TOP NEWS: Unilever 2020 Revenue Misses Mark As Forex Dents Sales Climb

(Alliance News) - Unilever PLC on Thursday posted an annual earnings fall, with revenue falling short of expectations, hurt by currency movements in its fourth-quarter.

More positively, the consumer goods company set out growth plans in the US, India and China and upped its fourth quarter payout.

Shares in Unilever fell 3.5% to 4,183.00 pence each in London on Thursday morning. The Dove soap and Ben & Jerry's ice cream owner was the worst-performing FTSE 100 stock in early trade.

For 2020, Unilever posted revenue of EUR50.72 billion, down 2.4% from USD51.98 billion in 2019. Revenue just missed forecasts of EUR50.81 billion. On a constant currency basis, however, revenue was up 3.5% in 2020.

Annual pretax profit fell 3.5% to EUR8.00 billion from EUR8.29 billion, though like revenue, it rose at constant currency, by 3.9%.

For the whole of 2020, underlying sales growth was 1.9%, in line with expectations.

In the fourth quarter alone, Unilever's revenue fell 4.2% to EUR12.10 billion from EUR12.64 billion a year earlier.

This was despite Unilever registering 3.5% underlying sales growth. More than offsetting the growth was a net 8.7% currency hit, numbers showed.

Unilever declared a quarterly dividend of EUR0.4268, which it noted was up 4%. The third quarter's payout was EUR0.4104. This takes its total payout in respect to 2020 to EUR1.6580, about GBP1.4643, improved 1.0% from 2019's EUR1.6416.

During the fourth quarter, Unilever saw a mixed performance across its vast range of ubiquitous brands, not all of which were on the right side of the effects of the pandemic.

"Growth was driven by hand and home hygiene products, laundry and in-home food and refreshments. Food solutions and out of home ice cream sales declined, impacted by channel closures. As people stayed at home and had fewer opportunities to socialise, they spent less time on personal grooming which impacted sales in much of the Beauty & Personal Care business, except for hygiene products where demand was high," Unilever said.

In Beauty & Personal Care, which includes the Dove soap brand, annual underlying sales grew 1.5%, with fourth quarter growth at 1.2%.

Home Care, which houses beneficiaries of the pandemic such as Domestos bleach and Cif household cleaner, saw 4.7% underlying sales growth in 2020. In the fourth quarter, underlying sales rose 4.5% in Home Care.

Meanwhile, Foods & Refreshment posted a 1.3% rise in underlying sales in the fourth quarter and a 5.4% hike for the whole of 2020.

The Hellmann's condiment brand saw a "high-single digit" sales hike in 2020. Plant-based brand The Vegetarian Butcher "grew over 70%", and ice cream grew "slightly", despite stay-at-home orders that restricted sales opportunities around the world.

"Ben and Jerry's performed strongly, teaming up with Netflix on its new 'Netflix and Chill'd' variant," Unilever added.

Looking ahead, Unilever said it will aim for underlying sales growth ahead of its markets, delivering growth in the range of 3% to 5%, as well as profit growth ahead of sales growth, on a comparable basis.

Chief Executive Officer Alan Jope said: "We progressed our strategic agenda, building on our existing sustainability commitments with ambitious new targets and actions, most recently with our plans to help build a more equitable and inclusive society. We completed the unification of our legal structure under a single parent company and we continue to work on separating out the tea business as we evolve our portfolio.

"Today we are setting out our plans to drive long-term growth through the strategic choices we are making and outlining our multi-year financial framework. 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."

Other elements of Unilever's plan include developing its product portfolio into "high growth spaces". It also will push harder to grow in the US, India and China, from which 35% of its turnover already comes.

Unilever said it will make restructuring investment of EUR1 billion in each of 2021 and 2022, with this reducing thereafter. It is aiming for EUR2 billion per year worth of savings from its established 'Fuel for Growth' effort.

It is targeting return on invested capital in the mid-to-high teens and a ratio of net debt to underlying earnings before interest, tax, depreciation and amortisation of about 2 times.

CEO Jope added that Unilever is continuing "to work on separating out the tea business as we evolve our portfolio".

Back in November, Unilever completed the unification of its group legal structure into a single parent company headquartered in the UK but still listed in Amsterdam, New York and London.

By Eric Cunha; ericcunha@alliancenews.com

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