Unilever sets long-term targets as sales in China and India rebound

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Unilever is targeting long-term sales growth of 3% to 5%, as sales in China and India rebound.

Unilever Plc, a British multinational consumer goods company headquartered in London, with a presence in Nigeria, has revealed that it is targeting long-term sales growth of 3% to 5%.

This long-term sales growth target was set after a recovery in China and India helped the British consumer goods company to regain momentum in the fourth quarter of 2020.

According to Reuters, the company’s emerging market performance in the fourth quarter of 2020 was below market expectations, while sales in China and India both rose in the high-single-digit percentage range in the fourth quarter driven largely by “at-home consumption”.

The management of Unilever stressed that the company is confident about the new long-term targets, as the improved business environment in China, especially in the food segment and other categories were factored in. It noted that sales of the company’s products picked up in India, and this is evident in the last quarter of 2020.

In line with these fundamental changes, driven by the shift in consumers’ behaviour, the Chief Executive of Unilever, Alan Jope, said the company would aim for underlying sales growth ahead of its markets, as well as profit growth ahead of sales growth.

Specta

He revealed that the company expects to save 2 billion euros per annum from cost savings programmes, and also maintain a net debt to underlying EBITDA target of around 2 times.

  • Sales in emerging markets rose by 1.2%, hurt in part by strict lockdowns in the first half of the year and declines in Thailand, the Philippines and in Indonesia in the fourth quarter.
  • The company’s performance in Emerging Markets disappointed analysts, as many regarded the slow growth in EM’s (emerging markets) sales in Q4 as the root cause of the top-line miss to analysts’ estimates.
  • However, developed market sales rose 2.9% in 2020, driven by strong demand for in-home foods, ice-cream and hygiene products in North America.
  • In Europe, sales were driven by home care products. The coronavirus pandemic has boosted sales of packaged food companies like Unilever, Nestle and Kraft Heinz, though Unilever has been hit by sharp declines in foods served in public places such as on beaches and at restaurants.
  • Fourth-quarter underlying sales rose 3.5%, for the Anglo-Dutch maker of Dove soap, Hellmann’s mayonnaise and Tresemme shampoo, in line with what analysts on average were expecting, based on a company-supplied consensus.
  • Turnover for the quarter came in at 12.1 billion euros ($14.53 billion), versus analysts’ estimates of 12.16 billion euros. Full-year 2020 turnover came in at 50.7 billion euros, slightly lower than the 50.81 billion euros, analysts had expected.
  • It was reported two weeks ago that Unilever Nigeria made a loss amounting to N1.59 billion in 2020. However, the company reported some upsides in its unaudited results for the period ended 31st December 2020, and a worthy mention is the company’s revenue generated from the sales of food items.
  • The company’s revenue in 2020 increased by 1.34%, at the back of an increase in food sales, with revenue from the food segment of the company increasing from N31.9 billion in 2019, to N34.7 billion in 2020.
  • This improvement in the food segment of the company was driven by a shift in the consumers’ buying pattern towards more food items.
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