Comfort Foods and Cleaning Products: No wonder Unilever is doing so well | Unilever

A large portfolio of food and household brands has helped consumer goods giant Unilever make its way through the pandemic.

Manufacturer of Domestos bleach, Dove soap and Cif cleanser benefited from a surge in demand for cleaning products in the early stages of the health crisis. Its shares rose and Unilever briefly became the most valuable company on the FTSE 100 index last year. And the company behind Marmite, Colman’s Mustard and Magnum Ice Cream has benefited from the forced shift to eating less in restaurants and cooking at home, which some analysts say could be a long-term change.

Unilever CEO Alan Jope says increased demand for soaps and cleaning products is another trend that will persist as people stick to more frequent handwashing and better hygiene at home. House.

As China and other economies around the world recover from the pandemic, consumers are spending more again. When Jope presents Unilever’s first half results on Thursday, he is expected to reveal underlying sales growth of 5.3%, including 4.8% growth in the second quarter, and underlying operating profit. € 4.8 billion (£ 4.1 billion), slightly below € 5.1 billion in 2020. Sales growth will have slowed from 5.7% in the first quarter, but the 4, 8% expected would still be a decent number. Global turnover is expected to stagnate at 25.7 billion euros due to currency effects.

The dividend will be of particular interest to shareholders. Analysts are looking for 148p per share for 2021, which would make Unilever the fifth-biggest dividend-payer on the FTSE 100 in terms of cash.

Despite the benefits, Unilever will face other challenges ahead, including the higher costs associated with rising global prices for food, raw materials, freight and crude oil – as well as what could be the the world’s first taxes on sugar and salt entering food production in the UK (although the company notes that the UK only accounts for 5% of its business).

The UN’s world food price index, which tracks monthly changes in a basket of major types of food, has roughly doubled since the start of the pandemic. This will be felt the hardest in the developing world, where consumers are more likely to cook from scratch. Analysts expect Unilever to pass on food price inflation in most cases.

Inspired by trends for healthier and more sustainable eating and lifestyles, the company plans to launch more plant-based ice cream after the success of its vegan versions of Magnum and Ben & Jerry’s. In one of its new strategic priorities, in February it presented plans to expand its vegan food lines to a plant-based food business of one billion euros per year in five to seven years, against 200 million euros currently.

Unilever also wants to capture a greater share of the high-end beauty and nutritional supplement markets – another growing area – and recently acquired Paula’s Choice, an American online skincare brand founded. by Paula Begoun in 1995, known for her jargon-free dictionary of ingredients.

Unilever will also take stock of its plans to sell most of its tea business, which has annual sales of € 2 billion.

Steve Clayton, Head of Equity Funds at Hargreaves Lansdown, which owns Unilever shares, said: “We are seeing many companies starting to highlight the strength of the recovery seen in many economies around the world. Will Unilever be another to point this out? Maybe, but the group’s high exposures to emerging markets could put the brakes on it, given countries like Brazil and India have had some pretty serious issues with the pandemic in recent months.

“But the group also has a lot of positives. There seems to have been a sustained shift towards preparing more meals at home in Western countries and that can only help. Perhaps we have seen a “cutting edge disinfectant” before, which could create a headwind for the home care division. But growth trends in the first quarter were strong, and overall we hope for a decent impression of Unilever when they release.


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