Unilever supported by cleanliness panic

Chief executive Alan Jope noted that the six months to June saw “unprecedented fluctuations in demand”. For one thing, restrictions on movement were introduced at different times around the world, and had different impacts across Unilever’s geographies. Group underlying revenues were broadly static, reflecting a 2.4 per cent improvement in developed markets and a 1.9 per cent decline in emerging markets.

Consumer shopping habits also changed dramatically. Unilever’s food service revenues fell by almost 40 per cent, while out-of-home ice cream sales tumbled by more than a quarter. But at the same time, a pandemic-induced focus on cleanliness meant that hand- and home-hygiene products each grew in the double-digits. And the crisis did more than just re-jig people’s grocery baskets. It also changed the way they purchased – driving many customers online. The group’s e-commerce channel enjoyed revenue growth of almost a half.

In turn, Unilever’s underlying operating margin edged up by 0.5 percentage points to 19.8 per cent – better than analysts’ forecasts of a 60-basis point fall. For the full year, UBS anticipates adjusted pre-tax profits of €8.7bn (£7.9bn), with EPS of 232c.

These results followed on from Unilever’s revelation in June that it would unify its Anglo-Dutch legal structure – creating a single parent company. The group believes that such a move will enhance its ability to make acquisitions and disposals. While this plan still requires shareholder approval, Unilever has already taken steps to progress the strategic review of its tea business. It now intends to retain its operations in India and Indonesia, while offloading all other tea brands – which collectively made €2bn in sales last year.