Unilever eyes long term growth as India, China revive from COVID-19 impact

Unilever, the UK-based consumer goods giant, is targeting long-term sales growth of 3 percent to 5 percent after a recovery in China and India helped the group to gain momentum in the final three months of 2020.

But the company’s emerging market performance in the fourth quarter missed some market expectations. Under its current chief executive officer Alan Jope, Unilever is aiming for underlying sales growth ahead of its markets, as well as profit growth ahead of sales growth.

Performance in emerging markets

Unilever’s chief financial officer Graeme Pitkethly said business in China had normalized in many categories, including in food service, while economic activity in India picked up particularly in the final quarter.

Unilever’s sales in China and India both rose in the high-single-digit percentage range in the fourth quarter, the company’s strongest performing markets in the quarter.
Overall for 2020, sales in emerging markets rose 1.2 percent, affected 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. This level of sales growth disappointed analysts.

“Slower EM’s (emerging markets) in the fourth quarter is the root cause of the top line miss to analysts’ estimates, playing out against a background of extended lockdown activity worldwide,” experts said.

Performance in developed markets

Developed market sales rose 2.9 percent in the quarter, 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.

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

2020, though difficult, was a historic year for the company which in November ditched its Anglo-Dutch dual-headed structure in favor of a single corporate entity based in London.