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


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Surge in eating at home cushions virus hit for Unilever

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07/23/2020 | 10:51am EDT
Unilever headquarters in Rotterdam

Second-quarter sales at Unilever fell much less than expected as a pick up in eating at home during coronavirus lockdowns boosted demand for products such as Hellmann's mayonnaise and Breyers ice cream.

Shares in the consumer goods giant were up 8.4% afternoon trade, after rising as much as 9.3% earlier on Thursday, as the Anglo-Dutch group surprised analysts who had expected a much bigger hit to sales from the closure of restaurants, schools, cinemas and outside venues.

"Overall, Unilever's strong performance in the period and an increasingly focused strategy has led to a sigh of overdue relief from investors," said Richard Hunter, head of markets at interactive investors.

Underlying sales fell 0.3% in the three months ended June 30, compared with analysts' mean forecast for a 4.3% drop.

That was still the first decline in quarterly sales since the third quarter of 2004, according to Jefferies analysts.

Underlying sales in North America jumped 7.3% in the first half, with volumes up as much as 20% in some categories, Chief Financial Officer Graeme Pitkethly told a media call. The United States is Unilever's biggest market by revenue.

Breyers, Magnum and Klondike ice-cream, along with Hellmann's mayonnaise and Knorr soups, were strong performers in food, while Suave beauty products did well in hygiene, he said.

"We see no signs of North America slowing down," Chief Executive Officer Alan Jope told analysts, despite coronavirus-cases spiking in the United States, but cautioned that other markets did not look so robust.

"We believe that talk about a quick recovery is too optimistic. A deep global recession has already started and we are seeing consumer habits changing dramatically. Unemployment is rising across many markets and even for those with jobs, people are saving a bit harder." Jope said.

Pitkethly said Unilever was now getting into its toughest phase in Latin America and Africa, where virus cases are spiking, while also dealing with other issues such as a surge in gang-related violence in Mexico that was making business difficult there.

Highlighting the huge disruptions caused by the pandemic, Unilever said food service sales declined by nearly 40% and out-of-home ice cream by nearly 30% in the first half. However, e-commerce sales were up 49%, with North America leaping 177%.


Unilever also said that after exploring options for its 3 billion euros ($3.5 billion) a year tea business, it had decided to keep its operations in India and Indonesia and its ready-to-drink joint venture with PepsiCo.

The rest of the tea business, which sells Pukka Herb and PG Tips and made 2 billion euros of revenues in 2019, will be separated into an independent entity, a process the company expects to conclude by the end of 2021.

Some analysts think Unilever could ultimately be more exposed to the pandemic than rivals such as Procter & Gamble and Nestle due to its greater reliance on emerging markets, where it makes about 60% of annual sales.

Graphic: Unilever shares versus peers - https://fingfx.thomsonreuters.com/gfx/mkt/nmopalnayva/Unilever%20shares%20vs%20peers.PNG

Analysts expect Nestle to report flat quarterly sales next week. Its shares were up more than 1% after Unilever's forecast-beating performance, but Jefferies analyst Martin Deboo cautioned against reading too much into Unilever's results for Nestle.

In North America, for example, he noted that while Unilever had benefited from its strength in foods, Nestle was more exposed to pet care, where there are signs consumers are running down stocks after building them up in March.

Unilever's underlying sales in developed markets rose 2.4% in the first half, while they declined 1.9% in emerging markets.

In China - where the virus first emerged and was first brought under control - sales returned to mid-single digit growth in the second quarter, although food service remained challenging, the company said.

Graphic: Unilever's emerging markets dependence grows -

By Siddharth Cavale

Stocks mentioned in the article
ChangeLast1st jan.
DOW JONES AFRICA TITANS 50 INDEX -0.14% 485.86 Delayed Quote.-9.41%
MAGNUM 0.00% 2.01 End-of-day quote.-21.79%
NESTLÉ S.A. 0.23% 106.56 Delayed Quote.1.70%
PEPSICO, INC. -0.04% 139.56 Delayed Quote.2.11%
S&P AFRICA 40 INDEX -0.01% 160.77 Delayed Quote.-6.93%
UNILEVER N.V. -0.82% 51.1 Delayed Quote.-0.25%
UNILEVER PLC -0.57% 4694 Delayed Quote.7.90%
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Sales 2020 50 680 M 60 112 M 60 112 M
Net income 2020 5 935 M 7 039 M 7 039 M
Net Debt 2020 22 638 M 26 851 M 26 851 M
P/E ratio 2020 22,9x
Yield 2020 3,22%
Capitalization 134 B 159 B 159 B
EV / Sales 2020 3,10x
EV / Sales 2021 3,02x
Nbr of Employees 149 867
Free-Float 55,7%
Duration : Period :
Unilever PLC Technical Analysis Chart | MarketScreener
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Technical analysis trends UNILEVER PLC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 54,00 €
Last Close Price 51,10 €
Spread / Highest target 23,3%
Spread / Average Target 5,67%
Spread / Lowest Target -21,7%
EPS Revisions
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
Sector and Competitors
1st jan.Capitalization (M$)
UNILEVER PLC7.90%158 938
UNILEVER N.V.-0.25%158 938