Fast-moving consumer products giant,
Unilever N.V.
(
UN
) announced that it will shut down its Atlanta factory where the
company manufactures spreads brands like Country Crock, Imperial
and I Can't Believe It's Not Butter. Unilever will close this
site by the end of Jun, thus eliminating 125 jobs. The move has
been made to deal with the spare capacity at its other U.S.
plants that make spreads.
Unilever, with dual headquarters in London and Rotterdam,
Netherlands, is the world's third-largest maker of consumer
products behind
Procter & Gamble Co.
(
PG
) and Nestle. It is also one of the world's leading suppliers of
fast moving consumer goods with strong operations in more than
100 countries and sales in 190.
Most recently, Unilever also posted decent fourth quarter and
full year 2012 results, with underlying (excluding the impact of
currency, acquisitions and disposals) sales growth of 7.8% in the
fourth quarter. The increase was driven by volume and pricing
gains of 4.8% and 2.9%, respectively. All the categories
performed well in the quarter, driven by increased investment in
innovation and brand building. This company also performed well
in the emerging markets despite global macroeconomic headwinds
and unfavorable foreign currency translations.
Overall, we are optimistic about Unilever's wide portfolio of
brands, which helps it to maintain a dominant share in the
market. Unilever has been strengthening its portfolio by
expanding through a number of acquisitions. Further, Unilever has
been divesting its businesses to shed off its non-core
operations, thereby optimizing resources and allocating them to
more promising markets.
Unilever sold its North America frozen meals business (brands
of Bertolli and P.F. Chang) in Aug 2012. More recently in
early-Jan 2013, Unilever agreed to sell its Skippy peanut butter
business to Minnesota-based meat producer
Hormel Foods Corporation
(
HRL
).
However, the company faces high commodity and raw material
cost that is impacting its margins since last many quarters.
Moreover, we continue to expect an uncertain macro-economic
environment, going forward. Though the company forecasts volume
gains and strong free cash flow in the near term, commodity cost
inflation will continue to be a headwind. Unilever currently
holds a Zacks Rank #4 (Sell). However, its peer
The J. M. Smucker Company
(
SJM
) carries a Zacks Rank #1 (Strong Buy) and is worth
considering.
HORMEL FOODS CP (HRL): Free Stock Analysis
Report
PROCTER & GAMBL (PG): Free Stock Analysis
Report
SMUCKER JM (SJM): Free Stock Analysis Report
UNILEVER N V (UN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research