Unilever: Coronavirus To Change Consumers’ Shopping Behavior For Long Term 

The novel coronavirus has changed the buying habits of the people as the demand for the safety and hygiene products has significantly increased in response to the pressing concerns of virus transmission. The people around the world want their hands, body, homes and other items of necessity that they come across on a day to day basis to remain clean and avoid any plausible contact with the virus.

Unilever Plc stated that epidemic COVID-19 would cause ‘lasting change’ in shopping habits. This statement coming from the world’s leading manufacturer of hygiene and personal care products has given validation to the shift experienced in users’ consumption habits.

In a trading update dated 23 April 2020, the Chief Executive Officer of Unilever Plc, Alan Jope, stated that the demand patterns are changing as the crisis hit the countries around the globe. However, Jope confirmed that the company is adapting the new demand pattern and preparing itself to serve as per the changing behavior of the consumers in every country.

He added that the company has experienced a significant growth in the sale of its safety and hygiene products along with in-home food products and household stocking. However, the company’s ice cream and food services business has reportedly been affected due to the prevailing lockdown conditions.

Unilever reported that the novel coronavirus spread has changed the operational environment in the consumer market. Several countries around the world have implemented varied degree of lockdown and travel restrictions that are having a considerable impact on consumer demand patterns with disruption in supply chain and distribution cycle of the companies.

Financial Highlights Of Unilever Plc For First Quarter 2020

• Underlying sales growth of the group remained flat during the quarter with volume growth of 0.2% and negative price of 0.2%.
• Unilever’s Q1 2020 turnover, therefore, stood at €12.4 billion including €5.3 billion from Beauty and Personal Care (+0.3%), €2.7 billion from Home Care (+2.4%), and €4.4 billion from Food & Refreshment (-1.7%).
• The work from home scenario has exhausted the demand for grooming products such as deodorant and shampoo. However, the company’s hygiene and cleaning products demand have increased during the quarter with double-digit growth in Cif surface cleaners and Domestos bleach sales, resulting in the overall growth of 2.4 percent in Home Care sales.
• Developed markets grew 2.8% whilst emerging markets declined 1.8% during the quarter. China market slowed and eventually declined due to lockdown conditions, but other markets witnessed normal sales patterns in January and February with Covid-19 impacting in March. The company’s North America and Europe segments witnessed a positive impact of household stocking in March 2020, as per the report.
• There has also been a substantial rise in e-commerce business as shoppers moved from offline to online channels during the quarter.
• Despite the challenging business environment, Unilever announced a quarterly interim dividend of €0.4104 per share for Q1 2020. The dividend will reportedly be paid on 4 June 2020 to holders of record as at 15 May 2020.
• But the company stated that since it could not ‘reliably assess the impact’ of the pandemic, it has decided to withdraw its full-year growth and margin forecast provided earlier for 2020.

In a bid to contain the community transmission of the coronavirus, Unilever has contributed €100 million through donations of health and hygiene products including soap, sanitiser, bleach and food. The company has also taken several initiatives to support national and global efforts in the fight against COVID-19 pandemic besides leveraging its procurement network to acquire essential medical equipment for organisations around the world.

Alan Jope stated that the company had entered the ongoing global crisis with a robust balance sheet backed by a strong cash position. It continues to undertake a systematic review of costs and cash generation and usage in the light of current circumstances to reallocate or invest its funds towards the best opportunities. ‘The fundamental drivers of growth continue to be the primary factors driving the long-term financial performance of the company through its sustainable business model,’ said Alan Jope.

Global-View On Changing Behaviour Amid The Novel Coronavirus Epidemic

The outbreak of contagious coronavirus has led to a massive economic downturn with a rising number of unemployment, reduced income and subsequently lower level of expenses. There has been a significant shift in consumer behaviours that has been recorded by one of a McKinsey’s survey series conducted across 40 countries during the crisis. The key highlights of the survey include:

• Due to novel coronavirus, mainly European countries have been impacted and because of that less number of people are optimistic about their economic recovery. In contrast, countries like China and India are confident about the same.
• Around 30 per cent to 50 per cent of consumers believe that their income will fall in the next two weeks. However, India and China still maintain their optimism, expecting an increase in income.
• The countries like Japan, Brazil and Portugal expects to increase spending but relatively at low positivity levels. In contrast, consumers from most of the European countries such as the United Kingdom, Spain, France and Italy are less favourable with regards to increasing spending.

Overview of Unilever Plc

Unilever Plc (LON:ULVR) is a leading multinational Fast-Moving Consumer Goods (FMCG) company. In the list of 400 brands, Lipton, Knorr, Rexona, Hellmann and dove are some famous brands that come under the umbrella of Unilever Group with an annual turnover of more than €1 billion. Around 2.5 billion people use Unilever’s branded product every day from across 190 countries where its brands are being sold.

Share Price Performance- ULVR

Unilever stock price last traded at GBX 4092.00, down 1.80 percent or GBX 75.00 on 25 April 2020. In last 52-weeks, the ULVR stock has achieved the maximum price of GBX 5,333.0 on 04 September 2019; in contrast, the company also dropped to the lowest price of GBX 3,583.50 in the last 52-weeks on 16 March 2020.

As on 24 April 2020, the market capitalisation of the company was recorded at GBP 105.76 billion with the shares outstanding of 2.63 billion. Its beta stood at 0.51, showing lower volatility as compared to the benchmark index, which indicates stability at one.