Yahoo Finance Unilever warns global recession has begun, causing spending shift
A deep global recession has already begun and is causing dramatic shifts in consumer behaviour, according to one of the world’s biggest manufacturers of grocery brands.
Unilever’s chief executive, Alan Jope, said: “We believe that talk about a quick recovery is too optimistic. A deep global recession has already started and we are seeing consumer habits changing dramatically. Unemployment is rising across many markets and even for those with jobs, people are saving a bit harder.”
The consumer goods multinational, which owns more than 400 brands including Dove, Marmite and PG Tips, also said it was taking an “extremely cautious” stance on asking its 50,000 office-based staff to return to their desks.
After four months of encouraging the public to work from home Boris Johnson has said that from 1 August the onus is on employers to decide whether staff can safely return to workplaces.
Unilever has about 2,000 office-based workers in the UK and Jope said there would a “very gradual return” from September – and then only if there had been continued progress in containing the disease.
“We anticipate that it will take many more months before we’re back in a steady state of being in the office,” he said.
“We will never go back to a 100% of office-based workers’ time being spent in the office. We see a hybrid future of work where people might spend a couple of days in the office and two or three days at home. This [experience] has unlocked tremendous productivity and flexibility in the Unilever team.”
His comments came as the FTSE 100-listed company reported flat quarterly sales – a better than expected performance given the economic upheaval caused by the pandemic – that sent its shares up 8%. In the three months to 30 June underlying sales were down 0.3% which was far better than the 4.3% drop pencilled in by analysts.
Highlighting the huge disruption to its usual trading patterns, Unilever said its food service business, which supplies restaurants and bars, had suffered a 40% hit while sales of its Magnum and Cornetto ice-creams to kiosks and cafes were down nearly 30%.
The group made up the lost ground as lockdown living caused shoppers to fill their kitchen cupboards with jars of its Hellmann’s mayonnaise and Knorr stock cubes, as well as cleaning products such as Cif.
Unilever added that after exploring options for its tea business it was going to break it up. It is keeping operations in India and Indonesia and a ready-to-drink joint venture with PepsiCo but the remainder, which includes brands such as PG Tips and Pukka Herb, and which had a turnover of €2bn (£1.82bn) in 2019, is being hived off into a separate company that could be sold or have its own stock market listing.
