* China, India boost performance in Q4
* Sets long-term USG targets of 3-5% growth
* Will invest up to 1 bln euros in R&D, e-commerce
* Shares fall 4%
(Adds details on strategic plan, compares outlooks with peers)
By Siddharth Cavale
Feb 4 (Reuters) - Unilever restored its
pre-pandemic sales growth target on Thursday, underwhelming
investors seeking more ambitious goals amid strong consumer
demand for plant-based food products and home care brands.
The Ben & Jerry's ice cream and Dove soap maker said it
would be "laser focused" on driving top line sales growth and
would invest 1 billion euros in each of 2021 and 2022 in high
growth areas including business to business e-commerce
retailing, plant-based food and beauty products.
This would help Unilever to achieve a long-term underlying
sales growth target of 3% to 5%, restoring a previous forecast
set in 2020 but pulled in April due to uncertainty caused by the
coronavirus pandemic.
Unilever shares were down about 4%.
"Even though we have come close to hitting the 3-5% target
range in 2020, it is not enough," Unilever chief executive Alan
Jope said.
Jope also said the company would be focused on making
acquisitions in hygiene, skin care, functional nutrition and
plant based foods.
Rival consumer goods group P&G last month raised its
fiscal 2021 sales growth forecast to a range of 5% to 6%, from
3% to 4%, mainly on the back of a strong first half.
The coronavirus pandemic has boosted sales of packaged food
companies such as Unilever, Nestle and Kraft Heinz
, but there have also been sharp declines in foods served
in public places such as on beaches and at restaurants.
Unilever Chief Financial Officer Graeme Pitkethly said the
company expected the food service business to continue to be hit
in Europe, where a spike in cases has led to stringent
lockdowns.
Pitkethly also said he expects a mid-to-high-single digit
rise in raw material costs in the first half of 2021, which
Unilever hopes to offset by raising prices.
"Looking forward the group sees a return to more predictable
sales growth as we move beyond the pandemic later this year,"
Steve Clayton, fund manager at Hargreaves Lansdown said.
"Ongoing restructuring to position the group further toward
digital commerce will hold back earnings in the near term,
perhaps explaining the market’s lack of enthusiasm for the
numbers this morning," Clayton said.
Unilever's full-year underlying sales growth came in at
1.9%, in-line with market estimates. Emerging market sales rose
1.2% in the full-year.
China returned to growth in the second quarter as
restrictions were eased, while India returned to growth in the
third quarter. Sales accelerated into the high single digits in
the fourth quarter in these two markets.
"Slower EM's (emerging markets) in Q4 is the root cause of
the top line miss to Jefferies estimates, playing out against a
background of extended lockdown activity worldwide," Jefferies
analysts wrote in a note. The brokerage expected fourth quarter
underlying sales growth of 4.4%.
Developed market sales rose 2.9% in 2020, driven by strong
demand for in-home foods, ice-cream and hygiene products in
North America. In Europe, sales were driven by home care
products.
The company's results end a historic year for the company
which in November ditched its Anglo-Dutch dual-headed structure
in favor of a single corporate entity based in London.
Turnover for the quarter came in at 12.1 billion euros
($14.53 billion), versus analysts' estimates of 12.16 billion
euros. Full-year 2020 turnover came in at 50.7 billion euros,
slightly lower than the 50.81 billion euros, analysts had
expected.
Adjusted earnings per share for the year were 2.48 euros,
one cent lower than analysts' estimates.
($1 = 0.8328 euros)
(Reporting by Siddharth Cavale in Bengaluru
Editing by Jane Merriman and Keith Weir)
