Coronavirus stockpiling offsets China slump for Domestos-maker Unilever
Unilever maintains its dividend but suspends guidance as the coronavirus pandemic in China weighs on its first quarter sales.
Thursday 23 April 2020 18:11, UK
The company behind a host of well known household brands including Domestos and Magnum ice creams has reported flat sales despite surge in stockpiling of its products from supermarkets.
Unilever, which also includes Ben & Jerry's, Dove soap and CIF cleaning products in its stable of consumer goods, said the COVID-19 outbreak in China at the beginning of the year had seen depressed demand among restaurants and grocery stores alike.
The company said underlying first quarter sales across Asia were almost 4% down on the same January-March period in 2019 - led by China.
But overall group sales were flat, at £10.8bn, because of boost from stockpiling by shoppers in North America and Europe.
Unilever said the UK and German markets led the way in Europe though prices declined across every global region.
Alan Jope, its chief executive, said: "We have been able to maintain the supply of product and we are keeping our factories running through the many unpredictable challenges in local operating environments across our value chain.
"We are also opening up new capacity where it is most needed, such as in hand hygiene and food.
"As the crisis hits countries around the world, we see upswings in sales of hygiene and in-home food products, combined with some household stocking, and near cessation of out-of-home consumption which is particularly affecting our food service and ice cream business."
Crucially, Mr Jope added: "We are adapting to new demand patterns and are preparing for lasting changes in consumer behaviour, in each country, as we move out of the crisis and into recovery."
The company maintained its dividend but withdrew full-year guidance because of the continuing uncertainty over the duration of the pandemic.
Shares fell 2%.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said of the update: "Sales of hygiene and in-home food have done well because of coronavirus.
"As people rushed to stock up on skin cleansers and threw more Domestos bleach in their baskets, Unilever and its retail customers were primed to capture that demand.
"However, the other side of the coin is a disappointing outcome for ice creams especially, as well as the group's food service customers, as lockdowns took hold."