Unilever – Brand Names at a Value Price

Unilever (UL & UN) recently popped up on one of the value screens that I follow, and I was a bit surprised that this brand name giant might be selling for a discount price. Then this morning I spotted several news items concerning Unilever, and they didn’t sound very promising. They all revolved around a news release by Unilever that revises their earning guidance down from double digit to single digit growth for the year. The cause for the slow down was blamed on poor weather in Northern Europe this summer and weaker consumer confidence in Western Europe. Mr. Market was not happy at all with that announcement and sent share prices down over six percent this morning. Could this possibly be our first fat pitch to come over our plate? Let’s take a closer look.

Business Basics
My first stop was over to Unilever’s investor relations center to learn a little more about this large European consumer products conglomerate. I was a bit amazed at the number of high quality brand names in Unilever’s stable of products. Here are a few of their many (400 plus) high quality brands:

  • Hellmann’s
  • Knorr
  • Wishbone
  • Bertolli
  • Becel
  • Country Crock
  • Slim*Fast
  • Lipton
  • Breyers
  • Ben & Jerry’s
  • Klondike
  • Popsicle
  • Birds Eye
  • Snuggle
  • Surf
  • Dove
  • Pond’s
  • Suave
  • Close Up
  • Calvin Klein fragrances

Many of these strong brands dominate their product sector and command premium prices. Unilever’s global brands provide the company a major competitive advantage against new entrants in the market.

The company appears to be free of any major legal problems.

Unilever does have substantial pension obligations. They are accounted for using reasonable assumptions. There is also the accounting of stock options, which thankfully have been expensed and are fully included in the financial statements. This is a good indicator that the company practices good conservative accounting.

Return on invested capital has improved from 2002, where it was 9.8%, and in 2003 was 12.5%.

There is still quite a bit more to write about, but I’m out of time. I’ll continue the discussion later today. However, I plan on buying this stock this morning while the price is still a bargain.

 

 

5 thoughts on “Unilever – Brand Names at a Value Price

  • February 26, 2008 at 2:47 pm
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    Dear Uniliever:
    I have used and enjoyed Dove products for many years. However at a time when our economy is having problems I try to purchase American made products to help fellow Americans working. I hope that you will change your polcys and have Dove products made in the USA. I am now making a concerted effort to nuy products made in the USA. I hope you return the manufacturing of Dove and your other products back to the USA so I can begin to buy them again.

  • July 2, 2008 at 9:49 pm
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    Dear Unilever management:

    I regret the day you bought and changed the recipe for my favorite all time ice cream, Breyer’s, to include gums that you claimed that your consumer’s complained about. When you put Xanthum gum in the recipe I could no longer eat it because of my food allergies to cellulose gum products. Recently you changed the recipe again to include Tara Gum which is another idiotic idea of your management. I tried the new product yesterday and had the most uncomfortable sleeping night of my entire life with flatulence and diarrhea. I can only wish you all experience the results of your unnatural additives to a once great ice cream recipe that has worked since it was started in Philadelphia in 1866. Breyer’s is no longer a premium ice cream because it is just like the rest of the ice cream manufacturers except one and that is the truly magnificent Haagen Daaz brand. If that ever changes I’ll either quit eating ice cream forever or be forced to make my own the old-fashioned way.

    Whatever you do, DO NOT send coupons to buy your truly awful frozen imitation ice cream.

  • August 12, 2008 at 10:22 pm
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    Within a half hour of eating Breyers Double churned Ice cream I found myself running to the bathroom with a bout of diarrhea and flatulence. A few days earlier the same thing happened . NEVER will I purchase this artifical garbage again.

  • October 13, 2008 at 9:07 pm
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    I hate the way Breyers with tara gum tastes. Breyers without tara gum was a classy, classic, premium product. How about a premium product without the gum? I will not buy your current product.

  • December 24, 2008 at 1:08 am
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    I am an cream addict. I will eat ice cream every night if it is in the freezer. Breyers WAS the only brand I would buy. Without knowing this takeover had occurred, I noticed one day that my bowl of ice cream tasted and had the mouth feel of that cheap store brand crap that I despise. Bring back the old recipe or I will continue to buy Haagen Daaz. the new yogurt sucks as well!

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