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Unilever1

1. Introduction

Unilever is one of the oldest multinational companies, with products available in around 190

countries and owns around 400 brands. It is a dual-listed company consisting of Unilever plc,

based in London, and Unilever N.V., based in Rotterdam, and has research and development

facilities in the United Kingdom, the Netherlands, China, India and the United States. They

operate as a single business, with a common board of directors, with Alan Jope as the CEO

since the beginning of 2019. Unilever is organized into three main divisions: Foods and

Refreshment (beverages and ice cream), Home Care, and Beauty & Personal Care.

2. History

With the purpose of being able to easily import big quantities of palm oil, Unilever was

founded in 1930 through the merge of two companies which had palm oil as their most

important raw material. The first, was a Dutch company, Margarine Urine. This company was

the result of the merge in 1927 of two companies; the first margarine factory in the world

founded by Anton Jurgens in Oss, Netherlands (1872). and a margarine company opened by

Samuel van den Bergh in Kleved (1888). The second company was Lever Brothers (also

owners of T. Wall & Sons and Mac Fisheries) that were British soap makers.

From this moment onwards, the company has kept buying and selling different brands and has

constantly looked for an increase in competitiveness and increasing profits. So, now it’s a

company that owns over 400 brands, with revenues of around 26 thousand million and with

sales over one billion euros.

1 Case written by Berta Algueró, Luka Markovic, Rita Rodríguez and Sandra Verneda; and

supervised by professor Oriol Amat, Universitat Pompeu Fabra, 2020.

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1930 Unilever was founded through the merge of Margarine Urine and Lever Brothers.

1930s New projects were launched in Africa and America.

1939-1945 It was impossible to reinvest their capital in Europe, so they decided to acquire new businesses

in the UK and the US.

1945 Unilever's business in the US (Lever Brothers and T.J. Lipton) began to decline. As a result,

Unilever proposed a "hands-free" policy towards subsidiaries, and left the US management to

its own devices.

1965 Laundry soap and edible fats were about half of Unilever's business benefits. It is also forced to

diversify due to a stagnant market and increasing competition in detergents and soaps from

Procter & Gamble.

1993 Largest ice cream manufacturer in the US

2000 The Bestfoods acquisition increased Unilever's scale in foods in America (second largest cash

acquisition in world business history).

2001 They split into two divisions: one for Foods and one for Home and Personal Care.

2007 First large-scale company to commit to sourcing all its tea in a sustainable manner.

2011 It was fined 104 million euros by the European Commission for establishing a price-fixing

cartel in Europe along with P&G, who was fined with 211.2 million euros, and Henkel, who

was not fined. Later, it was discounted by 10% after Unilever and P&G admitted running the

cartel.

2014 Unilever filed a lawsuit against their rival Hampton Creek. In the suit, they claimed that

Hampton Creek was "seizing market share" and the losses were causing Unilever "irreparable

harm." The company alleged that Hampton Creek's Just Mayo products were falsely advertised

because they didn’t contain eggs. At the end of that same year, the demand was dropped.

2015 The company separated its food spreads business, into an entity named Unilever Baking,

Cooking and Spreading.

2016 Unilever Group was listed as the fourth largest FMCG company worldwide in terms of sales.

2018 The company announced that its headquarters were being moved completely to Rotterdam,

ending its dual Anglo-Dutch structure.

Figure 1. Table with the main dates of Unilever history

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3. Industry analysis and competitors

3.1. Sales evolution in the industry and sales ranking

Unilever is one of the largest FMCG (fast moving consumer goods) company with a big

amount of sales and every day, 2.5 billion of consumers use their products from the different

400 household brands. In May 2018, Kantar’s Brand Footprint published a report of the top

50 FMCG brands of the world, and 13 brands out of 50 were owned by the group Unilever, a

quantity that any other FMCG company of the study couldn’t reflect.

Figure 2: Top 50 FMCG companies worldwide in 2018, based on net sales (in million US

dollars)

In 2017 Unilever Group was the fourth largest FMCG in terms of net sales with an amount of

60.12 billion U.S. dollars according to a study made by Statista, an important web page which

collaborates with Forbes. Above Unilever there was only Nestlé AG, Procter & Gamble and

PepsiCo.

Although achieving this goal in 2017, the turnover has declined by 5.1% from 2017 to 2018

as we can see in the annual report of Unilever and they justify that mainly this decline is the

consequence of the weakness of the currencies of the key emerging markets like Brazil. The

biggest decline of turnover was in the food and beverage with a decline of 9.9% while the

cosmetic sector is the one which Unilever obtain more profit.

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Referring to the beauty and personal care market, we can see it has had a positive growth

since 2014, being the industry in which Unilever obtains more profit.

Figu

re 3.

Annual growth of the global cosmetics market from 2004 to 2018

In Figure 3 we can see the annual growth of the global cosmetics market from 2004 to

2018.In this graph we can observe that these last years has increased more than it had in the

past (with a 5.5% growth) in contrary to what has happened, as we’ve said before, to the sales

of the company as a whole. We can also highlight that in 2009 there was just an annual

growth of 1%, which can be justified with the global financial crisis that put a damper on the

market as a lot of people just bought either cheaper merchandise or did it by themselves at

home.

The other industry in which Unilever works is the food and beverage industry. This industry,

according to Plant and Food research, is growing at around 5% every year and by 2030 this

industry is expected to reach 20 trillion dollars. However, this branch of Unilever is the

weakest and profits are continuing to decline although Unilever has tried to adapt their

products to the demand and necessities of the market, like more healthy and sustainable food.

The third industry is the home care market, an industry which is losing importance and in

which people are searching for more basic products and not products very specialized.

Although the ones who work in the market thought that industry would growth between 3%

and 5% like past years, this last year sales are declining in home care, an industry in which

Unilever is the one that leaders the ranking.

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3.2. SWOT industry of FMCG (fast moving consumer goods)

Strengths Weaknesses

● Low operational costs

● Use of economies of scale and synergies.

● Strong advertising and marketing strategies.

● Production of healthy and eco-friendly products.

● Existence of well-known brands and companies

with good reputation

● Aggressive price competition which leads to

price wars and reduction of profit.

● Low margin

● High dependence on retailers.

● Low investment

Opportunities Threats

● Increase of health awareness between consumers.

● Popular trend of consuming products which are

environmentally friendly.

● Appearance of new possible markets in countries

with growing economies.

● High influence of social media and its

advertisement in people.

● An arising economic crisis.

3.3. Main competitors

The company's largest international competitors are Nestlé and Procter & Gamble. Apart from

these two big companies it also faces competition from more local markets. Now, we are

going to study the most important competitors of Unilever in each division separately:

● Foods & refreshment:

This industry is highly competitive, so it is really important to be efficient and adapt

quickly to new trends and changes. We have highlighted 10 main competitors of

Unilever in the food industry which are also groups of companies owning some of the

most important brands of this sector. It’s major competitor it may be Nestle followed by

other companies such as Kellogg’s, Coca Cola, PepsiCo, Kraft Heinz, Mondelez,

Danone, General Mills and Associated British Foods.

Nestlé is the largest food company in the world with 447 factories operating in 189

different countries. In 2018 it had a total amount of sales of 83,942.5 million € among

its several well-known brands like Nespresso, Cheerio’s, KitKat, Buitoni, S.Pellegrino

and many others, and it experienced an organic growth of 3%. This company’s business

strategy is based on offering nutrition, health and wellness through its products and

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creating shared value by participating in several projects, which helps them remain

“relevant with consumers”.

● Home care and Beauty and personal care:

In the case of these two industries, as they share many competitors, we will analyze

them together. As main competitors, we have chosen ten companies which own some of

the best well-known brands of these sectors, some of them are also parent companies

with diversified portfolios and others are specialized in a particular industry. If we had

to highlight one competitor, that would probably be P&G, which has a wide range of

products. Some other competitors are Kimberly-Clark, L’Oréal, Johnsons & Johnson,

Henkel, Church & Dwight, Edgewell, Colgate-Palmolive and Estée Lauder.

Procter & Gamble (P&G) was founded in 1837 in Ohio by William Procter and James

Gamble and they started selling soap and candles. Nowadays is one of the largest

consumer goods companies in the world which operates in five of the six continents of

the world and own several renowned brands such as Pantene, Gillette, Oral-B and Ariel.

In the year 2018, the total amount of sales was of 66,8 billion dollars and net sales are

mainly growing since 2016.

The net sales of Procter & Gamble are higher than the Unilever sales every year but the

operating income in Unilever has increased over the years and the operating income of

Procter and Gamble has maintained around 13$, so in 2018, the operating income of the

two enterprises were similar.

Johnson & Johnson was founded in 1886 in the United States of America by two

brothers called James Wood Johnson and Robert Wood Johnson and they started

producing surgical bandages. Nowadays is a powerful company that works in the

healthcare sector and own Neutrogena.

In the year 2018, the total amount of sales was of 81,6 billion dollars and net sales

experienced a 6,7% of growth. The diluted earnings per share was 5,61$ and the

adjusted diluted earnings per share was 8,18$, a 12,1% more than the previous year.

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4. Present situation of the company

4.1. Segmentation of the products

As we have mentioned before, Unilever offers a wide range of products that are divided into

three main divisions. Before talking about the brands that make up each division, we should

see the weight each one has in the revenue of Unilever.

Figure 4: Global revenue of the Unilever Group from 2005 to 2018, by product segment

(in million euros)

By looking at figure 4 obtained by a study made by Statista, we can see that the strongest

division has always been food and refreshment, however, since 2010 we have seen quite a

substantial increase in personal care from 13,767 to 20,624 million euros, equalling revenues

of the food and refreshment division.

After looking at the weight each one has, we will take a look at the brands that compose each

division:

Food and Refreshment: Some of the main brands are Breyers, that consists on desserts, or

Heartbrand, in which we can find some of the most known ice creams such as Magnum,

Cornetto, Solero, Viennetta and Carte d’Or. We can also find Hellmann’s/Amora with a big

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range in sauces. Knorr, that offers food in general. Lipton, that focuses on the complex world

of tea. Finally, Unilever Food Solution which is one of the world’s leading suppliers of

consumer goods that has provided innovative and high-quality professional food ingredients

and value adding services created by over 300 professional chefs. The latter is able to cover

50 cuisines and 200 million dishes a day.

Home Care: In this sector, which is the weaker of the three we can find Cif which consists of

different home cleaner products for the house. Day2 is the world’s first dry wash spray that

leaves clothes the same way as if you put them in the laundry. Domestos are products used to

kill germs that can be found in areas of the house such as the bathroom. Omo are cleaning

products. Finally, Surf, is a global laundry brand.

Beauty & Personal Care: In this division we find some brands working with deodorants,

such as Rexona (for both men and women) and Axe (just for men). Clear and Sunsilk sell hair

products. Dove is a brand that has its focus on women and has quite a big range of products:

deodorants, body milk, shampoos, etc. Fair & Lovely and Lux have cosmetic products.

Lifebuoy sells antibacterial soap. Smile sells products related to mouth hygiene. And finally,

Vaseline that it works with products that are for skincare.

4.2. Customers and distribution channels

Since Unilever works on the consumer goods industry, innovation, understanding consumer

habits and being able to quickly adapt to trends, changes in tastes and economic scenarios is

of great importance. Furthermore, Unilever carries out a direct-to-consumer business model,

which is based on the direct access from a brand to its final customers. Therefore, the

company uses massive marketing campaigns to tap into its customers without intermediaries

and it has based part of their business model on consumer insight, to be able to enhance their

performance.

Nowadays consumers are becoming more concerned about sustainability and social welfare,

so Unilever is launching new products adapted to their preferences for healthier and natural

items. They are focusing its marketing campaigns on spreading awareness on the value chain

they are creating and the “purpose” behind their products. They are trying to establish

stronger connections with their consumers and trying to gain market share by targeting the

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“conscious consumer” through campaigns which make the consumer feel as a contributor to

their causes: reducing environmental impact, improving health and well-being and enhancing

livelihoods around the globe. Also, with brands like Dove, the publicity campaigns try to

promote positive self-esteem and body confidence.

Every day, approximately 2.5 billion people use Unilever's products. This is due to the

network of around 400 globally coordinated distribution centres operating in more than 190

countries. Unilever serves consumers through different channels: hyper and supermarkets, e-

commerce, out of home, drugstores, small convenience stores, discounters, Food Solutions

(company that manages food services and restaurant business), Unilever International,

prestige channel and global retail.

The company serves around 26 million retail stores globally, 8 million of which they cover

directly, and the remaining 18 million through wholesale and cash&carry. Unilever is now

focusing on further developing the e-commerce channel, which is gaining importance every

year, by working with Amazon, Taobao and other online grocery websites. Moreover, they

are still collaborating with the top hypermarkets and supermarkets as well as engaging with

small retailers, to make sure that their brands and products enjoy the best positioning possible

and are largely available and displayed.

4.3. Qualitative analysis

Who?

Paul Polman has been Unilever CEO for over ten years and has worked in the consumer

goods industry for almost four decades. During these years he has been able to achieve an

important impact due to his role in society, addressing the problem of inequality and climate

change, and to business, delivering great returns for its shareholders (290% return over the

years). As he said, “We cannot choose between [economic] growth and sustainability - we

must have both”.

We could see his great leadership in Unilever Chairman in 2016, Marijn Dekkers words:

“Paul is an exceptional business leader who has transformed Unilever, making it one of the

best-performing companies in its sector, and one of the most admired businesses in the world.

His role in helping to define a new era of responsible capitalism, embodied in the Unilever

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Sustainable Living Plan, marks him out as one of the most far-sighted business leaders of his

generation.”

After a bad development of a plan elaborated by Polman that interfered with large managers,

there was a decision from the Board to having a new CEO, who is since 1st January 2019

Alan Jope. He joined the company as a graduate marketing trainee in 1985 and has been

responsible for the largest division of the company, Beauty & Personal Care since 2011. He

has also run the company’s North Asia business for four years, served as President, Russia,

Africa & Middle East, and spent over a decade in senior roles for Unilever US of the different

divisions.

What?

Unilever finds itself in the consumer goods industry which is in a process of change and

evolution. There have been big changes happening due to the improvement in technology and

also because of a change on the concerns of society.

Their corporate mission is “to add vitality to life. We meet everyday needs for nutrition,

hygiene and personal care with brands that help people feel good, look good and get more

out of life.” So, we can see how this company focuses on the mission of working with

products that will be attractive to consumers that want to feel and look good and get more out

of life.

How

Unilever strategy aims in the belief that the only way to create a long-term value for all their

shareholders and have a profitable growth is having a sustainable, equitable and responsible

growth. That’s the reason why they decided to place the Unilever Sustainable Living Plan as

the centre of their business model.

Currently, it is very important to know what consumers want and how much are they willing

to pay in order to adapt their supply of products and brands to the market demand. Unilever is

an example of a company which is already using crowdsourcing to develop and test their new

products.

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Apart from this constant sustainability approach, some of the main strategic long-term choices

they have made are: having an active portfolio management, focusing on innovation and

putting emphasis on the digital market and on e-commerce (it could lead to a substantial

increase in sales), among others.

4.4. Distinctive factors

Multilocal and multi-global: they have products which are sold all around the world, but they

also manage brands which work only at a local level. Their marketing and innovation

divisions work with local brands and companies in order to be able to adapt the best way

possible to each market.

Consumer-centred: they give a lot of importance to the consumer and have a business model

based on the consumers and their changing needs

Attractive prices: it has a wide variety of prices, considering the level of diversification of the

products they offer.

Sustainability: their sustainability approach and redesign of their business model to achieve

this goal and long-term objectives presents an improved image to consumers and has helped

the company create value and positive externalities.

It has fostered a positive image in new emerging markets by purchasing native brands, which

allows Unilever to enlarge the popularity of its products

Unilever has a remuneration policy which consists of a fixed pay plus an annual bonus, part

of which the executives must invest in shares of the company. This strategy of variable pay is

known to be a characteristic of high-growth companies.

Innovation is an important aspect for Unilever, so it invests around €1 billion in R&D each

year.

5. Main problems or challenges the company is facing now

By looking at the consumer sector we can see that there has been a recent change of the

person in charge of some of the biggest companies, and also in the case of Unilever not only a

change in their CEO, but also a change in their marketing boss, who had been Keith Weed for

over 35 years. This has been followed by a context of a slow growth in the consumer goods

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sectors and an increasing competition of some newer and smaller brands. That’s why, Alan

Jope now has different challenges he is facing.

First of all, he will need to maintain the Paul sustainability legacy, even though Paul was able

to set ambitious plans and achieve some of them, there are still many that are far from being

reached, for example the company’s current water impact per consumer use has only been

reduced by around 2% since 2010.

Moreover, Alan Jope will need to fight for maintaining prices and margin. FMCG is in a

moment where many of the big companies are shifting their strategies and increasing their

prices. This may be because of the entrance to the market of new competitors, and at the same

time an increase in commodity costs. Therefore, Alan Jope needs to be careful not to enter

into a price war with its competitors and also needs to consider the Brexit and other political

uncertainties that could make consumers more cautious with their spendings.

Furthermore, there will be the need on putting more effort into a strong marketing campaign

that maintain the loyalty of its customers due to the fact of the appearance of competence that

is releasing similar products but with much lower prices.

On their website, we can see that they say: “Our CEO Alan Jope is challenging the

advertising world to defy the green-washing that’s polluting the industry, and instead use

creativity to drive purpose and positive change.”. They expose the idea that many brands are

using the idea of sustainability as their marketing campaign, but they don’t actually believe or

apply the idea to their business. Therefore, Unilever expresses their consent on the belief that

the industry will lose credibility and so they will lose one of their strengths. They encourage

customers to walk away from those brands that have no substance behind what they say. So,

as a company they are making sure clients understand that this company is truly going to

work in favour of this purposes that worry the society and they invite them to contribute in

ideas for the plans and advertising.

6. Inflation

Regarding inflation, accounts of Unilever should be adjusted for inflation because it is a

company from 1930 and it may have many old fixed assets. The problem with old companies

is that if we don’t adjust for inflation there may be an undervaluation of buildings and

inventories and therefore, lower depreciation. So, if we don’t adjust, we may have accounts

with inflated profits.

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Even if the accounts may not be accurate, as the industry average is also calculated without

adjusting for inflation, when comparing we are considering information following an equal

pattern in terms of inflation.

Impact of inflation on the Income Statement of the company in 2018: Net monetary gain /

(loss) arising from hyperinflationary economies according to information from Unilever’s

accounting report: 122

7. Questions to be solved

1. Identify main qualitative strengths and weaknesses

2. Identify main financial strengths and weaknesses

3. Cause and effect diagram

4. Propose recommendations

5. Demonstration of the recommendations

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8. Appendix

Unilever balance sheets

Average sector with

profits 2 % 2019 % 2018 % 2017 % 2016 % 2015 %

Non-current assets 3455,06 68,06 46.940 72,74 43.975 73,96 43.302 71,83 42.545 75,4 39.612 75,74

Goodwill n.d. - 17.697 27,42 17.341 29,17 16.881 28 17.624 31,23 16.213 31

Intangible assets 1.521,18 29,96 12.547 19,44 12.152 20,44 11.520 19,1 9.809 17,38 8.846 16,92

Property, plant and equipment (Fixed

assets) 1.186,82 23,38 12.067 18,7 10.347 17,4 10.411 17,27 11.673 20,69 11.058 21,14

Pension asset for funded schemes in

surplus n.d. - 2.053 3,18 1.728 2,9 2.173 3,6 694 1,23 934 1,79

Deferred taxes n.d. - 1.376 2,13 1.117 1,88 1.085 1,8 1.354 2,4 1.185 2,27

Financial assets n.d. - 705 1,09 642 1,08 675 1,12 673 1,19 605 1,16

Other non-current assets 374,84 7,38 495 0,77 648 1,09 557 0,92 718 1,27 771 1,47

Current Assets 1.621,18 31,93 17.589 27,26 15.481 26,04 16.983 28,17 13.884 24,6 12.686 24,26

Inventory 553,56 10,90 4.387 6,8 4.301 7,23 3.962 6,57 4.278 7,58 4.335 8,29

Trade and other current receivables 479,64 9,45 8.079 12,52 6.485 10,9 5.222 8,66 5.102 9,04 4.804 9,19

Current tax assets n.d. - 265 0,41 472 0,79 488 0,8 317 0,56 230 0,44

Cash and cash equivalents 269,62 5,31 3.911 6,1 323 5,43 3.317 5,5 3.382 5,99 2.302 4,4

Other financial assets n.d. - 913 1,41 874 1,47 770 1,28 599 1,06 836 1,6

Assets held for sale n.d. - 34 0,05 119 0,2 3.224 5,35 206 0,37 179 0,34

Total Assets 5.076,67 100,00 64.529 100 59.456 100 60.285 100 56.429 100 52.298 100

Net Equity 2.269 44,69 13.396 20,76 12.292 20,67 14.387 23,87 16.980 30,09 16.082 30,75

Called up share capital 192,41 3,79 12.710 19,7 464 0,78 484 0,8 484 0,86 484 0,93

Share premium account n.d. - 129 0,22 130 0,22 134 0,24 152 0,29

Other reserves n.d. - -15.286 -25,7 -13.633 22,61 -7.443 -13,19 -7.816 -14,95

Retained profit n.d. - 26.392 44,39 22.721 37,69 23.179 41,08 22.619 43,25

Non-controlling interest n.d. - 686 1,06 720 1,21 758 1,26 626 1,11 643 1,23

Non-current Liabilities 1.522,71 29,99 29.388 45,54 27.392 46,07 22.721 37,69 18.893 33,48 16.197 30,97

Financial liabilities 1.229,78 24,22 23.369 36,21 2165 34,41 16.462 27,3 11.145 19,75 9.854 18,84

Non-current tax liabilities n.d. - 187 0,29 174 0,29 118 0,2 120 0,21 121 0,23

2 We used the industry average of the main 100 companies with profits because the dimensions and the characteristics of these companies are more similar to Unilever and

taking into account the companies with not so good results into the average sector would make it less representative and not such a good reference for our company. As

Unilever woks in three different sectors, and it’s difficult to find companies operating in the same markets to use as the industry sample, we have used the industry average of

the foods & beverages industry because it’s the most important and profitable division of the company.

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Pensions and post-retirement healthcare

liabilities n.d. - 2.593 4,02 2.602 4,38 2.734 4,54 3.867 6,85 3.254 6,22

Provisions 166,81 3,29 637 0,99 697 1,17 794 1,32 1.033 1,83 831 1,59

Deferred tax liabilities n.d. - 2.272 3,52 1.923 3,23 1.913 3,17 2.061 3,65 1.744 3,33

Other non-current liabilities 308,30 6,07 330 0,51 346 0,58 700 1,16 667 1,18 393 0,75

Current Liabilities 1.322,91 26,06 21.745 33,7 19.772 33,25 23.177 38,45 20.556 36,43 20.019 38,28

Financial liabilities 245,93 4,84 5.616 8,7 3.235 5,44 7.968 13,22 5.450 9,66 4.789 9,16

Provisions n.d. - 665 1,03 624 1,05 525 0,87 390 0,69 309 0,59

Trade payables and other current

liabilities 571,99 11,27 14.391 22,3 14.457 24,32 13.426 22,27 13.871 24,58 13.788 26,36

Current tax liabilities n.d. - 1.072 1,66 1.445 2,43 1.088 1,8 844 1,5 1.127 2,154

Liabilities held for sale n.d. - 1 0,001 11 0,02 170 0,28 1 0,001 6 0,011

Total Equity and Liabilities 5.076,67 100,00 64.529 100 59.456 100 60.285 100 56.429 100 52.298 100

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Unilever income statements

Average sector

with profits % 20193 % 2018 % 2017 % 2016 % 2015 %

Revenues 6.764,92 100 26.126 100 50.982 100 53.715 100 52.713 100 53.272 100

Cost of sales -3.490,66 -51,60 -28.769 -56,43 -30.547 -56,87 -30.229 -57,35 -30.808 -57,83

Gross profit 3.274,25 48,40 22.213 43,57 23.168 43,13 22.484 42,65 22.464 42,17

Brand and marketing investment expenses 0,00 -7.164 -14,05 -7.566 -14,09 -7.731 -14,67 -8.003 -15,02

Research and development -15,06 -0,22 -900 -1,77 -900 -1,68 -978 -1,86 -1.005 -1,89

Staff costs -283,22 -4,19 -6.552 -12,85 -6.712 -12,5 -6.523 -12,37 -6.555 -12,3

Amortisation of finite-life intangible assets and software 0,00 -348 -0,68 -365 -0,68 -310 -0,59 -273 -0,51

Depreciation of property, plant and equipment -97,92 -1,45 -1.191 -2,34 -1.173 -2,18 -1.154 -2,19 -1.097 -2,06

Raw and packaging materials and goods purchased for resale -719,18 -10,63 -20.526 -40,26 -21.579 -40,17 -21.122 -40,07 -21.543 -40,44

Impairment of assets 0,00

Other results 1.685,45 24,91 27.003 52,97 23.984 44,65 23.135 43,89 23.527 44,16

OPERATING RESULT (EBIT) 473,42 7,00 4.589 17,56 12.535 24,59 8.857 16,49 7.801 14,8 7.515 14,11

Finance income 91,30 1,35 86 0,33 135 0,26 157 0,29 115 0,22 144 0,27

Share of net profit/(loss) of joint ventures and associates 0,00 85 0,33 185 0,36 155 0,29 127 0,24 107 0,201

Other income/(loss) from non-current investments and

associates 0,00 2 0,01 22 0,04 18 0,03 104 0,2 91 0,17

Finance costs -49,35 -0,73 -420 -1,61 -591 -1,16 -556 -1,04 -584 -1,11 -516 -0,97

Pensions and similar obligations 0,00 -17 -0,07 -25 -0,05 -96 -0,18 -94 -0,18 -121 -0,23

NET FINANCE RESULT 41,95 0,62 -351 -1,34 -481 -0,94 -877 -1,63 -563 -1,07 -493 -0,93

Earnings before taxes 515,37 7,62 4.354 16,67 12.383 24,29 8.153 15,18 7.469 14,17 7.220 13,55

Income Tax -94,86 -1,40 -1.145 -4,38 -2.575 -5,05 -1.667 -3,1 -1.922 -3,65 -1.961 -3,68

NET INCOME 420,51 6,22 3.209 12,28 9.8084 19,24 6.486 12,07 5.547 10,52 5.259 9,87

3 The information from 2019 is not complete because it wasn’t fully provided by Unilever. 4 Impact of inflation on the Income Statement of the company: Net monetary gain/(loss) arising from hyperinflationary economies (Argentina): 122.

17

Unilever cash flow statements

2019 2018 2017 2016

A) CASH FLOWS FROM OPERATING

ACTIVITIES

1) EBT (Net profit) 3.209 9.808 6.486 5.547

2) Adjustments

(+/-) Depreciation, amortization and impairment 965 1.747 1.538 1.464

3) Change in working capital -1.888 -793 -68 51

(+/-) Inventory -471 -105 190

(+/-) Trade and other receivable -1.298 -506 142

(+/-) Trade payables and other liabilities 976 542 -281

4) Cash flows from operating activities 3.701 9.047 9.456 9.298

(-) Income tax paid -1.309 -2.294 2.164 -2.251

5) Cash flows from operating activities (1+2+3+4) 2.392 6.753 7.292 7.047

B) CASH FLOW FROM INVESTING

ACTIVITIES

8) Cash flows from investing activities (6+7) -716 4.644 -5.879 -3.188

C) CASH FLOW FROM FINANCING

ACTIVITIES

9) Dividends paid on ordinary share capital -2.080 -4.066 -3.916 -3.609

10) Other financing activities 1.224 -7.482 2.483 536

12) Cash flows from financing activities (9+10+11) -856 -11.548 -1.433 -3.073

E) INCREASE / DECREASE IN CASH AND CASH

EQUIVALENTS (5+8+12) 820 -151 -20 786

Cash and cash equivalents at the beginning of the year 3.090 3.169 3.198 2.128

Cash and cash equivalents at the end of the year 3.789 3.090 3.169 3.198

18

Unilever ratios5

Average

sector6 2019 2018 2017 2016 2015

DEBT AND CAPITALIZATION

Debt = Liability / Assets 0,56 0,79 0,79 0,76 0,70 0,69

Debt Quality = Current Liabilities / Total

Liabilities 0,46 0,43 0,42 0,50 0,52 0,55

Repayment Capacity = Cash flow /Loans 0,29 0,03 -0,03 0,00 0,05 -

Cost of debt = Financial Expenses / Loans 0,03 0,03 0,11 0,02 0,04 0,04

Financial Expenses = Financial Expenses / Sales 0,02 0,06 0,01 0,01 0,01 0,01

LIQUIDITY

Liquidity = Current Assets / Current Liabilities 1,23 0,81 0,78 0,73 0,68 0,63

Treasury = Debtors + Cash / Current Liabilities 0,57 0,56 0,37 0,39 0,43 0,37

Acid Test = Cash / Current Liabilities 0,20 0,18 0,02 0,14 0,16 0,11

Z (UPF) = -3,9 + 1,28 CA/CL+ 6,1 + 6,5 NI/A+

4,8 NI/E 1,88 1,35 3,27 1,36 1,01 1,01

Working Capital (real) (euros)= Current assets –

Current liabilities 298,27 -4156,00 -4291,00 -6194,00 -6672,00 -7333,00

Operating Working Capital (euros)= Operating

current assets – Operating current liabilities 1099,35 -1222,50 -3290,80 -3049,30 -3352,40 -3853,10

Operating CA = Inventory + Clients + Other

operating CA + Minimum cash required 1.680,69 14905,50 13235,20 11989,70 11752,60 11370,90

Operating CL = Suppliers + Other operating CL +

Accruals 581,34 16128,00 16526,00 15039,00 15105,00 15224,00

Working Capital Deficit (euros) -801,08 -2933,50 -1000,20 -3144,70 -3319,60 -3479,90

ASSETS MANAGEMENT

Non-current assets turnover = Sales / Non-

current assets 0,65 1,11 1,16 1,24 1,24 1,34

Current assets turnover = Sales / Current assets 1,39 2,97 3,29 3,16 3,80 4,20

DEADLINES

Inventories days = Stocks / Daily cost of sales 57,88 - 54,57 47,34 51,65 51,36

Days receivable (days) = Clients / Daily Sales 77,84 56,43 46,43 35,48 35,33 32,92

Days payables (days) = Suppliers / Daily cost of

sales 59,81 - 183,42 160,42 96,05 163,35

SALES

Sales growth = Last year’s sales / Previous year

sales - 1,02 0,95 1,02 0,99 -

PROFITABILITY, SELF-FINANCING AND

GROWTH

Return on assets = EBIT / Assets 0,09 0,14 0,21 0,15 0,14 0,14

Return on equity = Net Income / Equity 0,19 0,48 0,80 0,45 0,33 0,33

5 The ratios of 2019: We multiply by 2 all the components obtained by the income statement, since we just have

the numbers of half of the year 2019, as the whole accounts haven't been released yet. 6 We used the average sector, in particular, the food and refreshment sector, because as said in the memory it is

the division that composes a higher percentage of the companies costs and revenues, and therefore it is the most

proper one, as not to do all the analysis for each sector.

19

Cash flow / Sales 0,19 0,06 0,00 0,00 0,01 -

Cash flow / Assets 0,08 0,01 0,00 0,00 0,01 -

Dividends / Net profit - 1,30 0,41 0,60 0,65 -

Dividends / Net equity - 0,16 0,33 0,27 0,21 -

STOCK EXCHANGE RATIOS

Share price vs Book value= Share price/ Book

value - 10,8 10,37 3,69 3,52 3,18

P/E= Share price/ Earnings per share 25,36 14,36 22,35 22,41 23,47 20,7

Diluted earnings per share7 - - 3,48 2,15 1,82 1,72

Unilever breakdown of profitability

Data from the industry8

Home care 2019 2018 2017 2016 2015

Turnover 10.131 10.574 10.009 10.159

Operating Profit 1.160 1.138 949 740

Property plant and equipment 1,933 1.787

Net assets held for sale 0 0

Inventories 803 735

Trade and other receivables 1.139 1.032

Trade payables and other current

liabilities -2.995 -2.836

Food & refreshment 2019 2018 2017 2016 2015

Turnover 20.227 22.444 22.532 23.039

Operating Profit 7.245 3.616 3.148 3.138

Property land and equipment 4.783 5.104

Net assets held for sale 25 742

Inventories 1.761 1.637

Trade and other receivables 3.027 2.172

Trade payables and other current -5.984 -5.606

7 Expressed in euro million 8 The information is expressed in million euros

Average

sector with

profits

2019 2018 2017 2016 2015

ROE = 0,19 0,48 0,80 0,45 0,33 0,33

EBIT/Sales 0,00 0,18 0,25 0,16 0,15 0,14

Sales /Assets 1,33 0,40 0,86 0,89 0,93 1,02

(Assets/Equity) x (EBT/EBIT) 2,44 4,57 4,78 3,86 3,18 3,12

Net Profit/EBT 0,82 0,74 0,79 0,80 0,74 0,73

20

liabilities

Beauty & Personal care 2019 2018 2017 2016 2015

Turnover

20.624

20.697 20.172 20.074

Operating Profit 4.130 4.103 3.704 3.637

Property land and equipment 3.631 3.520

Net assets held for sale 1 1

Inventories 1.737 1.590

Trade and other receivables 2.319 2.018

Trade payables and other current

liabilities -5.478 -4.984

21

8. Webgraphy

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product-segment/

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MbaSkool. Link: www.mbaskool.com

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Unilever’s 2019 growth challenge. Financial Times.

Link: https://www.ft.com/content/372dac74-252e-11e9-8ce6-5db4543da632

Unilever España eleva un 50% el beneficio y mantiene ventas. Expansión. Link:

https://www.expansion.com/empresas/distribucion/2019/10/11/5da04fa5468aeb466c8b4639.h

tml

Unilever PE ratios. Y charts. Link: https://ycharts.com/companies/UL/pe_ratio

22

Unilever PLC (ULVR). Investing.com. Link: https://www.investing.com/equities/unilever-

ratios

Unilever Price to Book value. Y charts. Link:

https://ycharts.com/companies/UL/price_to_book_value

Unilever Statistics & Facts. Statista. Link: https://www.statista.com/topics/1397/unilever/

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Week.

Link: https://www.marketingweek.com/unilevers-chief-digital-and-marketing-officer-mean