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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Unilever PLC    ULVR   GB00B10RZP78

UNILEVER PLC

(ULVR)
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Coronavirus Melts Demand for Unilever's Ice Cream -- Update

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04/23/2020 | 05:41am EDT

By Saabira Chaudhuri

LONDON -- Unilever PLC reported flat sales growth for the first quarter as the maker of Dove soap and Ben & Jerry's ice cream said the hit from Covid-19 lockdowns in big emerging markets such as China and India outweighed stockpiling by consumers in the U.S.

The consumer-goods giant said Thursday it was grappling with major shifts in shopper behavior across the globe, with a broad decline in sales of food to restaurants and ice cream.

Underlying sales growth in emerging markets -- ordinarily a bright spot for Unilever -- declined 1.8%, outweighing growth of 2.8% in developed markets. Overall, Unilever reported sales of EUR12.4 billion ($13.4 billion) for the quarter, in line with sales from a year earlier. The company suspended its guidance for the year.

Unilever shares fell 5% in early trading in London.

Some of the changes in consumer behavior could last beyond the pandemic, said Chief Financial Officer Graeme Pitkethly on a call with reporters. The shift to working from home means people are using personal-care products such as shampoo and deodorant less, he said, estimating 11 fewer uses in a typical week. On the flip side, people are cooking more at home, buoying demand for brands such as Knorr soup cubes and Hellmann's mayonnaise. They are also cleaning their homes and washing their hands more, a change executives across the industry have flagged as having long-term potential. "That's almost a given -- we think that will continue," said Mr. Pitkethly.

Online sales -- which make up about 6-7% of Unilever's business -- grew 36% in the quarter, as consumers under lockdown ordered more via the internet. Unilever plans to ramp up investments in selling directly to consumers, said Mr. Pitkethly.

A drop in restaurant traffic, which has hit Unilever's food-service business, is another change that could last for several months, he said. The business, which supplies ingredients to restaurants, generates annual sales of about EUR2.5 billion. Mr. Pitkethly thinks some form of social distancing is likely to be in place through the end of the year in many countries, which would continue to cap sales. In China, 70% of closed restaurants have reopened but are running at between 50-70% capacity because of social-distancing protocols, he said.

Unilever's ice-cream business, the world's largest with EUR6 billion in annual sales, also faces a big challenge. About half the division's sales are made outside of grocery stores in places like beaches and parks.

The company has been ramping up partnerships with food-delivery companies to allow consumers to order ice cream along with their takeout. Mr. Pitkethly warned that the second quarter -- the biggest for ice cream -- will be worse hit than the first as the full impact of lockdowns trickles through.

In North America, Unilever reported strong sales, with underlying growth of 4.8%, driven by stockpiling.

"People have got bigger houses, bigger pantries, everything's bigger in the States and they certainly went for household stocking in the biggest way around the world," said Mr. Pitkethly, who hails from Scotland. Consumers in the U.K. and Germany also stockpiled noticeably, he added.

By contrast, Unilever's results showed consumers in many emerging markets haven't rushed to stockpile, meaning it didn't see the same boost in those countries.

Outside of China, strict lockdowns in other emerging economies also crimped sales.

For instance, India -- Unilever's second-largest market -- has implemented some of the world's strictest restrictions on mobility to stem the spread of the new coronavirus, including closing factories and halting distribution until recently.

Overall, underlying sales in Unilever's home-care arm grew 2.4%, helped by growth in Cif cleaners and Domestos bleach, while the food-and-refreshments unit reported a 1.7% drop in underlying sales as lower ice-cream volumes offset growth in dressings and cooking ingredients.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

 

Stocks mentioned in the article
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BYD COMPANY LIMITED 4.35% 77.9 End-of-day quote.100.51%
CHANGE INC. -0.22% 9280 End-of-day quote.219.12%
NEXT PLC 2.51% 5632 Delayed Quote.-21.60%
SHIFT, INC. 1.57% 11610 End-of-day quote.45.49%
THE NEW HOME COMPANY INC. -3.01% 3.87 Delayed Quote.-16.95%
UNILEVER N.V. 0.82% 51.5 Delayed Quote.-0.41%
UNILEVER PLC 0.73% 4707.418 Delayed Quote.7.28%
WORLD CO., LTD. 5.00% 1303 End-of-day quote.-51.58%
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Financials
Sales 2020 50 787 M 59 983 M 59 983 M
Net income 2020 5 950 M 7 027 M 7 027 M
Net Debt 2020 22 736 M 26 853 M 26 853 M
P/E ratio 2020 23,2x
Yield 2020 3,22%
Capitalization 134 B 158 B 159 B
EV / Sales 2020 3,09x
EV / Sales 2021 2,97x
Nbr of Employees 149 867
Free-Float 55,7%
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Technical analysis trends UNILEVER PLC
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 53,00 €
Last Close Price 51,02 €
Spread / Highest target 23,5%
Spread / Average Target 3,89%
Spread / Lowest Target -21,6%
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Managers
NameTitle
Alan Jope Chief Executive Officer & Executive Director
Nils Smedegaard Andersen Chairman
Nitin Paranjpe Chief Operating Officer
Graeme David Pitkethly Chief Financial Officer & Executive Director
Richard Slater Chief Research & Development Officer
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