Unilever announced a 5% decline in first-half profit to 3.1 billion euros ($3.65 billion), which was partly driven by foreign exchange losses.
Sales rose by a mere 0.3% to 25.8 billion euros (30 billion dollars), largely because of a negative currency effect. According to the group, sales would have been much higher with a constant exchange rate.
According to a statement on Thursday, the group’s margins have also been impacted by investments in its brands and by increasing manufacturing costs. Unilever Chief Executive Alan Jope reported that online sales had increased by 50% year-over-year in the first six months of this year.
As the group noted in its statement, the operating environment across its various markets has improved but remains volatile. Daily life restrictions continue around the world, affecting distribution channels, sales mix, and consumer behavior.”
“Restriction in India weighed on the second quarter, but they are relatively less severe than they were last year, while growth in China has normalized; however, it is below pre-covid-19 levels.”
North America and Europe have seen their markets decline compared to the first half of last year, after the first strict containment measures had boosted demand for hygiene and food products.
Although the group is seeing growth in South America, it is experiencing difficulties in Southeast Asia, particularly in Indonesia, where “large parts of the country are under containment” due to a spike in Coronavirus cases.
Jope believes “we can generate sub-par sales growth in 2021 (…) within our multi-year targets of 3-5% despite unfavorable comparison effects in the second quarter.” He also emphasized “we are managing cost volatility aggressively and expect a stable operating margin in 2021.”