Unilever announced results for the first half of 2020: Developed markets are up 2.4%, and emerging markets are down 1.9%, for an overall sales decline of 0.1%, according to a press release.
- Turnover decreased 1.6%
- Operating profit excluding currency increased 3.8%, before a negative impact of 3.2% from currency
- Underlying earnings per share are up 6.4%
- Free cash flow is up €1.3 billion
- Completed acquisition of Horlicks brand from GSK
- Announced plans to unify the Group legal structure under a single parent company
Unilever’s CEO Alan Jope said in the press release: “Performance during the first half has shown the true strength of Unilever. We have demonstrated the resilience of the business—in our portfolio, in a continued step-up in operational excellence, and in our financial position—and we have unlocked new levels of agility in responding to unprecedented fluctuations in demand. We have also taken action to strengthen the strategic future of the company by announcing proposals to unify our dual-headed legal structure, progressing the strategic review of our global tea business and making new commitments to help protect the climate and regenerate nature.”
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The press release notes that COVID-19 has “led to significant changes” in the operating environment of Unilever’s markets. China’s market slowed significantly during the lockdown period, but following the reopening showed some recovery. North America and parts of Europe showed increased demand due to household stocking in March, but consumption patterns normalized in the second quarter.
Unilever saw growth in home consumption of foods, ice cream, and tea, but a decline in personal care products, except for hygiene products, which grew in the double digits.
Jope’s summary of the company’s COVID-19 response: “From the start of the Covid-19 crisis, we have been guided by clear priorities in line with our multi-stakeholder business model to protect our people, safeguard supply, respond to new patterns of consumer demand, preserve cash and support our communities.”
Unilever has also assessed a range of options with regards to its tea business, which includes brands such as Lipton, Brooke Bond, and PG Tips. The company will retain the tea businesses in India and Indonesia, and the partnership interests in the ready-to-drink tea joint ventures. However, the press release says, “the balance of Unilever’s tea brands and geographies and all tea estates have an exciting future, and this potential can best be achieved as a separate entity.” A process to implement the separation will begin soon, and is expected to conclude by the end of 2021. The businesses that will be separated generated revenues of €2 billion in 2019.
Jope concluded: “Our focus for the rest of 2020 will continue to be volume led competitive growth, absolute profit and cash delivery, as this is the best way to maximize shareholder value. I would like to thank every member of the Unilever team for the outstanding commitment they have shown in the most difficult of circumstances.”