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Unilever shines despite pandemic pain

by LLB Editor
22nd Oct 20 9:25 am

Were it not for unfavourable foreign exchange rates weighing on its numbers, Unilever’s third quarter results would have been as shiny as the surfaces treated by its cleaning products.

Like Reckitt Benckiser and other consumer goods companies reporting in recent days, Unilever has seen strong sales growth in home care products beyond the initial lockdown phase earlier this year.

It would suggest households and businesses are taking hygiene much more seriously than before, which is music to the ears of companies selling disinfectants, bleach and other cleaning items.

“While underlying prices for home care products have fallen in the period, it has managed to sell significantly greater volumes. However, there is still pressure on the business to stay alert to competition and to ensure it isn’t left behind by rivals slashing their prices further just to shift goods,” said AJ Bell’s Russ Mould.

“Unilever has this year faced a big challenge with its food and drink products, but the latest update shows that changing market dynamics have resulted in a positive outcome.

“There were fears that a lockdown-induced reduction in trade for cafes, restaurants and other eating establishments would have hurt Unilever’s sales, yet it has more than made up for this weakness with very strong in-home sales. It seems the nation has taken to eating lots of mayonnaise and ice cream while stuck indoors.

“A year ago, Unilever was faced with the problem of how to accelerate growth. Fortunately, coronavirus has created a backdrop which plays to its strengths.

“The next challenge for the company is what to do if a vaccine is successfully developed. Unilever will have to keep banging the drum that it pays to keep your house and yourself clean, otherwise it could see sales trends revert to pre-Covid levels and growth concerns back on the agenda.”

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