By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 24, 2020).
LONDON -- Consumers are cleaning their hands and homes more as
concerns about coronavirus continue to swirl around the world, and
Unilever PLC is reaping the benefits of speedily retooling its
business to capitalize on the trend.
Soon after coronavirus struck, the maker of Suave shampoo and
Dove soap aggressively expanded its previously small hand-sanitizer
business to meet surging demand. Before the pandemic it had just
two manufacturing facilities making sanitizer, and the business
wasn't a big focus. Now it has over 60 sites.
"We've stepped up capacity across multiple brands by a factor
of, believe it or not, 600 times in just five months and we've
launched sanitizers in 65 new markets," said Chief Executive Alan
Jope on an investor call Thursday.
That booming business helped Unilever beat expectations in the
second quarter, with underlying sales growth -- a closely watched
figure that strips out currency movements and deals -- declining
just 0.3%, compared with analyst estimates of a 4.3% fall. Its
share closed up nearly 8% in London.
Mr. Jope said sales in Unilever's hygiene arm -- which includes
cleaning sprays, hand soap and hand sanitizer -- jumped 26% in the
second quarter. Within that, sanitizer sales -- albeit from a small
base -- rose by over 20,000%. The company's Domestos line of
cleaners climbed 37%, while its Cif surface cleaners grew by
By region, North America was a bright spot, with Unilever
reporting underlying sales growth of 9.5% -- its best quarterly
performance in the region for over a decade, according to analysts
at UBS. That gain was driven by its hygiene business and the shift
toward more home-cooking during lockdowns, which buoyed sales of
Hellmann's mayonnaise and ice-cream brands Magnum and Ben &
"How long will U.S. consumers remain preoccupied with hygiene?
We think probably for quite some time," Mr. Jope said.
Unilever isn't alone in benefiting from the cleaning craze. U.S.
sales of hand sanitizer are up almost fivefold in the first half of
this year, according to research firm Nielsen, with soap companies
ramping up production and untraditional players such as distillers
piling into the market. Other big hygiene brands, like Lysol owner
Reckitt Benckiser Group PLC, also say they think the cleaning boom
will outlast the pandemic.
Much of Unilever's hand-sanitizer rollout was done under its
125-year-old brand Lifebuoy, an affordable red carbolic soap
originally aimed at workers in industrial England. Over the
decades, as the number of workers in factory jobs declined in the
U.K., Unilever largely stopped selling the brand in developed
markets, focusing instead on countries such as Brazil and India
where the soap is marketed as a way to keep children free from
The company only began selling Lifebuoy hand sanitizer in a few
countries during the SARS outbreak in the early 2000s. Until
recently its two production sites mainly pumped out gels aimed at
young children and their parents, with bottles featuring cartoon
characters and fitted with clips for school bags.
After Covid hit and orders for hygiene products came pouring in
from retailers, Unilever repurposed manufacturing lines used for
products including deodorant -- for which demand has slumped amid
lockdowns -- to make hand sanitizer instead. South Africa, which
previously imported Lifebuoy, began producing the brand locally,
while in Vietnam it kitted out a factory to make sanitizer in 25
days. It also launched new sanitizer products under other brands
like Suave in the U.S.
Since the start of the year Unilever said it has gone from
making about 700,000 units of sanitizer a month to around 100
million units. It has moved 8,300 employees from slumping
businesses such as out-of-home ice cream to ones focused on retail
businesses to deal with the surge in demand for sanitizer and other
Despite the effort, Mr. Jope said there were still some cases
where it was struggling to keep up with demand in North
However, the second quarter wasn't all rosy. On a call with
reporters, Chief Financial Officer Graeme Pitkethly described the
period as "probably the most testing we've ever seen," and said the
results mask huge volatility in various businesses. "Although it
looks like we are flat on topline, we had record growth and record
declines just one click below that," he said.
For instance, Unilever said sales at its food-service arm, which
provides ingredients to restaurants, declined nearly 40% over the
first six months of the year, while sales of ice cream sold for
out-of-home consumption dropped nearly 30%.
Those drops dragged down sales outside the U.S. In Europe, where
Unilever's ice-cream business is far more out-of-home focused, sold
in parks and through kiosks that are popular with tourists, the
company reported an underlying sales decline of 4.5%.
Underlying sales in emerging markets overall dropped 1.9% in the
second quarter, with declines in big markets such as India and the
Philippines, where consumers have faced strict lockdowns that make
Overall, Unilever reported a net profit of EUR3.28 billion
($3.80 billion) for the six months to June 30, compared with EUR3
billion a year earlier. Revenue declined to EUR25.71 billion from
The company also said it plans to spin off the majority of its
tea business into a stand-alone entity, capping a review it
launched earlier this year. It will retain its tea operations in
India and Indonesia, as well as its Lipton ice-tea joint venture
with PepsiCo Inc.
Write to Saabira Chaudhuri at firstname.lastname@example.org
(END) Dow Jones Newswires
July 24, 2020 02:47 ET (06:47 GMT)
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