Underlying sales growth was flat in the first quarter of 2020, the FTSE 100 group said in an update on Thursday, with emerging markets declining 1.8% but offset by developed markets growth of 2.8%.
China suffered a significant decline in sales during its lockdown, with out-of-home eating and shopping trips curtailed for most of the quarter, while South Asia was declined after India imposed its lockdown from mid-March.
Sales grew 4.8% in North America and 1.4% in Europe, with retail business performing strongly as households stocked up in March but out of home sales under pressure. There was no comment on performance since the first quarter.
“Demand patterns are changing,” said chief executive Alan Jope, adding that the company was “preparing for lasting changes in consumer behaviour in each country as we move out of the crisis and into recovery”.
As the coronavirus crisis hits countries around the world, Unilever has seen upswings in sales of hygiene and grocery products, with a collapse in out of home consumption, which Jope said is particularly affecting the food service and ice cream business.
Underlying sales of home care products, from Cif surface cleaners to Domestos bleach and germ-killing hand-wash ranges, grew 2.4%.
Offsetting this, sales at the Foods & Refreshment arm shrank 1.7%, with sales of ice cream the worst affected as distributors were said to be reluctant to commit to buying ice cream stock ahead of an uncertain holiday and tourism season.
Overall turnover grew 0.2% to €12.4bn thanks to acquisitions, which will be further boosted in the second quarter after Indian subsidiary Hindustan Unilever completed its merger with GlaxoSmithKline Consumer Healthcare.
The dividend, kept flat at €0.4104 per share, will be payable in June.
Shares in Unilever fell 5% to 4,032p on Thursday morning, down around 7% for the year to date.
With the scrapping of its famed target 20% underlying profit margin target, analysts at Liberum said: “The big news is undoubtedly the dropped margin guidance.
“While not a huge surprise all in, this margin target has become controversial as it has coincided with slower growth. While the company has a convenient excuse, we wonder if Unilever will commit to meeting such targets in the medium term. Many models hinge on it.”
The analysts said with its dividend maintained, Unilever is now “very attractive versus its peers and versus LT government bond yields”.
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