Unilever

Unilever will need little introduction as the Anglo/Dutch consumer goods company. While it originally started life selling soap and margarine, today its focus is on food and refreshment, beauty and personal care, and home care products. Its strengths lie in the portfolio of leading brands and in the company’s emerging markets distribution footprint, with over 60% of revenues now coming from those countries. This includes leading local subsidiaries in markets such as India, Indonesia and Brazil. In recent times, the company has struggled with both competition in more mature markets and in managing price input pressures, leading to a sharp derating in the share price. After a number of years of modest performance, the Investment Manager believes that the prospects for an investment in Unilever look more propitious than they have done for some time. Expectations from investors are low, the valuation multiple that the shares trade on has significantly contracted, the famed activist Nelson Peltz has a seat on the board and the potential for growth from emerging markets is improving. Coupled with this comes Unilever’s strong commitment to sustainability, with industry leading net-zero carbon commitments, alongside detailed and ambitious plans on its supply chain to reduce water intensity, reduce virgin plastic usage and remove deforestation completely. For consumer brands to be relevant in the longer-term, sustainability will need to be at their core and in this regard the Investment Manager sees this as an additional point of advantage in Unilever’s quest to regain the leading mantle among global consumer goods companies.