Coronavirus Melts Demand for Unilever's Ice Cream -- Update
23 Abril 2020 - 04:55AM
Noticias Dow Jones
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
(END) Dow Jones Newswires
April 23, 2020 05:40 ET (09:40 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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