Unilever sales growth beats expectations as demand for hygiene products booms

Unilever’s sales growth rose far above expectations in the third quarter on strong demand for Lifebuoy soap and other hygiene products, making it the latest consumer goods group to report buoyant figures in the pandemic.

Underlying sales growth, a key metric for the sector, was 4.4 per cent, significantly above the 1.3 per cent that analysts had expected, while turnover of €12.9bn beat expectations of €12.7bn.

The hygiene boom has also boosted companies such as Reckitt Benckiser and Procter & Gamble, both of which upgraded full-year profit forecasts this week after expanding production to cater for soaring demand.

Nestlé, the world’s largest foodmaker, likewise forecast strong full-year numbers, citing consumer demand for “trusted” brands.

Graeme Pitkethly, chief financial officer at Unilever, said the company had shown “incredible speed and agility in response to really rapidly changing consumer dynamics around the world . . . the headline growth masks incredible volatility across channels and geographies”.

Sales of Lifebuoy soap and sanitising products were up 65 per cent so far this year, Mr Pitkethly said, making Lifebuoy a €1bn brand after the company rolled it out in new markets.

Multinationals have gained ground over smaller players since coronavirus broke out, but Mr Pitkethly said this might not last. “The bigger brands have been at an advantage because [they] were more available and we’ve been . . . able to keep service levels high relative to smaller brands,” he said.

“We would expect that would, as things normalise, swing back towards a more normal mix on the retailers’ shelves.”

Foods sold in stores have also prospered: Hellmann’s mayonnaise benefited from households eating at home, with sales up by a mid-teens figure and a vegan version now available in 30 countries, Unilever said. This helped to offset lower demand for products such as ice cream that are normally bought outside the home.

Consumers had ditched products such as deodorant and skincare during lockdowns earlier in the year, but these recovered somewhat in the third quarter, the company said. 

Sales at Unilever had dropped 0.3 per cent in the second quarter, their first fall in 16 years, as coronavirus hurt emerging markets sales and food service.

Emerging market sales rebounded strongly in the three months to September, with 5.3 per cent growth compared with 3.1 per cent in developed markets. The company did not provide guidance for the full year, however.

The maker of Dove soap, Ben & Jerry’s ice cream and Domestos bleach said it was preparing for the global economic downturn caused by coronavirus, with teams dedicated to ensuring budget products were available in different segments and geographies.

“We are seeing quite a bit of down-trading already in south-east Asia, Latin America and India but not so much in a couple of other big markets like Turkey and China,” said Mr Pitkethly. Price promotions have stepped up in Europe, he added.

Under Alan Jope, who took over as chief executive last year, Unilever has been seeking to unify its dual-company structure into a single entity based in the UK to make disposals and acquisitions easier.

The move won approval from shareholders in both its Dutch and UK entities, with completion of the change scheduled for November 29. But political support is growing in the Netherlands for a law to hit multinationals leaving the country with billions in exit taxes, which could still scupper the plan.

Unilever said it would push ahead “provided that unification, in the boards’ view, remains in the best interests of Unilever, its shareholders and other stakeholders as a whole”.

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