JAKARTA (TheInsiderStories) – Global consumer goods producer, Unilever Plc (AMS: UNA) said on Thursday (07/23) will retained the tea businesses in Indonesia and India, following a strategic review that began early of this year. The review has resulted the tea business with valued of EUR2 billion (US$1.72 billion) will be separated into an independent entity.
The Anglo-dutch company is expected to put the demerged entity up for sale and reportedly has received interest from some of the top buyout firms, including Advent International, Bain Capital, KKR, Blackstone and others. In June, the manufacturer announced to become one single legal entity in the United Kingdom (UK) by buying things with equity or de-merging parts of the business.
On Thursday, Unilever announced its results for the first half of 2020, which show that overall underlying sales declined 0.1 percent, with developed markets up 2.4 percent and emerging markets down 1.9 percent. The sales volume also declining 0.3 percent and price growth of 0.2 percent.
“From the start of the COVID-19 crisis, we have been guided by clear priorities in line with our multi-stakeholder business model to protect our people, safeguard supply, respond to new patterns of consumer demand, preserve cash and support our communities,” CEO Alan Jope said in a statement.
The company’ focus for the rest of 2020, he asserted, will continue to be volume led competitive growth and creates an absolute profit and cash delivery. The spread of virus combined with the lockdowns and restrictions that have been implemented in many countries, has led to significant changes in the operating environment in the Unilever markets.
“China was the first of our markets to be impacted by COVID-19, entering lockdown in January. China slowed significantly during the lockdown period, with some recovery after April as the economy opened back up,” said the CEO.
In North America and parts of Europe there was a positive impact from household stocking in March. Consumption patterns then normalized in the second quarter with heightened levels of demand for hygiene and in-home food products.
Market growth in India had already been slowing prior to the spread of pandemic and was further impacted by the introduction of the strict national lockdown at the end of March. This national lockdown continued until early June, when it was followed by further regional lockdowns.
Then, Latin America was impacted by COVID-19 later than other major markets, with the effects primarily in the second quarter, exacerbating already challenging conditions in the region.
“Food service declined by nearly 40 percent and out-of-home ice cream declined by nearly 30 percent. Shoppers moved from offline to online channels, driving e-commerce growth of 49 percent,” he noted.
Even there are a challenged in global businesses, the operating profit of Unilever was rose 2.8 percent to EUR5.1 billion, excluding a negative impact from currency of 3.2 percent. In the second half of the year, he expect to see higher brand and marketing investment, as lockdowns ease and product innovations tailored to the new environment.
To reached those targets, said Lope, Unilever delivered free cash flow of EUR2.9 billion, an increase of EUR1.3 billion driven by favorable working capital movements, reduced capital expenditure and lower cash tax paid.
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