Headquartered in the Netherlands,
) is the second largest consumer goods company in the world after
Procter & Gamble (
) and sells everything from soaps and deodorants to salad
dressings, ice-cream and tea beverages. Its portfolio of
billion-dollar brands includes Dove, Lux, Axe, Rexona, Surf,
CloseUp, Signal, Wall's, Lipton and Vaseline, to name a few.
Our price estimate for Unilever stands at
, well ahead of market price.
See our full analysis and $35.14 price estimate
Unilever recently announced its results for 2010, which
highlighted its strategy amid sluggish economic conditions. As the
global economy recovers from the recessionary macroeconomic period
during 2008 and 2009, consumer demand seems to be picking up,
albeit at a slow pace. The recovery has been notably sluggish in
the West with North America and Western Europe recording under 4%
In 2010, Unilever focused on volume growth at reduced prices.
Amidst low employment and disposable income levels, many consumers
substituted premium brand purchases for lower priced brands and
private labels. Unilever increased its promotional spending and
slashed prices of its products in an effort to be more competitive
and gain sales volume in the process. Unilever also increased its
spending on advertising, which further squeezed operating margins.
While this strategy put pressure on Unilever's product pricing and
profit margins, the company was successful at maintaining (and
growing) its market share.
Unilever's home care segment, which includes detergents and
cleaners, showed the highest volume growth in 2010, at over 8%.
However, discounted pricing eroded almost 5%, leading to a 3%
effective growth in dollar terms. Unilever's foods segment
witnessed stiff competition from both local brands and private
labels and, as a result, could only generate 2.5% growth in
Emerging economies continued to be Unilever's engine of growth
for yet another year. Asia, Africa and Central and Eastern Europe
grew in excess of 10% in terms of volumes. In Western Europe, price
cuts seemed to have limited effect on volume growth - a 1.8% drop
in prices could only generate a 1.4% growth in volumes, leading to
a net decline of 0.4%.
Going forward, as macroeconomic conditions improve and consumer
spending returns to pre-crisis levels, we expect a gradual recovery
in prices, which could present Unilever with a notable upside