Unilever Defies Market Expectations, Posting 4.4% Growth in Q3

LONDON – Although currency headwinds dented Unilever’s revenue growth in the third quarter, the consumer giant outstripped analysts’ expectations by posting a 4.4 percent uptick in underlying sales.

Analysts had expected underlying sales to rise 1.3 percent for the three months to Sept. 30. On a reported basis, turnover was down 2.4 percent to 12.9 billion euros.

Unilever said consumers are doing more things at home – eating, and washing their hair and clothing – while demand for anti-bacterial products has been buoyant. Unilever’s prestige beauty business, which includes brands such as Dermalogica, Kate Somerville, Murad and REN, was growing, despite “subdued” footfall in the health and beauty channel.

Online channels continued to grow, Unilever said, with e-commerce rising 76 percent in the quarter.

During the three months, soap and body care brand Dove moved into the anti-bacterial segment, while sales of Ben & Jerry’s and Magnum “more than offset” the decline in ice cream sales at beaches, cafés, restaurants and other venues that had to shut during lockdown.

Hellmann’s mayonnaise grew in the mid-teens as consumers stayed at home and prepared their own meals.

“We have delivered a strong performance this quarter. Volume-led growth shows the resilience of our portfolio and our agility in responding to rapidly changing dynamics across consumer segments, geographies and channels,” said Alan Jope, chief executive officer of Unilever.

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“The environment we are operating in will remain unpredictable in the near term, so we will continue to maintain the speed and agility of our response. Our focus remains volume-led competitive growth, delivering absolute profit and free cash flow.”

Unilever said that emerging markets saw underlying sales growth of 5.3 percent as China’s recovery continued, and India and Brazil returned to growth. Developed markets grew 3.1 percent due to the “ongoing strength in North America.”

In Europe, sales volumes grew despite the downturn in sales of pre-packaged food and ice cream in beaches, cafés, restaurants and other venues that had to shut during lockdown. Unilever added that “a step up in promotional intensity” also propelled sales volume growth during the period.

Jope added that Unilever’s proposals to simplify the corporate giant’s dual-headed legal structure have received “strong support” both from shareholders in the U.K. and in the Netherlands, while the company has also set out its Clean Future strategy in home care, to eliminate fossil fuel derived carbon from cleaning products by 2030.

Mark Lynch of Oghma Partners, an independent corporate finance advisory firm, called the Q3 results a “strong set of figures that highlight the maintained shift from out of home to in-home spend and also the trend of ‘comfort buying’.” He argued that consumers are shifting back to brands that are trusted and well-known, and that the companies that have invested over the years in building their core brands are being rewarded.

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