Unilever has recorded a smaller than expected drop of 0.3% in its second-quarter underlying sales, as a strong performance in North America helped to offset the impact of Covid-19 lockdowns.
The company fared considerably better than analysts’ mean forecast of a 4.3% drop, but was still hit by a plunge in demand for products sold through out-of-home channels, such as restaurants, schools and cinemas.
According to Jefferies analysts, cited by Reuters, the fall marked the first decline in quarterly sales for Unilever since Q3 2004.
The owner of Ben & Jerry’s, Marmite and Hellmann’s reported turnover of €13.3 billion during the quarter, representing a fall of 3.1%, which underpinned a year-over-year decline in overall first-half turnover of 1.6%.
Underlying sales fell across Unilever’s Europe and Asia/AMET/RUB segments in Q2, while the Americas witnessed underlying sales growth of 5.2%.
A decline of 0.8% in Latin America, where coronavirus hit later and the impact of the pandemic on Unilever has so far been concentrated in Q2, was more than offset by the 9.5% rise in underlying sales seen in North America.
In the first half of the year, Unilever says that e-commerce sales leapt 49% and the company saw ‘double digit growth’ in its retail foods business. Out-of-home ice cream sales declined by nearly 30% – a trend that was already having a major impact in Q1 – and food service sales by around 40%.
Unilever has been exploring options for its tea business – which includes brands such as PG Tips and Lipton – with a strategic review, launched earlier this year.
The company now says that it will retain its operations in India and Indonesia, as well as its partnership interests in ready-to-drink tea joint ventures. The rest of Unilever’s tea business will be separated into an independent entity.
Commenting on the results, Unilever CEO Alan Jope said: “Performance during the first half has shown the true strength of Unilever. We have demonstrated the resilience of the business – in our portfolio, in a continued step-up in operational excellence, and in our financial position – and we have unlocked new levels of agility in responding to unprecedented fluctuations in demand.
“From the start of the Covid-19 crisis, we have been guided by clear priorities in line with our multi-stakeholder business model to protect our people, safeguard supply, respond to new patterns of consumer demand, preserve cash, and support our communities.
“Our focus for the rest of 2020 will continue to be volume-led competitive growth, absolute profit and cash delivery as this is the best way to maximise shareholder value.”