Unilever hits FTSE peak af­ter avoid­ing Covid slump

Con­sumer goods firm now the in­dex’s most valu­able com­pany but tea di­vi­sion faces an un­cer­tain fu­ture

The Daily Telegraph - Business - - Front Page - By Laura Onita and Chris John­ston

UNILEVER has seized the top spot as Britain’s most valu­able listed com­pany af­ter dodg­ing a Covid sales hit and sug­gest­ing its PG Tips tea busi­ness could float on the stock mar­ket.

Shares in the con­sumer goods ti­tan soared af­ter it said sales were al­most flat in the first half of the year, far bet­ter than a sharp fall pre­dicted by an­a­lysts.

Shares rose al­most 8pc, adding about £9bn to Unilever’s value and leav­ing it worth just un­der £122bn. It has now leapfrogge­d drug­maker As­traZeneca to take the top spot in the blue-chip FTSE 100 in­dex.

The com­pany said its tea busi­ness will be carved out by next year fol­low­ing a slump in Britons drink­ing the brew. The di­vi­sion, which had sales of €2bn (£1.8bn) last year and owns brands in­clud­ing Lip­ton, Pukka and PG Tips, could be sold out­right, de­merged or listed on the stock mar­ket sep­a­rately. Unilever will hold on to its tea busi­ness in In­dia and In­done­sia, as well as ready-to-drink joint ven­tures such as its Lip­ton tie-up with Pepsi.

Alan Jope, the chief ex­ec­u­tive, said the process will be a for­mal le­gal and fi­nan­cial sep­a­ra­tion rather than sim­ply shift­ing peo­ple around. Unilever wants the di­vi­sion to act as if it were in­de­pen­dent, paving the way for a sale or float. He added: “We have no idea what the fi­nal out­come will look like.”

Global chaos in the wake of the pan­demic has trig­gered a ma­jor shake-up on the FTSE 100. Royal Dutch Shell was knocked from its perch at the top ear­lier this year af­ter shed­ding tens of bil­lions of pounds in value fol­low­ing a col­lapse in the oil price. Mean­while, As­traZeneca shares jumped when the com­pany emerged as a lead­ing player in the race for a Covid-19 vac­cine.

Unilever has been helped by its sta­tus as an es­sen­tial con­sumer goods stal­wart, with cus­tomers still buy­ing many of its prod­ucts even in deep re­ces­sions.

Mr Jope also warned that UK staff will only make a “very grad­ual” re­turn to the of­fice from Septem­ber, in a fur­ther blow for Boris John­son’s hopes of a re­turn to nor­mal.

Unilever – which makes goods from Domestos bleach to Mar­mite – em­ploys about 6,000 peo­ple in the UK.

Min­is­ters are push­ing for a rapid march back to nor­mal­ity from Septem­ber amid fears of dis­as­ter for town and city cen­tres if com­muters stay at home.

The plans al­ready suf­fered a set­back ear­lier this week when NatWest said 50,000 of its staff will not re­turn un­til next year.

Mr Jope said: “We an­tic­i­pate that it will take many more months be­fore we’re back to a steady state, and we think we will never be 100pc back.”

In the first half of the year, demand for clean­ing prod­ucts and items typ­i­cally con­sumed at home off­set big falls in grab-and-go categories and beauty.

Unilever’s un­der­ly­ing sales fell 0.3pc in the sec­ond quar­ter com­pared with a 3.9pc de­cline fore­cast by an­a­lysts. Pre­tax prof­its rose 4pc to €4.5bn.

The com­pany said that lock­down meant that con­sumers had less rea­son to put on make-up be­cause they were not go­ing to work or meet­ing friends.

This led to a 0.9pc fall in sales in its beauty and per­sonal care di­vi­sion to €5.3bn, a drop off­set by a scram­ble for hand soap and sur­face wipes to help pre­vent the spread of the virus.

The maker of Mag­num and Ben & Jerry’s ice cream has been look­ing for ac­qui­si­tions over the past six months de­spite the pan­demic, Mr Jope said.

He added: “If good op­por­tu­ni­ties emerge, we’re cer­tainly in a strong po­si­tion, es­pe­cially with our healthy bal­ance sheet, to take ad­van­tage of that.”

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