Unilever has reported flat sales in the first quarter of 2020, as underlying sales growth was 0.0% with +0.2% volume and -0.2% in price. Underlying sales growth in developed markets was 2.8%, while there was a -1.8% decline in emerging markets.
“Covid-19 is having an unprecedented impact on people and economies worldwide,” said CEO Alan Jope. “We have structured our immediate response into five areas: supporting our people; protecting supply; serving demand; contributing to society; and maintaining our financial strength.”
Co-headquartered in London and Rotterdam, the multinational consumer goods and value-added foods company has moved quickly to redeploy personnel to parts of its business that are seeing high demand, which includes certain in-home food product lines as well as home cleaning and personal hygiene brands.
Unilever’s Foods & Refreshment sector sales declined 1.7%, with volumes down 1.8% and positive pricing of 0.1%. The largest volume decline was in ice cream, as the seasonal sell-in for out-of- home consumption in key markets such as Europe, Turkey and Latin America were heavily impacted by lockdown measures and the reluctance of distributors to commit to buying ice cream stock with an uncertain holiday and tourism season.
There was also a sharp decline in foodservice, as restaurants in China and elsewhere closed due to Covid-19 mitigation measures. This was offset by increased in-home consumption and household stocking in some markets, particularly the US and Europe, leading to volume-led growth in savory and dressings.
Most major markets, outside China, saw normal sales patterns in January and February with the novel coronavirus pandemic impacting in March. The Chinese market slowed significantly during the lockdown period, which began in January, while Europe and North America saw a positive impact of household stocking in March. The Indian market had slowed even before the strict lockdown began at the end of March. Conditions in Latin America remain challenging, as they were before Covid-19, although we have seen some household stocking at the end of the quarter.
“We will continue to adapt throughout this crisis,” said Jope. However, the unknown severity and duration of the pandemic, as well as the containment measures that may be adopted in each country, mean that we cannot reliably assess the impact across our markets and our business. We are therefore withdrawing our previous growth and margin outlook for 2020.”
Covid-19 Support Measures
During the quarter Unilever introduced a wide range of measures to support global and national efforts to tackle the Covid-19 pandemic. It has contributed €100 million through donations of food, soap, sanitizer and bleach, as well as leveraged its procurement network to acquire much-needed medical equipment for organizations around the world.
Strict protocols for hygiene and physical distancing have been put in place for Unilever’s sourcing units and distribution centers, and all Unilever office-based employees have been working from home. The company has also committed to protect its workforce in the short-term from sudden drops in pay, as a result of market disruption or being unable to perform their role.