Unilever (ULVR)

[scrumpyjack]

The criticisms of Unilever are down to the failure to keep the promise they made at the time of the Kraft Heinz bid (increase margins) and the long term poor performance compared with their competitors such as Nestle. Hopefully Nelson Pelz will spur them to sort themselves out. But I do agree with the view that their brands do not give them nearly as strong a moat as they think they have, which is one reason they have not been able to meet their margin improvement promises. The criticism of them is not simply based on their perceived excess of 'wokeness'!

[monabri]

Over the last 5 years, the total return on ULVR has been ~5.7% (Merchants 56%, CTY 20%, ) so it needs to pull it's socks up.

[monabri]

Source for above graph was Hargreaves Lansdown.

https://www.hl.co.uk/funds/fund-discoun ... ion/charts

Monabri

(duplicate post above - I've asked MODs to remove !)

[Bouleversee]

The criticisms of Unilever are down to the failure to keep the promise they made at the time of the Kraft Heinz bid (increase margins) and the long term poor performance compared with their competitors such as Nestle. Hopefully Nelson Pelz will spur them to sort themselves out. But I do agree with the view that their brands do not give them nearly as strong a moat as they think they have, which is one reason they have not been able to meet their margin improvement promises. The criticism of them is not simply based on their perceived excess of 'wokeness'!

I think it is very difficult to maintain or increase margins when the majority of people are feeling the pinch of rampant inflation (9.02% CPI in year to end May according to my latest NS&I Index-linked savings certificate statement received today; glad I held on to those!). I forget whether it was Unilever or another company whose products Tesco was refusing to stock because their prices were now too high. Mr Peltz may find it is not easy to do much about that, especially as I gather various institutions are trying to sort him out which must be occupying much of his time.

[scrumpyjack]

The criticisms of Unilever are down to the failure to keep the promise they made at the time of the Kraft Heinz bid (increase margins) and the long term poor performance compared with their competitors such as Nestle. Hopefully Nelson Pelz will spur them to sort themselves out. But I do agree with the view that their brands do not give them nearly as strong a moat as they think they have, which is one reason they have not been able to meet their margin improvement promises. The criticism of them is not simply based on their perceived excess of 'wokeness'!

I think it is very difficult to maintain or increase margins when the majority of people are feeling the pinch of rampant inflation (9.02% CPI in year to end May according to my latest NS&I Index-linked savings certificate statement received today; glad I held on to those!). I forget whether it was Unilever or another company whose products Tesco was refusing to stock because their prices were now too high. Mr Peltz may find it is not easy to do much about that, especially as I gather various institutions are trying to sort him out which must be occupying much of his time.

Yes that may be so, but margins can be increased by reducing costs, not just by increasing prices, and at the time of the KH bid it was pointed out that Unilever employed vastly more people in relation to turnover than KH and that there was huge scope for efficiency improvements.

[Dod101]

The criticisms of Unilever are down to the failure to keep the promise they made at the time of the Kraft Heinz bid (increase margins) and the long term poor performance compared with their competitors such as Nestle. Hopefully Nelson Pelz will spur them to sort themselves out. But I do agree with the view that their brands do not give them nearly as strong a moat as they think they have, which is one reason they have not been able to meet their margin improvement promises. The criticism of them is not simply based on their perceived excess of 'wokeness'!

I think it is very difficult to maintain or increase margins when the majority of people are feeling the pinch of rampant inflation (9.02% CPI in year to end May according to my latest NS&I Index-linked savings certificate statement received today; glad I held on to those!). I forget whether it was Unilever or another company whose products Tesco was refusing to stock because their prices were now too high. Mr Peltz may find it is not easy to do much about that, especially as I gather various institutions are trying to sort him out which must be occupying much of his time.

It was Heinz that Tesco had their recent spat with. And I think Nelson Pelz is a positive for Unilever. Personally I think they ought to change their Finance Director who seems to have too much influence. They have several great brands so don't knock Unilever too much!

Dod

[absolutezero]

You do not give those who run Unilever much credit then? I suspect that the Unilever CEO and Board have more idea about economic moats than you or I do.

Dod

Why?

[Dod101]

Over the last 5 years, the total return on ULVR has been ~5.7% (Merchants 56%, CTY 20%, ) so it needs to pull it's socks up.

And while we are at it, City is no great shakes! Alliance might be a better comparator although how you can compare the returns from a consumer goods company with generalist Investment trusts I do not know.

Dod

[Dod101]

You do not give those who run Unilever much credit then? I suspect that the Unilever CEO and Board have more idea about economic moats than you or I do.

Dod

Why?

Well I cannot speak for you, maybe you have run say Nestle or Kraft Heinz, but I certainly do not have much idea about economic moats, and no experience in marketing, so they certainly know a lot more about the subject than I do.

Dopd

[scrumpyjack]

The criticisms of Unilever are down to the failure to keep the promise they made at the time of the Kraft Heinz bid (increase margins) and the long term poor performance compared with their competitors such as Nestle. Hopefully Nelson Pelz will spur them to sort themselves out. But I do agree with the view that their brands do not give them nearly as strong a moat as they think they have, which is one reason they have not been able to meet their margin improvement promises. The criticism of them is not simply based on their perceived excess of 'wokeness'!

I think it is very difficult to maintain or increase margins when the majority of people are feeling the pinch of rampant inflation (9.02% CPI in year to end May according to my latest NS&I Index-linked savings certificate statement received today; glad I held on to those!). I forget whether it was Unilever or another company whose products Tesco was refusing to stock because their prices were now too high. Mr Peltz may find it is not easy to do much about that, especially as I gather various institutions are trying to sort him out which must be occupying much of his time.

It was Heinz that Tesco had their recent spat with. And I think Nelson Pelz is a positive for Unilever. Personally I think they ought to change their Finance Director who seems to have too much influence. They have several great brands so don't knock Unilever too much!

Dod

Well I've kept my Unilever shares so I haven't given up on them! The market certainly feels they have not been well run and it is hard to argue with that view when you look at their profit performance compared to their competitors. I think it will be good for Unilever to be under pressure to improve as that may well assist management in making the internal changes needed, whatever those are. Also I guess that the change in structure to a UK only company, whilst making it easier for them to make acquisitions, also makes it easier for them to be acquired. That fact may also help concentrate their minds! Not a time to sell them IMO.

[absolutezero]

You do not give those who run Unilever much credit then? I suspect that the Unilever CEO and Board have more idea about economic moats than you or I do.

Dod

Why?

Well I cannot speak for you, maybe you have run say Nestle or Kraft Heinz, but I certainly do not have much idea about economic moats, and no experience in marketing, so they certainly know a lot more about the subject than I do.

Dopd

You are falling into the 'appeal to authority' fallacy here.

By your logic, 'investment professionals' know a lot about investing and should beat the market consistently.
Spoiler alert. They don't!

[Dod101]

You do not give those who run Unilever much credit then? I suspect that the Unilever CEO and Board have more idea about economic moats than you or I do.

Dod

Why?

Well I cannot speak for you, maybe you have run say Nestle or Kraft Heinz, but I certainly do not have much idea about economic moats, and no experience in marketing, so they certainly know a lot more about the subject than I do.

Dopd

You are falling into the 'appeal to authority' fallacy here.

By your logic, 'investment professionals' know a lot about investing and should beat the market consistently.
Spoiler alert. They don't!

We will need to agree to differ here. There are successful marketeers and there are not so successful marketeers but that does not change the fact that they know a lot more about marketing than I do (and about economic moats) I made no comment about them being successful or otherwise. Neither does the fact that they may be unsuccessful necessarily make them idiots. Language is important.

Dod

[monabri]

You do not give those who run Unilever much credit then? I suspect that the Unilever CEO and Board have more idea about economic moats than you or I do.

Dod

Why?

Because they most likely monitor and track sales and margins and make adjustments (cost inputs, price, sourcing of ingredients, advertising, competition) on each item...something I personally don't do.

Only 400 brands to be an expert in!

[idpickering]

Morning all. Heads up, the Unilever CEO is being interviewed on Bloomberg TV at 0800hrs UK time today.

Ian.

[idpickering]

2022 FIRST HALF YEAR RESULTS

First half highlights
• Underlying sales growth of 8.1%, with 9.8% price and (1.6)% volume
• Turnover increased 14.9%, including a currency impact of 5.6%
• Underlying operating margin of 17.0%, a decrease of 180bps driven by input cost inflation
• Underlying earnings per share up 1.0%, including a currency impact of 4.9%
• The billion+ Euro brands, accounting for more than 50% of Group turnover, grew 9.4%
• €750 million share buyback tranche completed on 22 July, intention to launch second tranche in third quarter.

Alan Jope: Chief Executive Officer statement
“Unilever has delivered a first half performance which builds on our momentum of 2021, despite the challenges of
high inflation and slower global growth. Underlying sales growth of 8.1% was driven by strong pricing to mitigate input
cost inflation, which, as expected, had some impact on volume. We are now raising our sales guidance for the year.
Underlying operating margin was on track at 17% for the first half.
We have made further progress against our strategic priorities. We are maintaining strong investment in our brands,
supporting 9.4% underlying sales growth in our billion+ Euro brands. eCommerce sales now represent 14% of
turnover, up from 6% in 2019. Of our three priority markets, the USA and India again grew strongly, while sales in
China were affected by the lockdowns in the second quarter. We continue to reshape our portfolio, completing the
sale of the global tea business ekaterra, and the acquisition of Nutrafol, a leading provider of hair wellness products.
Prestige Beauty and Health & Wellbeing, now 4% of Group turnover, again grew double-digit.
Our simpler, more category-focused organisation came into effect as planned on 1 July. This major change to
Unilever’s operating model is an important further step that will underpin the delivery of consistent growth, which
remains our first priority. The challenges of inflation persist and the global macroeconomic outlook is uncertain, but
we remain intensely focused on operational excellence and delivery in 2022 and beyond.”

https://www.unilever.com/files/c285e622 ... cement.pdf

Ex Dividend 4 Aug 22, paid 1 Sep 22.

Ian.

[ADrunkenMarcus]

Thanks Ian.

I noted they’re raising sales guidance for the year.

Best wishes


Mark

[idpickering]

Thanks Ian.

I noted they’re raising sales guidance for the year.

Best wishes


Mark

Indeed. You're most welcome. I topped up my holdings not long ago, and I'm glad I did.

Ian.

[Dod101]

Unfortunately I cannot get to the full results either from Ian's link or the one on their own website. However these results do not look bad in all the circumstances. Margins are being squeezed but they appear to have the pricing power to significantly raise prices without too much loss of sales so that overall turnover is up. Weak sterling has of course helped make their mostly foreign earnings more valuable. They seem to be doing the right things and as ADrunkenMarcus has said, they expect something similar for the second half.

The share price has been rising in the last few weeks. Be interesting to see what the market thinks this morning.

Dod

[Dod101]

I am happy to see the share price now over £40 up about 2.5% this morning. Where are the idiots? I see the critics are quiet this morning.

Dod

[ADrunkenMarcus]

I note ULVR is up 2.6% and now over £40. Despite recent sluggishness it’s up 60% for me in share price terms in 2013 and the dividends on top mean that it has more than doubled. However it does look bad against the 2019 peak of over £53.

I continue to hold.

Best wishes

Mark