Unilever Plc., the UK parent of Hindustan Unilever Limited (HUL) has had to withdraw its financial guidance for the year since the first quarter has changed everything thanks to the coronavirus pandemic.
Unilever reported its results for the first quarter of the year and sales figures showed no increase or decrease in the period, though certain markets like India recorded a decline in sales by 1.8%. Other markets included in this cluster are China, South Asia and Latin America. The markets in developed countries on the other hand recorded a 2.8% growth in sales.
The analysts’ estimate for the quarter for the company was 2.1%. Unilever had expected that it will grow 3% in the first half of the year and at 4% for the whole year. Now, looking at the flat first quarter sales and a bleak immediate future ahead, the company has withdrawn these guidance figures.
On the Indian situation, the company says though the government allowed essential items to be sold from stores, there were disruptions in reaching even essential goods to the distribution network and from distribution points to retail outlets. The number of hours the shops were open got reduced and there was a general decrease in footfalls in the stores. In any case the large format stores were fully closed.
HUL had to halt production as well for the lockdown period. Though production may recommence in a few days, the pre-Coronavirus levels won’t be reached very soon. Most sectors, including the consumer goods business expect the overall consumer sentiment to remain low for some time even if the lockdown were to be lifted. Lower or no income in the hands of the lower middle class and working class people will mean cautious spending for at least a few months.
Unilever holds 61.9% equity in HUL.