Unilever Sales Show Pandemic Keeps Kindling Home Demand
(Bloomberg) -- Unilever Plc joined other consumer-goods companies in benefiting from a boom in sales of everything from ice cream to cleaning products as shoppers emerge warily from lockdowns.
The maker of Knorr bouillon cubes on Thursday guided for a strong first half but a more tempered end to the year amid significant uncertainty in key markets such as India and Brazil.
The comments come days after larger rival Nestle SA reported a blowout quarter and maintained its full-year forecast and Reckitt Benckiser Group Plc’s sales beat estimates as the pandemic continued to fuel demand for its Dettol and Lysol cleansers.
Later today, earnings updates from large U.S. consumer giants Kraft Heinz Foods Co. and The Hershey Co are likely to echo the bullish outlook for the first half. Unilever shares rose as much as 4% in London trading.
Consumer companies have been one of the lockdown winners as demand for hygiene products and food to be eaten at home has boosted sales. At Unilever, demand for everything from Magnum ice cream pints to tea and Hellmann’s mayonnaise helped underlying sales soar 5.7% last quarter, surpassing analysts’ estimates.
Forced lockdowns in many of key markets fueled sales of skin-care products, such as Dermalogica and Murad face masks, as consumers attempted salon-style facial treatments at home. This helped offset lower sales of deodorants and hair-styling products, although demand in these categories could start to pick up again as people start returning to work.
What Bloomberg Intelligence Says:
Unilever’s 1Q organic-sales growth of 5.7% is 80% volume driven, which nods to market-share gains, and alongside the sizeable cost savings, adds confidence for operating-margin progress in 2021.
-- Deborah Aitken, BI consumer-goods, luxury-goods analyst
The end of lockdowns and the increasingly fast pace of vaccinations in many developed countries is fueling a sense of optimism in the markets more generally. Airbus SE reported positive cashflow for the third quarter in a row today despite the upheaval in the travel industry.
BASF SE, the world’s biggest chemical producer, described consumer demand so strong that “there is just no time to rebuild inventories,” according to Chief Executive Officer Martin Brudermueller.
There are potential blots on the horizon, however. Unilever said although sales will be around the top of its full-year guidance of 3% to 5% growth, higher costs will lead to lower profitability in the first half.
Two key markets -- India and Brazil -- are fighting dramatic surges in infections, which has also damped Unilever’s outlook despite the strong start to the fiscal year. The company has reiterated its full-year guidance, however, and said it will buy back as much as 3 billion euros ($3.6 billion) of shares.
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