TIDMULVR
RNS Number : 5690K
Unilever PLC
23 April 2020
UNILEVER TRADING STATEMENT FIRST QUARTER 2020
Performance highlights
Underlying performance GAAP measures
=========================================================
vs 2019 vs 2019
============================ ======= ==================
Underlying sales growth
(USG) 0.0% Turnover EUR12.4bn 0.2%
============================= ======= ================== ==================== ===============
Quarterly dividend payable in June EUR0.4104 per share
2020
====================================== =========================================================
-- Underlying sales were flat with volume growth of 0.2% and negative price of 0.2%
-- Developed markets underlying sales growth was 2.8% and emerging markets declined 1.8%
-- Turnover increased 0.2% including a positive impact of 0.6%
from acquisitions net of disposals and negative impact of 0.4% from
currency
-- Quarterly dividend maintained at EUR0.4104 per share
Alan Jope: Chief Executive Officer statement
"Covid-19 is having an unprecedented impact on people and
economies worldwide. Unilever has moved at speed to support our
multiple stakeholders and maintain our operations through the
crisis, and prepare for growth in a new normal. We have structured
our immediate response into five areas: supporting our people;
protecting supply; serving demand; contributing to society; and
maintaining our financial strength.
Our people are our priority and we moved quickly to ensure the
safety of our workforce as well as to protect incomes and jobs. We
are now focused on redeploying people to those parts of the
business that are seeing high demand.
We have been able to maintain the supply of product and we are
keeping our factories running through the many unpredictable
challenges in local operating environments across our value chain.
We are also opening up new capacity where it is most needed, such
as in hand hygiene and food.
Demand patterns are changing. As the crisis hits countries
around the world, we see upswings in sales of hygiene and in-home
food products, combined with some household stocking, and near
cessation of out of home consumption which is particularly
affecting our food service and ice cream business. We are adapting
to new demand patterns and are preparing for lasting changes in
consumer behaviour, in each country, as we move out of the crisis
and into recovery.
The crisis highlights the importance of our commitment to use
our scale and brands as a force for good in society, throughout the
pandemic and beyond. We are supporting communities through
donations and partnerships, while our Lifebuoy and Domestos brands
are leading the way on hygiene education programmes.
We take these actions in the knowledge that we enter the crisis
with a strong balance sheet and cash position. We are
systematically reviewing all areas of cash generation and usage and
re-evaluating all costs in the light of the current circumstances,
so that we can continue to invest in our brands and reallocate
funds towards the best opportunities.
We will continue to adapt throughout this crisis. However, the
unknown severity and duration of the pandemic, as well as the
containment measures that may be adopted in each country, mean that
we cannot reliably assess the impact across our markets and our
business. We are therefore withdrawing our previous growth and
margin outlook for 2020.
Our portfolio, our financial stability and the quality of our
leadership teams around the world mean that Unilever is
well-positioned during this crisis and for the changing world that
will come afterwards. The fundamental drivers of growth continue to
be the key principles driving our execution as we remain focused on
delivering superior long-term financial performance through our
sustainable business model."
23 April 2020
FIRST QUARTER OPERATIONAL REVIEW: DIVISIONS
First Quarter 2020
-----------------------------
(unaudited) Turnover USG UVG UPG
========================= ======== ===== ===== =====
EURbn % % %
======== ===== ===== =====
Unilever 12.4 0.0 0.2 (0.2)
======== ===== ===== =====
Beauty & Personal Care 5.3 0.3 0.7 (0.5)
Home Care 2.7 2.4 2.6 (0.2)
Foods & Refreshment 4.4 (1.7) (1.8) 0.1
======== ===== ===== =====
Our markets: The spread of Covid-19 has led to extensive changes
in the operating environment in our markets. The lock-downs and
restrictions that have been implemented in many countries have
varied in severity, but all have had some impact on consumer demand
patterns and many have also had a significant impact on the supply
of goods.
At an individual market level, most lock-downs have required
closures in out of home channels, resulting in little out of home
consumption of ice cream and food. Initial household stocking of
both hygiene and food products has led to increased volume in some
markets .
Most major markets, outside China, saw normal sales patterns in
January and February with Covid-19 impacting in March. The Chinese
market slowed significantly during the lock-down period, which
began in January, whilst Europe and North America, saw a positive
impact of household stocking in March. The Indian market had slowed
even before the strict lock-down began at the end of March.
Conditions in Latin America remain challenging, as they were before
Covid-19, although we have seen some household stocking at the end
of the quarter.
Unilever overall performance: Underlying sales growth was 0.0%
with 0.2% from volume and negative 0.2% from price. Developed
markets grew 2.8% whilst emerging markets declined 1.8%. China
declined as a result of the downturn in food service, out of home
ice cream and retail sales during the lock-down. Growth in India
was impacted by both the slowing market and the lock-down
implemented at the end of March, which stopped production and
shipping for a number of days. Latin America grew 4.9% whilst South
East Asia was mixed, following the introduction of strict
restrictions in the Philippines. North America and Europe
benefitted from household stocking, despite a decline in food
service and ice cream. E-commerce grew as shoppers moved from
offline to online channels.
Turnover increased 0.2%. There was a positive impact of 0.6%
from acquisitions net of disposals and a negative impact of 0.4%
from currency.
Covid-19 support measures: During the quarter Unilever
introduced a wide-ranging set of measures to support global and
national efforts to tackle the Covid-19 pandemic. We are
contributing EUR100m through donations of soap, sanitiser, bleach
and food as well as leveraging our procurement network to acquire
much-needed medical equipment for organisations around the
world.
Strict protocols for hygiene and physical distancing have been
put in place for Unilever's sourcing units and distribution
centres, and all Unilever office-based employees have been working
from home. Unilever has also committed to protect its workforce in
the short-term from sudden drops in pay, as a result of market
disruption or being unable to perform their role.
We are making available EUR500m of cash flow relief for our most
vulnerable small and medium sized suppliers and small-scale retail
customers whose business relies on Unilever.
In addition, we are working with the UK's Department for
International Development to fund a global programme to urgently
tackle the spread of coronavirus. The programme aims to reach up to
a billion people worldwide, raising hygiene awareness and changing
behaviour.
Recent acquisitions: On 1 April 2020 Hindustan Unilever Limited,
Unilever's listed subsidiary in India, successfully completed the
merger with GlaxoSmithKline Consumer Healthcare Limited. The
transaction is in line with Unilever's strategy to evolve the Foods
& Refreshment portfolio into higher growth segments. In early
April we also entered into agreements to buy out the minority
shareholders of our subsidiary in Malaysia.
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 0.3%, with
volume growth of 0.7% and negative pricing of 0.5%. Growth in key
categories was driven by both consumption and household
stocking.
Skin cleansing saw mid-single digit volume-led growth as we
responded to the critical need for hygiene products to prevent the
spread of Covid-19. Through our Lifebuoy hygiene brand we continued
to raise handwashing awareness, introducing lifebuoy products to 43
new markets, as well as working quickly across brands to expand our
range of formats to support the pandemic response. Skin care
declined, as travel restrictions impacted the Carver portfolio and
India was impacted by lock-down conditions. Vaseline continued to
perform well, with mid-single digit growth, and we launched
anti-bacterial hand cream in the UK as well as a new Pro Derma
Clinical range in China. The Prestige portfolio was impacted by
health and beauty channel closures in many markets. Whilst hair
grew in the USA, the lock-down impacted the portfolio in China and
in India. Deodorants grew mid-single digit, with strong
performances from our Rexona Clinical range and Dove deodorants.
Oral care grew, with growth from natural toothpastes and bamboo
toothbrushes . Negative pricing was primarily driven by India
following price reductions in the previous quarter.
Home Care
Home Care underlying sales grew 2.4%, with 2.6% from volume and
negative price of 0.2%.
Our home and hygiene brands, including Cif surface cleaners and
Domestos bleach, benefitted from increased demand for household
cleaning products, with double digit underlying sales growth. In
China, we accelerated the launch of the new germ-killing Botanical
Hygiene range, addressing demand for natural cleaning supported by
advanced and effective technology. Format premiumisation continues
to be a driver of volume-led growth in fabric solutions, with
liquids and capsules both growing double digits. Clean and green
home care brand Seventh Generation also saw double digit
growth.
Foods & Refreshment
Foods & Refreshment underlying sales declined 1.7%, with
volumes down 1.8% and positive pricing of 0.1%.
The largest volume decline was in ice cream, as the seasonal
sell-in for out of home consumption in key markets such as Europe,
Turkey and Latin America were heavily impacted by lock-down
measures and the reluctance of distributors to commit to buying ice
cream stock with an uncertain holiday and tourism season. There was
also a sharp decline in food service, as restaurants in China and
elsewhere closed due to Covid-19 mitigation measures. This was
offset by increased in-home consumption and household stocking in
some markets, particularly the USA and Europe, leading to
volume-led growth in savoury and dressings. Knorr saw low single
digit growth, while Hellmann's grew double digits as our brands
helped to feed the many families at home. Tea declined low-single
digit, impacted by India and out of home channel closures. The
strategic review of our tea business is ongoing .
FIRST QUARTER OPERATIONAL REVIEW: GEOGRAPHICAL AREA
First Quarter 2020
----------------
(unaudited) Turnover USG UVG UPG
---------------- --------
EURbn % % %
-------- ----- ----- -----
Unilever 12.4 0.0 0.2 (0.2)
-------- ----- ----- -----
Asia/AMET/RUB 5.7 (3.7) (3.4) (0.3)
The Americas 4.0 4.8 3.9 0.9
Europe 2.7 1.4 3.1 (1.7)
-------- ----- ----- -----
First Quarter 2020
--------------------
(unaudited) Turnover USG UVG UPG
-------------------- --------
EURbn % % %
-------- ----- ----- -----
Developed markets 5.1 2.8 3.9 (1.1)
Emerging markets 7.3 (1.8) (2.2) 0.4
-------- ----- ----- -----
North America 2.4 4.8 5.6 (0.7)
Latin America 1.6 4.9 1.7 3.1
-------- ----- ----- -----
Asia/AMET/RUB
Underlying sales declined 3.7% led by volume decline of 3.4% and
price decline of 0.3%. China suffered a significant decline as the
lock-down measures restricted out of home eating and shopping trips
across much of the quarter. Lock-down measures in India commenced
from mid-March, followed by a strict national lock-down, severely
limiting the flow of goods and leading to a decline in South Asia.
Indonesia and Vietnam performed strongly although the Philippines
declined across divisions as restrictive social measures were put
in place.
The Americas
Underlying sales growth in North America was 4.8% with 5.6% from
volume and a decline of 0.7% from price. Our mainstream retail
business grew by 7.2%, helped by household stocking in March. Food
service, ice cream and our Prestige portfolio are negatively
impacted by the social restriction measures.
Latin America grew 4.9% with 3.1% from price and 1.7% from
volume. Across the region, there was relatively limited impact in
the quarter from Covid-19, with a small positive impact from
household stocking in late March and a negative impact from out of
home ice cream. Growth in Brazil was helped by continued strength
in deodorants and fabric solutions.
Europe
Underlying sales grew 1.4% with volume growth of 3.1% and price
down 1.7%. Sales across hygiene products and foods benefited from
household stocking, particularly in the UK and Germany. Central and
Eastern Europe had a strong quarter led by volume. Italy declined
following a prolonged lock-down impacting out of home consumption.
Across Europe, ice cream sales declined without the normal retail
sell-in ahead of the Easter holiday, which normally marks the
beginning of the ice cream season. Many out of home ice cream
outlets were closed during March in Europe. Price declined,
reflecting a difficult pricing environment.
COMPETITION INVESTIGATIONS
As previously disclosed, along with other consumer products
companies and retail customers, Unilever is involved in a number of
ongoing investigations and cases by national competition
authorities, including those within Italy, Greece and South Africa.
These proceedings and investigations are at various stages and
concern a variety of product markets. Where appropriate, provisions
are made and contingent liabilities disclosed in relation to such
matters.
Ongoing compliance with competition laws is of key importance to
Unilever. It is Unilever's policy to co-operate fully with
competition authorities whenever questions or issues arise. In
addition the Group continues to reinforce and enhance its internal
competition law training and compliance programme on an ongoing
basis .
DIVIDS
The Boards have determined to pay a quarterly interim dividend
for Q1 2020 at the following rates which are equivalent in value
between the two companies at the rate of exchange applied under the
terms of the Equalisation Agreement:
Per Unilever N.V. ordinary share: EUR 0.4104
Per Unilever PLC ordinary share: GBP 0.3614
Per Unilever N.V. New York share: US$ 0.4445
Per Unilever PLC American Depositary Receipt: US$ 0.4445
The quarterly interim dividends have been determined in euros
and converted into equivalent sterling and US dollar amounts using
exchange rates issued by WM/Reuters on 21 April 2020.
US dollar cheques for the quarterly interim dividend will be
mailed on 4 June 2020 to holders of record at the close of business
on 15 May 2020. In the case of the NV New York shares, Netherlands
withholding tax will be deducted.
The quarterly dividend calendar for the remainder of 2020 will
be as follows:
Announcement Ex-Dividend Record Date Payment Date
Date Date
================= ============= ============= =============
Q1 2020 Dividend 23 April 2020 14 May 2020 15 May 2020 4 June 2020
Q2 2020 Dividend 23 July 2020 6 August 2020 7 August 2020 9 September
2020
Q3 2020 Dividend 22 October 5 November 6 November 2 December
2020 2020 2020 2020
============= ============= ============= =============
SEGMENT INFORMATION - DIVISIONS
(unaudited)
First Quarter Beauty & Home Foods & Refreshment Total
Personal Care
Care
========= ===== ===================
Turnover (EUR million)
2019 5,204 2,691 4,521 12,416
2020 5,298 2,717 4,425 12,440
Change (%) 1.8 1.0 (2.1) 0.2
Impact of:
Acquisitions (%) 1.6 0.3 0.1 0.8
Disposals (%) - - (0.6) (0.2)
Currency-related items (%), of
which: (0.1) (1.7) - (0.4)
Exchange rates changes (%) (0.4) (2.0) (0.2) (0.7)
Extreme price growth in hyperinflationary
markets* (%) 0.3 0.4 0.2 0.3
Underlying sales growth (%) 0.3 2.4 (1.7) -
=========================================== ========= ===== =================== ======
Price* (%) (0.5) (0.2) 0.1 (0.2)
Volume (%) 0.7 2.6 (1.8) 0.2
=========================================== ========= ===== =================== ======
SEGMENT INFORMATION - GEOGRAPHICAL AREA
(unaudited)
First Quarter Asia / The Europe Total
AMET / Americas
RUB
======= ========= ======
Turnover (EUR million)
2019 5,931 3,872 2,613 12,416
2020 5,744 4,035 2,661 12,440
Change (%) (3.2) 4.2 1.8 0.2
Impact of:
Acquisitions (%) - 1.8 0.8 0.8
Disposals (%) (0.2) (0.1) (0.5) (0.2)
Currency-related items (%), of
which: 0.7 (2.3) 0.2 (0.4)
Exchange rates changes (%) 0.6 (3.2) 0.2 (0.7)
Extreme price growth in hyperinflationary
markets* (%) - 0.9 - 0.3
Underlying sales growth (%) (3.7) 4.8 1.4 -
=========================================== ======= ========= ====== ======
Price* (%) (0.3) 0.9 (1.7) (0.2)
Volume (%) (3.4) 3.9 3.1 0.2
=========================================== ======= ========= ====== ======
* Underlying price growth in excess of 26% per year in
hyperinflationary economies has been excluded when calculating the
price growth in the tables above, and an equal and opposite amount
is shown as extreme price growth in hyperinflationary markets.
NON-GAAP MEASURES
In our financial reporting we use certain measures that are not
defined by generally accepted accounting principles (GAAP) such as
IFRS. We believe this information, along with comparable GAAP
measurements, is useful to investors because it provides a basis
for measuring our operating performance, and our ability to retire
debt and invest in new business opportunities. Our management uses
these financial measures, along with the most directly comparable
GAAP financial measures, in evaluating our operating performance
and value creation. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP. Wherever appropriate
and practical, we provide reconciliations to relevant GAAP
measures. The non-GAAP measures used in this announcement are
underlying sales growth, underlying volume growth and underlying
price growth (see below).
Underlying sales growth (USG)
Underlying sales growth (USG) refers to the increase in turnover
for the period, excluding any change in turnover resulting from
acquisitions, disposals, changes in currency and price growth in
excess of 26% in hyperinflationary economies. Inflation of 26% per
year compounded over three years is one of the key indicators
within IAS 29 to assess whether an economy is deemed to be
hyperinflationary. We believe this measure provides valuable
additional information on the underlying sales performance of the
business and is a key measure used internally. The impact of
acquisitions and disposals is excluded from USG for a period of 12
calendar months from the applicable closing date. Turnover from
acquired brands that are launched in countries where they were not
previously sold is included in USG as such turnover is more
attributable to our existing sales and distribution network than
the acquisition itself. The reconciliation of changes in the GAAP
measure turnover to USG is provided on page 5.
Underlying price growth (UPG)
Underlying price growth (UPG) is part of USG and means, for the
applicable period, the increase in turnover attributable to changes
in prices during the period. UPG therefore excludes the impact to
USG due to (i) the volume of products sold; and (ii) the
composition of products sold during the period. In determining
changes in price we exclude the impact of price growth in excess of
26% per year in hyperinflationary economies as explained in USG
above. The measures and the related turnover GAAP measure are set
out on page 5.
Underlying volume growth (UVG)
Underlying volume growth (UVG) is part of USG and means, for the
applicable period, the increase in turnover in such period
calculated as the sum of (i) the increase in turnover attributable
to the volume of products sold; and (ii) the increase in turnover
attributable to the composition of products sold during such
period. UVG therefore excludes any impact on USG due to changes in
prices. The measures and the related turnover GAAP measure are set
out on page 5.
CAUTIONARY STATEMENT
This announcement may contain forward-looking statements,
including 'forward-looking statements' within the meaning of the
United States Private Securities Litigation Reform Act of 1995.
Words such as 'will', 'aim', 'expects', 'anticipates', 'intends',
'looks', 'believes', 'vision', or the negative of these terms and
other similar expressions of future performance or results, and
their negatives, are intended to identify such forward-looking
statements. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and
other factors affecting the Unilever Group (the 'Group'). They are
not historical facts, nor are they guarantees of future
performance.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by
these forward-looking statements. Among other risks and
uncertainties, the material or principal factors which could cause
actual results to differ materially are: Unilever's global brands
not meeting consumer preferences; Unilever's ability to innovate
and remain competitive; Unilever's investment choices in its
portfolio management; the effect of climate change on Unilever's
business; Unilever's ability to find sustainable solutions to its
plastic packaging; significant changes or deterioration in customer
relationships; the recruitment and retention of talented employees;
disruptions in our supply chain and distribution; increases or
volatility in the cost of raw materials and commodities; the
production of safe and high quality products; secure and reliable
IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political
risks and natural disasters; financial risks; failure to meet high
and ethical standards; and managing regulatory, tax and legal
matters. A number of these risks have increased as a result of the
current COVID-19 pandemic. These forward-looking statements speak
only as of the date of this document. Except as required by any
applicable law or regulation, the Group expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statement is based. Further details of potential risks and
uncertainties affecting the Group are described in the Group's
filings with the London Stock Exchange, Euronext Amsterdam and the
US Securities and Exchange Commission, including in the Annual
Report on Form 20-F 2019 and the Unilever Annual Report and
Accounts 2019.
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations
Team
+44 78 2527
3767
+44 77 7999
9683
UK +31 10 217 lucila.zambrano@unilever.com
or 4844 JSibun@tulchangroup.com
NL +31 62 375 els-de.bruin@unilever.com +44 20 7822
or 8385 marlous-den.bieman@unilever.com 6830 investor.relations@unilever.com
There will be a web cast of the results presentation available
at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
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END
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