By Siddharth Cavale
(Reuters) – Consumer goods giant Unilever Plc withdrew its full-year forecast on Thursday, saying the hit from lockdowns in China and India, as well as lower ice cream sales, offset strong U.S. and European sales of cleaning items, sending its shares down 5%.
Underlying sales across Asia, the Middle East and Russia, fell 3.7%, as lockdowns in the quarter restricted restaurant visits and shopping in China and led to factory shutdowns that halted production in India.
In Europe, Turkey and Latin America, Unilever’s 3 billion euro ($3.2 billion) ice cream business was hit by national efforts to prevent the spread of the coronavirus, deterring distributors in holiday destinations from buying stock.
“Many of our classic out-of-home retailers like leisure sites, travel hubs, beaches and tourist destinations were closed,” Chief Financial Officer Graeme Pitkethly said on a call.
These factors countered increased sales in the United States and Europe, where consumers stocked up on laundry detergents, Domestos bleach, Cif cleaning products and personal hygiene items, as the virus spread to those regions.
Overall, first-quarter turnover rose 0.2% to 12.40 billion euros ($13.42 billion), slightly missing the estimate of 12.77 billion euros based on analysts polled by Factset.
The company withdrew its sales performance targets for the year, which forecast growth at the lower end of a 3%-5% range, saying it could not “reliably assess the impact” of the virus, , although it said it would still pay its interim dividend.
Jefferies analysts said investors would be asking why Unilever “has apparently been hit so badly, and early, by the negative impacts of COVID-19 without seeing much of the positives. We expect a difficult day for the shares.”
Shares in Unilever, which joins spirits maker Diageo and other consumer goods companies in withdrawing guidance, was down 5.5% at 4,008 pence in early trading.
The Anglo-Dutch company’s report follows results from larger U.S. rival Procter & Gamble, which last week said its U.S. sales had seen their biggest rise in decades.
Unilever also said underlying sales grew strongly in North America, rising 4.8% as shoppers stocked up on personal hygiene products, Knorr soups and Hellmann’s dressings.
In Europe, sales growth was led by Germany and Britain, although prices across the region fell.
“We are adapting to new demand patterns and are preparing for lasting changes in consumer behaviour, in each country, as we move out of the crisis and into recovery,” Unilever Chief Executive Alan Jope said in a statement.
The company said it was directing a chunk of its 500 million euro package to support suppliers towards its ice cream distribution partners, which Pitkethly called the “jewel” in its supplier relationships.
($1 = 0.9267 euros)
(Reporting by Siddharth Cavale and Tanishaa Nadkar in Bengaluru; Editing by Sriraj Kalluvila and Edmund Blair)