Unilever withdraws 2020 guidance: Hindustan Unilever may get hit too

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Published: April 24, 2020 5:55 AM

Unilever had expected demand to pick up across its markets in H2 of 2020 with a growth of 3%. The company had lowered its guidance for 2020 in December 2019 and now its long-term guidance band for the current year too stands suspended.

Unilever had expected demand to pick up across its markets in H2 of 2020 with a growth of 3%.

Unilever Plc on Thursday withdrew its full-year growth guidance for 2020 in the wake of Covid and subsequent lockdowns in China and India, signalling that Hindustan Unilever’s performance too may be impacted. Unilever, which announced results for January-March, said sales were flat because of the unprecedented impact of Covid-19.

CEO Alan Jope said the unknown severity, duration and the containment steps adopted in each country meant the company could not reliably assess the impact across markets.

“We are, therefore, withdrawing our previous growth and margin outlook for 2020,” Jope said. The negative commentary hit HUL shares, which closed down 2.97% at Rs 2,315.85 on the BSE. The stock has been doing well as the consumer staples sector is considered to be more resilient than others.

Even as developed markets reported a growth of 2.8% year-on-year, emerging markets declined by 1.8% during the quarter. “Growth in India was impacted by both the slowing market and the lock-down implemented at the end of March, which stopped production and shipping for a number of days,” the global FMCG major observed.

While consumption of packaged food products and ice-creams have taken a hit across markets, the company is focusing on changing demand patterns in the current environment. Jope said on Thursday the company had been able to maintain the supply of product and were keeping factories running “through the many unpredictable challenges in local operating environments across our value chain”.

While Latin America grew 4.9% as households stocked up, the performance in Southeast Asia was mixed, following the introduction of strict restrictions in the Philippines. Unilever had expected demand to pick up across its markets in H2 of 2020 with a growth of 3%. The company had lowered its guidance for 2020 in December 2019 and now its long-term guidance band for the current year too stands suspended.

Jope said the company was also opening up new capacity where it is most needed, such as in hand hygiene and food.
“Demand patterns are changing. As the crisis hits countries around the world, we see upswings in sales of hygiene and in-home food products, combined with some household stocking, and near cessation of out of home consumption which is particularly affecting our food service and ice cream business,” he added.

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