Unilever soars to top of the Footsie: How locked down Britain’s changing spending habits have rejigged the FTSE 100 index
- Workers under lockdown have been drinking tea and scoffing ice cream
- The British consumer goods group said sales of brands such as Ben & Jerry’s ice cream have surged as families stayed at home and cooked more during the crisis
Workers under lockdown have been drinking tea, scoffing ice cream and abandoning their personal grooming regimes, according to Unilever.
The British consumer goods group, which owns Marmite, Dove soap and Wall’s, said sales of brands such as Ben & Jerry’s ice cream and Hellman’s mayonnaise have surged as families stayed at home and cooked more during the crisis.
Cleaning products including Cif and Domestos have also flown off the shelves, as households become increasingly worried about hygiene.
But the lockdown is not all good news for Unilever. Stay-at-home lifestyles have made people less bothered about their looks, which has hit sales of make-up, lipstick, hair products and even deodorant including the Lynx brand.
Despite this, Unilever said profits increased by 4 per cent to £4.1billion in the first half of 2020.
The group confirmed it plans to spin off its tea business – including the PG Tips brand – with view to a possible sale or float.
The announcements sent Unilever’s shares nearly 8 per cent higher, helping it to overtake drugs giant Astrazeneca to claim the crown of Britain’s most valuable listed company. Unilever had a market value of £122.2billion last night, compared with AZ at £114.8billion. Alan Jope, Unilever’s boss, yesterday said there had been ‘massive changes in demand, on what people are buying and consuming’.
He said he was uncertain how long the trends would last but that ‘talk of a quick recovery is too optimistic’. He added: ‘In a recession, the role of price, value and affordability is really important and that happens to be an area of strength for Unilever.’
Jope revealed that Unilever has rushed to ramp up production of cleaning products and hand sanitisers in recent months, as it responds to unprecedented demand during the pandemic.
He said the hand sanitiser business had previously been ‘tiny’ but capacity has been increased 600-fold. Home and hygiene sales grew by ‘the high teens’ in the second quarter, with brands such as Lifebuoy and Suave doing particularly well.
Its business supplying food to cafes and restaurants has suffered, however. Overall turnover in the first half dipped slightly from £23.8billion to £23.4billion, though profits rose from £4billion to £4.1billion.
Unilever confirmed that after a review of its tea business launched in January, it will keep operations in India and Indonesia but will separate off the rest by the end of 2021, including PG Tips. Bosses said the spun-off business could be sold or listed on the stock exchange in its own right, among other options.
Finance chief Graeme Pitkethly added: ‘It is the most wonderful, wonderful business. But the results of the review told us that business is held back a little bit by being part of the very wide portfolio of Unilever, and also that Unilever is held back a little by having the tea business within its portfolio.’
Russ Mould, investment director at AJ Bell, said: ‘In a world where investors have been obsessed with growth, one might have thought Unilever’s pedestrian performance would have gone down like a cup of cold gravy.
‘However, resilience is a highly-desired characteristic and the latest trading update is likely to attract a lot of interest from people who had previously dismissed the company as being too boring.’