets.
Whilst hair grew in the US, the lock-down impacted the portfolio in China and in India. Deodorants grew mid-single digit, with strong performances from Rexona Clinical range and Dove deodorants. Oral care grew, with growth from natural toothpastes and bamboo toothbrushes. Negative pricing was primarily driven by India following price reductions in the previous quarter.
Home care
Home care underlying sales grew 2.4%, with 2.6% from volume and negative price of 0.2%. The company stated that its home and hygiene brands, including Cif surface cleaners and Domestos bleach, benefited from increased demand for household cleaning products, with double digit underlying sales growth. In China, the company accelerated the launch of the new germ-killing Botanical Hygiene range, addressing demand for natural cleaning supported by advanced and effective technology.
Format premiumization continues to be a driver of volume-led growth in fabric solutions, with liquids and capsules both growing double digits. Clean and green home care brand Seventh Generation also saw double digit growth.
Foods and refreshment
Foods and refreshment underlying sales declined 1.7%, with volumes down 1.8% and positive pricing of 0.1%. The largest volume decline was in ice cream, as the seasonal sell-in for out of home consumption in key markets such as Europe, Turkey and Latin America were heavily impacted by lock-down measures and the reluctance of distributors to commit to buying ice cream stock with an uncertain holiday and tourism season.
There was also a sharp decline in food service, as restaurants in China and elsewhere closed due to COVID-19 mitigation measures. This was offset by increased in-home consumption and household stocking in some markets, particularly the US and Europe, leading to volume-led growth in savoury and dressings. Knorr saw low single digit growth, while Hellmann’s grew double digits as Unilever’s brands helped to feed the many families at home.
Tea declined low-single digit, impacted by India and out of home channel closures. The strategic review of the company’s tea business is ongoing.
