Unilever Plc (LON: ULVR) is a Consumer goods company, based out of London, the United Kingdom. The company’s premier business activity is the selling of fast-moving consumer goods (FMCG) through all its brands across the world. The company claims that around 2.5 billion people globally use their products each day. These products are sold through more than 400 brands that the company has. The company operates across 190 countries in the world, making it one of the biggest and widest consumer goods organisations in the world. The company has a wide range of products that include the likes of Nutritious foods, Household care essentials, Indulgent ice creams, Refreshing teas, Luxurious shampoos, Affordable as well as disease-combating soaps. The company sells these products through three primary business segments, which are – Beauty and Personal Care, Food and Refreshment as well as Home Care. The company also has a water purifier business segment.
In the Beauty and Personal Care segment, some of the most famous brands of the company include Axe, Clear, Dove, Fair and Lovely, Lux, Lifebuoy, Rexona, Smile, Sunsilk and closeup, which are some of the most common names in households across the world. In Food and Refreshments segment, the company has backing of products such as Ice creams with brands like Kwality Walls, Cornetto and Magnum, Tea and Coffee products such as Lipton, PG Tips, Pure Leaf, Taj Mahal, Taaza and Bru, and ready to eat soup products that include the likes of Knorr and Cup A Soup. The company is in the candy business too, with brands such as Fruitare. The company also sells Homecare segment products, some of which are prominent household names, such as Domex, Comfort, Rin, Skip, Day 2, Surf Excel, Wheel, Sunlight and Ala, which primarily operate under the umbrella of laundry and toiletries sub-segment.
Unilever Pure It is the company’s push into the water purifier segment.
For the last 90 years, since the inception of the company, it has been known as one of the most innovative product advertisers, with its products being pushed across all medias such as Television, Radio and now even Social Media with the most innovative and inventive copies, which is one of the biggest reason why Unilever has some of the highest-grossing products in the world.
Unilever Final Results
On 30th January 2020, the company reported its final results for the year ended 31st December 2019. In terms of the underlying performance, the company reported a modest sales growth of 2.9 per cent year on year against the sales in FY 2018. The underlying operating margin was reported to have grown by 50 basis point year on year and was reported to be at 19.1 per cent in FY 2019. The company highlighted that the underlying earnings per share for the period were reported to be at €2.55 per share, year on year jump of 8.1 per cent. The free cash flow generated during the year, rose by €0.7 billion and was reported to be at €6.1 billion. In terms of the GAAP Measures, it was reported that the Turnover increased by 2.0 per cent year on year with a positive impact from currency and a negative impact from the spreads disposal and was reported to be at €52.0 billion. The operating margin for FY 2019 was reported at 16.8 per cent, displaying a decline of 800 basis points as compared to FY 2018. The net profit for the period was €6.0 billion, which was a decline of 38.4 per cent as compared to the previous year. When presenting the segment-wise financial performance, the company reported that the Home Care segment’s Underlying Sales Growth was at 6.1 per cent, while the Food and Refreshment segment performed the worst with a sales growth of just 1.5 per cent. This was primarily due to the decline in sales of its tea products, especially from brands like Lipton and PG Tips. The Underlying Volume Growth for the Food and Refreshment segment declined by 0.2 per cent, which was a big shock to the company.
Source: Company Website
Why is Unilever considering selling Lipton and PG Tips?
After the announcement of results on 30th January 2020, many market experts suggested that Unilever might be planning to quit the Tea business altogether in the United Kingdom, primarily on the back of poor performance and a slump in sales of its black tea products and the tea brands such as Lipton and PG Tips.
The development is in line with a research that was conducted by a research agency, which suggested that sales of tea, across the UK market has fallen by around 9 per cent in the last decade and 2 per cent over the last two years, which symbolised the fact that UK tea drinkers are moving towards coffee and other caffeine-based drinks as an alternative to tea. Unilever’s PG Tips, which is one of the oldest brands in the Tea Market in UK, was a market leader in the country, but for the first time during the last year, slipped to the second position, after being overtaken by Twinnings brand of the Associated British Foods. Experts have suggested that all the segments within tea have seen a decline in sales over the last few years, the only sign of growth has been the herbal segments, as people move towards healthier product alternatives.
Another factor is that the young tea drinkers, over the past few years have moved towards coffee, because of their “experience seeking” nature.
All things considered, Unilever is now planning to get rid of two of its most famous tea brands, which may cause a huge shock in the industry while it also might shape the future of this industry, as we could see the industry either coming up with newer and more innovative products that could lure the consumers, or sell their tea businesses.
ULVR Stock Price Performance
(Source: Thomson Reuters) Daily Chart as on 31-January-20, before the closing of the LSE Market
As on 31st January 2020, at 12:14 P.M (Greenwich Mean Time), by the time of writing this report, the Unilever Plc Stock was trading at a price of GBX 4521.00 per stock on the London Stock Exchange market, a decline in the value of 0.14 per cent or GBX 6.50 per stock, as opposed to the price of the stock on the previous trading day, which had been reported to be at GBX 4527.50 per stock. At the time of writing, the stock of Unilever Plc was reported to have been trading 15.78 per cent above the 52-week low stock price, that was GBX 3904.94 per stock, which the company set on January 31, 2019. At this time, the stock price was reported to have been trading 15.23 per cent lower than the 52-week high price of GBX 5333.00, that the company achieved as on September 04, 2019. The market capitalisation (M-Cap) of the stock stood at a value of GBP 52.860 billion, with respect to the current market price of the stock of the company at the time of writing this report.
It has been reported that the Unilever Plc stock had gained around 13.46 per cent in value, in the last twelve months, since January 31, 2019, when the stock was trading at a price of GBX 3984.50 per stock at the time of the close of the market. It has also been reported that the company’s stock has lost approximately 8.77 per cent, in the last six months, in comparison with the stock price of GBX 4955.50 at the time of the close of the market as on July 31, 2019. Unilever Plc’s stock has been reported to have gained 3.92 per cent, in last 30 days’ time from the stock price of GBX 4350.50 per stock that the stock set as on December 31, 2019.
The Annual dividend of the company was reported to be at GBX 142.76, while the annual dividend yield has been reported to be at 3.15 per cent. The company’s last ex-dividend date was on October 31, 2019. The company’s last dividend pay-date has been reported to be on December 14, 2019. The average volume of the company’s shares traded in the London Stock Exchange market since the last year has been 2.36 million stocks per day. By the time of writing, 687,850 stocks of the company have been traded in the market today.
The beta of the Unilever Plc’s stock has been reported to be at 0.58, giving an idea that the movement in the stock price, is less fickle, as against the movement of the comparative benchmark index.