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China and home cooks help Unilever top forecasts

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China and home cooks help Unilever top forecasts
China and home cooks help Unilever top forecasts   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions - https://agency.reuters.com/en/copyright.html
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By Siddharth Cavale

(Reuters) -Unilever beat quarterly sales forecasts on Thursday, helped by a pick up in home cooking in coronavirus lockdowns and a strong economic recovery in China, and said it would buy back up to 3 billion euros ($3.6 billion) of shares from May.

Shares in the maker of Dove soap and Ben and Jerry’s ice cream climbed 4% in early trade, and were among the top gainers on the UK’s benchmark FTSE 100 index.

Underlying sales rose 5.7% in the three months to the end of March, topping analysts’ average forecast of 3.9%, according to a company supplied consensus.

“These are encouraging numbers,” said Steve Clayton, portfolio manager of Hargreaves Lansdown’s Select UK Shares funds. “Unilever gains much of its strength through the group’s diversity.”

Unilever said it was confident of delivering full-year underlying sales growth within its mid-term target range of 3-5%, with the first half around the top of the range. Some analysts had doubted whether it would hit that goal this year.

Emerging markets saw growth of 9.4% in the quarter, led by double-digit increases in China and India following strict lockdowns the previous year.

Pitkethly said easier comparables than last year, a resurgence in out-of-home ice cream sales in some emerging markets, a return of sales to cafes and restaurants in places like China, and U.S. retailer restocking of high-end beauty products underpinned its confidence for the rest of the year.

He also noted some changes in consumer behaviour a year into the pandemic, with demand for hair, skin and oral care products remaining strong, but deodorants weaker, indicating more time being spent at home.

FOODLEADSTHEWAY

Unilever also said it expected a slight increase in underlying operating margin this year, and that it was making good progress in separating its slower-growth Elida beauty and tea businesses, which could lead to sales or spin-offs.

Elida beauty will consist of brands predominantly sold in Europe and North America, including Q-Tips, Caress, Tigi, Timotei, Impulse and MonSavon, which together generated revenues of around 600 million euros in 2020, the company said.

Underlying sales in the group’s food and refreshments business, where brands include Hellmann’s mayonnaise and Knorr soups, jumped 9.8% in the quarter, helped by strong demand for home consumption in North America and Europe.

That performance echoes Nestle, the world’s biggest food group, which last week reported the biggest jump in quarterly group sales for a decade.

Activia maker Danone, however, saw its first-quarter sales drop 3.3%.

Unilever noted the devastating surge in COVID-19 infections currently sweeping India, another key market, but said it was not seeing any material impact on its business from that so far.

($1 = 0.8246 euros)

(Reporting by Siddharth Cavale in Bengaluru. Editing by Mark Potter)

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