Unilever’s “strong” full-year results: Food Solutions targets restored despite COVID-19 volatility

04 Feb 2021 --- Unilever has released its 2020 financial results pinning overall underlying sales growth of 1.9 percent. There were gains for Food & Refreshment which edged up driven by Hellmann’s mayonnaise and Unilever’s plant-based brand The Vegetarian Butcher. 

Foods & Refreshment underlying sales grew 1.3 percent, but Food Solutions declined by 30 percent as out-of-home consumption channels were heavily impacted by the COVID-19 pandemic and lockdown measures.

The British multinational’s retail foods business grew double-digit, as restricted living led to more in-home eating occasions for consumers. Meanwhile, Food solutions and out-of-home ice cream sales declined, impacted by channel closures. 

Category demand patterns varied throughout the year and by market, driven by lockdown restrictions’ differing status. E-commerce grew by 61 percent, as it captured demand in online channels, and is now 9 percent of Unilever.

The operating environment in Unilever markets has been volatile since the COVID-19 pandemic began in early 2020. In Q4, the company continued to see changes in consumer behavior and channel dynamics. 

The consumer goods company has restored its targets as India and China boosted sales.Foods & Refreshment
The Foods and Refreshment categories saw underlying sales grow 1.3 percent, with 0.1 percent from volume and 1.1 percent from price.

Hellmann’s grew high-single-digit, and plant-based brand The Vegetarian Butcher grew over 70 percent. 

Last month, Unilever’s plant-based brand The Vegetarian Butcher said it was expanding its partnership with fast food giant Burger King to launch the Plant-Based Whopper in Latin America, the Caribbean and China.

Despite a significant decline in the out-of-home business due to channel closures, ice cream grew slightly overall as Unilever rapidly shifted resources toward the in-home business. 

Ben and Jerry’s performed strongly, teaming up with Netflix on its new ‘Netflix and Chill’d’ variant. Tea grew in the low single digits.

Underlying operating margin in Foods & Refreshment declined by 50 basis points (bps). The decline was driven by lower gross margin due to adverse mix impacts from out of home channel closures, costs related to COVID-19 and higher commodity costs in the second half of the year.

China and India key markets
Lockdown restrictions in China and India led to market declines in the first and second quarters, respectively, with both markets subsequently returning to growth during the year. 

China has normalized in many categories, while India's economic activity picked up significantly in the final quarter, the company reveals. It has restored its targets as India and China boost sales.

Unilever has strong brand and category leadership positions in the US, India and China, with around 35 percent of its turnover from those three countries alone. The company believes it can bring sharper focus to those geographies as well as the “significant opportunity” beyond these markets. 

Emerging markets grew 1.2 percent as China and India returned to growth after lockdowns in the first half of the year. China returned to growth in Q2 as restrictions were eased, delivering high single-digit growth in the second half. 

Latin America grew mid-single digit, and Indonesia increased slightly, though declined in the final quarter. Developed markets rose 2.9 percent, led by strength in North American in-home foods. Europe declined for the full year but grew in the last quarter.

“Resilience and agility”Foods & Refreshment underlying sales grew 1.3 percent, with 0.1 percent from volume and 1.1 percent from price.
In 2020, the British multinational consumer goods company focused on driving competitive growth and delivered a step up in competitive performance.

“In a volatile and unpredictable year, we have demonstrated Unilever’s resilience and agility through the COVID-19 pandemic,” says Alan Jope, CEO. 

“As a result, we are winning market share in over 60 percent of our business in the last quarter, based on measurable markets,” he explains. 

The business also generated an underlying operating profit of €9.4 billion (US$11.2 billion) and a free cash flow of €7.7 billion (US49.2 billion), increasing €1.5 billion (US$1.7 billion).

“We completed the unification of our legal structure under a single parent company, and we continue to work on separating the tea business as we evolve our portfolio,” Jope adds.

“While volatility and unpredictability will continue throughout 2021, we begin the year in good shape and are confident in our ability to adapt to a rapidly changing environment.”

Overall performance
Unilever grew underlying sales by 1.9 percent for the full year, with volumes growing 1.6 percent and 0.3 percent from price. In Q4, underlying sales growth was 3.5 percent, with volumes of 3.3 percent and 0.2 percent from price.

Growth was primarily driven by hand and home hygiene products, laundry and in-home food and refreshments. 

Turnover decreased 2.4 percent, including a positive impact of 1.2 percent from acquisitions net of disposals and a negative impact of 5.4 percent from currency movements.

Edited by Elizabeth Green