Shares of the consumer goods group rose more than 8% after reporting stronger-than-expected results in the second quarter, despite lockdowns forcing much of the world’s population to stay at home.
Underlying sales fell 0.3 percent – the first quarterly decline in the key metric in 14 years – but analysts had forecast a 4.3 percent drop.
Shares of soap maker Dove, ice cream Ben & Jerry’s and bleach Domestos rose 8.75% to £ 47.09 on the news, making it the largest company in the FTSE 100 in terms of in market capitalization, surpassing drugmaker AstraZeneca.
Alan Jope, Managing Director, said: “We have shown good flexibility in responding to massive changes in demand and what people buy and consume. We have seen record levels of growth in some categories and record levels of decline [elsewhere]. »
The relatively small drop in sales was in part due to the rapid rollout of additional hygiene products for consumers concerned about curbing the spread of Covid-19.
The Anglo-Dutch group has added Lifebuoy soap and hygiene products in 50 markets and increased the production capacity of hand sanitizers by 600, he said.
Ice cream sales jumped 26% in the second quarter, with consumers treating each other’s Magnum, Cornetto and Ben & Jerry’s products in a lockdown fashion, including through e-commerce deliveries.
It was the first decline in Unilever’s underlying quarterly sales since the fourth quarter of 2005, analysts at Jefferies said. The company said it was preparing its ranges for the recession resulting from the coronavirus.
Mr Jope said: “It seems inevitable that we have a severe global economic recession. We don’t really know the depth and duration of this. . . We are currently working a lot around the company to find gaps in our value portfolio. ”
Foodservice was particularly hard hit in the first half of the year, with Unilever’s restaurant, cafes and bars division having a 40% impact on sales. The demand for skin care and hair care products and deodorants has declined as people have prioritized hygiene over grooming.
Group revenue fell 3.1% to 13.3 billion euros in the second quarter. However, underlying operating income for the first half of the year increased 3.8% to 5.1 billion euros.
Margins were boosted by a sharp reduction in marketing spend for the company, which is one of the world’s largest advertisers. Marketing spend fell 1 percentage point as a percentage of year-over-year sales in the first half of the year.
As Unilever factories continued to operate during the pandemic, Mr Jope said the group was taking an ‘extremely cautious’ approach towards its 50,000 office workers – of which around 2,000 are based in the UK – who were going back to work.
“It will be several more months before we are in a stable state back to the office, and I think we will never get back to 100% of the time that office workers spend in the office,” he said.
“We see a hybrid future of work, where people could spend a few days in the office and two or three days at home or work remotely. . . This unleashed extraordinary productivity and flexibility within the Unilever team. ”
Workers in offices with parking lots are likely to return home faster due to safer transportation options, said Graeme Pitkethly, chief financial officer.
The group added on Thursday that it would split or sell its tea business – with the exception of Indian and Indonesian companies – by the end of 2021, creating a company with around € 2 billion in annual revenue.
The move comes after a review of the division, which includes the Lipton and PG Tips brands, prompted by a drop in consumers’ appetite for black tea.