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Fake meat and cleaning products help Unilever cope with COVID

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
Demand for cleaning products like Domestos helped offset weakness elsewhere in Unilever's business. Photo: Igor Golovniov/SOPA/LightRocket via Getty
Demand for cleaning products like Domestos helped offset weakness elsewhere in Unilever's business. Photo: Igor Golovniov/SOPA/LightRocket via Getty

Strong demand for cleaning products and fake meat helped offset poor sales of beauty products and on-the-go food last year, consumer goods giant Unilever (ULVR.L) said on Thursday.

Full-year results from the FTSE 100 companies — which owns everything from Dove soap to Ben & Jerry’s ice cream and Comfort fabric softener — showed underlying sales rose by 1.9% last year.

The company was buoyed by strong demand for cleaning products due to the onset of the COVID-19 pandemic. Unilever’s Lifebuoy hand sanitiser saw sales jump 50%, while sales of Domestos bleach grew by 25%.

Elsewhere, Unilever also saw strong growth for new products like its fake meat brand The Vegetarian Butcher. Sales rose by 70%.

The strong performance in these areas helped to offset weakness in other parts of the business.

“Lock-downs and restricted living in our markets led to lower demand for skin care, deodorants and hair care, which each saw volume and price declines, most significantly in the second quarter,” Unilever said.

Brands like Magnum ice creams, which are typically eaten while out and about, also suffered.

“In a volatile and unpredictable year, we have demonstrated Unilever's resilience and agility through the Covid-19 pandemic,” chief executive Alan Jope said in a statement. “I would like to thank the Unilever team, whose dedication and hard work has delivered a strong set of results under the most difficult of circumstances.”

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Unilever’s turnover for the year fell by 2.4% to €50.7bn (£45bn, $61bn), impacted by unfavourable currency moves. Underlying operating profit fell 5.8% to €9.4bn.

Bruno Monteyne, a retail analyst at Bernstein, said the results were “underwhelming”.

“At first sight, all seems fine... However, beneath the surface, things do not look that great.”

Unilever shares fell sharply at the open in London. Photo: Yahoo Finance UK
Unilever shares fell sharply at the open in London. Photo: Yahoo Finance UK

He highlighted weaker-than-expected margins, a miss on revenues, and higher than expected restructuring costs, with guidance that the costly transformation plan will run for another two years. Unilever said it planned to spend €1bn on restructuring this year and next.

“In effect, two of our bear concerns on profitability are coming through: (1) the -119bps margin miss in H2 can be seen as the start of the lower margins and (2) restructuring costs are here to stay,” Monteyne said.

Shares fell 3.6% in early trade in London.

“While volatility and unpredictability will continue throughout 2021, we begin the year in good shape and are confident in our ability to adapt to a rapidly changing environment,” Jope said.

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