Unilever's quarterly report released: ice cream business is hurt

For the British and Dutch FMCG giant Unilever, although the epidemic has only spread over the past quarter, the company is already preparing for lasting changes in consumer behavior.


Recently, Unilever released the first quarter of 2020 results: In the first three months of this year, the company's sales revenue was the same as last year, of which sales in developed markets increased by 2.8% and emerging markets fell by 1.8%. Like many other multinational companies, Unilever withdrew its previous growth and profitability prospects for 2020. After the performance announcement, Unilever's stock price fell more than 5%.



Focus on five aspects


In a statement, Unilever CEO Alan Jope said that the new crown epidemic had an unprecedented impact on the people and economy of the world. Unilever has taken rapid action and made efforts in five areas Employees provide support, protect supply, respond to demand, contribute to society, and maintain the company's financial strength.


According to reports, the company donated soap, disinfectants, bleach and food, and purchased much-needed medical equipment, totaling about 100 million euros. In addition, Unilever also arranged that all employees who previously worked in the office work from home, and provided some 500 million euros of cash flow relief to smaller suppliers.


He said that the company has always been able to maintain the product supply, and the factory continues to operate in the face of numerous unpredictable challenges in the operating environment everywhere. "Demand patterns are changing." He said that as the epidemic swept the world, Unilever saw health and household food sales increase, and some households were hoarding products. On the other hand, outdoor consumption is almost stagnant, which particularly affects Unilever's catering services and ice cream business.


Qiao Anlu said: "As we gradually get rid of the epidemic in various countries and enter the recovery phase, the company is adapting to the new demand model and preparing for the lasting changes in consumer behavior in each country.



Prior to this, Danone, another large European consumer goods company, had similar judgments. The company that produces nutraceuticals and drinking water said this week that it will reduce its investment in food and beverage channels under the epidemic, but it will produce more food in large packages and household packaging.


Withdraw performance expectations


In his statement, Joan Lu stressed the importance of a strong balance sheet and cash position in the crisis. He pointed out that Unilever is systematically evaluating all areas of cash generation and use, and re-evaluating all costs based on current conditions so that it can continue to invest in the company ’s brand and allocate funds for the best opportunities.



"We will continue to make adjustments in this crisis." Qiao Anlu said, however, the severity and duration of the epidemic is unknown, and each country may take different measures to combat the epidemic, which means that the company cannot " Reliably assess the impact of "on the entire market and business, so the previous growth and profitability prospects for 2020 will be withdrawn." Earlier, Unilever had hoped to achieve a 3-5% growth this year.
He said that Unilever ’s product portfolio, solid and reliable finance, and the quality of the global leadership team have allowed the company to be in a good position in this crisis. Unilever will continue to focus on providing excellence through "sustainable business models. Long-term financial performance ".



Regarding the trend of the global market under the epidemic situation, Unilever reviewed this today: Except for the Chinese market, most major markets were in normal sales mode from January to February, but began to be affected in March. Under the blockade measures, the Chinese market, which started in January, slowed significantly, while in March, the European and North American markets began to hoard, which had a positive impact on sales. In addition, before the blockade measures began at the end of March, the Indian market has slowed down; as before the outbreak, the situation in the Latin American market remains challenging.



Continue to evaluate the tea business


In the first quarter of this year, Unilever's food and beverage business sales revenue fell by 1.7%, of which sales fell by 1.8%, and sales prices increased by 0.1%.



Unilever pointed out that the biggest drop in sales was ice cream, because the blockade measures prevented them from going out, and sales in major markets such as Europe, Turkey and Latin America were severely affected. In addition, distributors are reluctant to purchase ice cream because it is impossible to predict when festivals and tourism consumption will be brought.

In addition to ice cream, another "severely hit area" affected by the epidemic is in the catering service sector. This is due to the closure of restaurants in China and other markets in order to combat the epidemic. Unilever's catering service business declined sharply in the quarter. However, in other markets, especially the United States and Europe, due to increased household consumption and household hoarding, the impact has been offset. Among them, the Knorr brand recorded low single-digit growth in the first quarter, while Hellmann recorded double-digit growth.


As for the tea business, Unilever's business has experienced a low single-digit decline due to the closure of Indian and non-home consumption channels. Despite experiencing the epidemic, Unilever reiterated today that it is conducting a strategic assessment of its tea business. Bloomberg quoted Qiao Anlu as saying today that black tea is a "structural decline" and the outbreak will not change Unilever's judgment on its prospects.