COMPANY DESCRIPTION

Unilever is a consumer goods manufacturing group based in the United Kingdom. Co. is engaged in supplying consumer goods in the refreshments, foods, home and personal product categories. Co. supplies its consumers product for nutrition, hygiene and personal care and is active in emerging markets in Asia, Africa, Central & Eastern Europe and Latin America. Co.'s portfolio includes such well-known brands as Knorr, Lipton, Hellmann's, Magnum, Omo, Dove, Lux and Axe/Lynx. Co. manages its brands under the following four category headings: savoury, dressings and spreads; ice cream and beverages; personal care; and home care. Co.'s products are sold in over 190 countries around the world.

 

ECONOMIC MOAT

UL’s moat is evidenced by its strong brand portfoflio. UL has 13 brands each generating more than EUR 1 billion in annual revenue.  UL’s size and scope allows it to achieve cost advantages over smaller competition.

 

OUTLOOK

The strong U.S. dollar adversely impacted Unilever's 2014 results. The product portfolio continues to be rebalanced. In late 2014, UL announced it purchased the Camay brand globally, and the Zest brand outside North America and the Caribbean, from Procter & Gamble. he deal makes Unilever a market leader in skin cleansing in Mexico. In addition UL agreed to buy REN Skincare. Management's strategy is to allocate assets to higher-growth personal care brands at the expense of the food portfolio. Indeed, the bigger picture shows that, in the last six years, about 9% of overall revenues have moved out of the food unit and into the personal care division. In our opinion capital appreciate potential is moderate in the 2016-2016 but UL does offer and attractive dividend yield for income oriented portfolios.