Unilever PLC (LON:ULVR) kept its interim dividend flat as underlying sales declined by 0.3% in the first half of 2020, but free cash flow increased amid changing coronavirus lockdown conditions in the second quarter.
The consumer goods colossus also revealed it will sell its tea brands PG Tips, Lipton and Brooke Bond and all its tea estates, following a review over the past six months, with the disposal process beginning immediately and expected to conclude by the end of next year.
For the first half of 2020, underlying sales were down only 0.1% but turnover fell 1.6% to €25.7bn, the FTSE 100 company said, after a 2.5% impact from currency swings offset a positive impact of 1.1% from acquisitions.
The food and drinks business was the worst performer, with underlying sales down 1.8% in the second quarter as food service declined by nearly 40% and out of home ice cream by nearly 30% as people stayed at home much more during the coronavirus (COVID-19) lockdown.
More time spent at homes meant growth in-home consumption of foods, ice cream and tea but also that consumers bought less personal care items from a reduced need for going to work or socialising, leading to a 0.9% second-quarter decline in that division, where the only growth was from hygiene products.
Homecare was the strong performer, with growth of 4% as sales surged for household cleaning products such as Cif and Domestos.
The Anglo-Dutch group said its objective to protect cash during the crisis led to free cash flow increasing €1.3bn to €2.9bn, making it easy to maintain its quarterly dividend at €0.4104 per share.
Unilever chief executive Alan Jope said the performance during the first half “has shown the true strength of Unilever”
The focus for the rest of 2020, he said, will be on “volume led competitive growth, absolute profit and cash delivery”.
Published at Thu, 23 Jul 2020 06:39:00 +0000-Unilever brews up plans for sale of tea business as sales drop in first half