Unilever (ULVR)

[Dod101]

I trimmed Unilever at £50. It may be a good time to buy in again, but I am not so sure. I will leave it as it is still just (I think) my largest holding and as scrumpyjack has said, in effect, sometimes these negative ripples are just the start of something else.

Dod

[scrumpyjack]

Yes it's entirely possible that Unilever know exactly what they are doing and perhaps even have discovered the magic sauce to identify which 50% of advertising spend is wasted.

But the analysts (or teenage scribbles as Lawson once described them) will be in close contact with management of a company the size of Unilever and so if they say Unilever is making a conscious decision to cut marketing in order to maintain margins, then that statement is very probably true.

Whether that is a good management judgement is certainly open for discussion. But generally I am not in favour of management doing things to massage the short term results rather than for the long term strength of the business. But perhaps lower but better marketing spend is good, if that is what it is?

[Dod101]

Scrumpyjack and the FT are the only ones claiming a lower marketing spend as far as I can see. In the Times this morning, the matter is reported but it tells us that difficult conditions in South East Asia, particularly India and difficult conditions in west Africa are to blame. Some analyst says that they believe Unilever needs to increase investment in the business even at the expense of margins, which might well be a hint at the advertising issue but is not explicitly mentioned. Unilever has been here before and will no doubt sort it out.

Dod

[richfool]

In IT Troy Income and Growth's (TIGT) latest factsheet (dated 30 Nov 2019), there is a commentary on a meeting between TIGT and Unilever's Chief Sustainability Officer.

I accessed it via HL website factsheet for TIGT (link below), and then click on "View factsheet" in the "Annual & Interim Reports" section towards the end on the right hand side. It opens as a pdf. The commentary is towards the end of the first page of the pdf.

It is an interesting couple of paragraphs, which it doesn't allow me to copy, but makes the point that Unilever's commitment to sustainability in which ULVR emphasised that the journey is only just beginning.

https://www.hl.co.uk/shares/shares-sear ... st-ord-25p

[Dod101]

Thanks for that. Actually if you attend the AGM of almost any major company I guess you will get some 'green' supporter asking more than one question about the company's sustainability credentials to the extent of being very intrusive. It is sometimes difficult to question the directors on the actual business of the company. I have seen it in action at both HSBC and Unilever. They simply have no option and are making the best of it.

Dod

[monabri]

Scrumpyjack and the FT are the only ones claiming a lower marketing spend as far as I can see. In the Times this morning, the matter is reported but it tells us that difficult conditions in South East Asia, particularly India and difficult conditions in west Africa are to blame. Some analyst says that they believe Unilever needs to increase investment in the business even at the expense of margins, which might well be a hint at the advertising issue but is not explicitly mentioned. Unilever has been here before and will no doubt sort it out.

Dod

I'm no expert on ULVR but it looks to me that they themselves are doing more of the marketing work "in house" . ...they say as much (link in my previous post ). Looking at the Morningstar numbers ( link above..my previous post) , I see quite an increase in the operating margin reported last year....is the uptick in operating margin due to increased internal efficiencies, cost savings (" DIY marketing") or a combination? It's even more noticeable when the reported gross margin in 2018 is similar to 2017.

[idpickering]

Full year results here; https://www.unilever.com/Images/ir-q4-2 ... 824_en.pdf

[scrumpyjack]

Buried on p28, dividend 34.72 xd 20/2 pay 18/3

[ADrunkenMarcus]

The market seems to like it!

[PinkDalek]

The market seems to like it!

I don't know what last night's close was.

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B10RZP78GBGBXSET1.html?lang=en contains:

The last closing price date being displayed on londonstockexchange.com is incorrect, due to an issue with a third party market data vendor. All other market data displayed is correct. We are working with the vendor to resolve the issue. There is no impact to trading across our markets in London.

Thus showing Last close 4,438.00 on 28-Jan-2020 and current Price (GBX) 4,515.50. An apparent +1.75% ( +77.50).

[tjh290633]

Currently Bloomberg are suggesting that it was 4438, up 88 at the moment at 4526p.

TJH

[idpickering]

Helping to protect lives and livelihoods: Covid-19

Unilever will contribute €100m to help the fight against the pandemic through donations of soap, sanitiser, bleach and food. This includes:

· A product donation of soaps and sanitiser of at least €50m to the COVID Action Platform of the World Economic Forum, which is supporting global health organisations and agencies with their response to the emergency. In addition to the supply of soap, Unilever will adapt its current manufacturing lines to produce sanitiser for use in hospitals, schools and other institutional settings.

· Product donations, partnerships and handwashing education programmes, delivered through national health authorities and NGOs, to support local communities most at need.

https://www.investegate.co.uk/unilever- ... 00053668H/

[idpickering]

Q1 Trading Statement here;

https://www.unilever.com/Images/ir-q1-2 ... 281_en.pdf

Also on HYP Practical for HYPer chat.

[ADrunkenMarcus]

Glad Unilever is 10% of my portfolio!

[dealtn]

Q1 Trading Statement here;

https://www.unilever.com/Images/ir-q1-2 ... 281_en.pdf

Also on HYP Practical for HYPer chat.

Big distortions in here for Covid-19, so we can expect similar disruption over the coming quarters too.

For instance Developed Markets showing growth, but Developing Markets declining. No surprises to see parts of the world entering lockdown having falling sales, and those preparing for it seeing increased product demand from stockpiling. Next quarter will likely see the start of a reversal with China going back onstream but the West in lockdown.

Really difficult to predict the likely direction and speed of the profit path over the next year or so, but the general truth that this is a good company expanding into new growth markets remains. Obviously the macro picture will be affecting its competitors too, so long term prospects may well be relatively better than a few months ago.

[idpickering]

Glad Unilever is 10% of my portfolio!

They account for just over 3% in capital value terms of my 28 share HYP, I am intending to top up my ULVR holdings soon, to nudge them up to nearer the average capital value weighting of my HYP shares.

Ian.

[kempiejon]

They account for just over 3% in capital value terms of my 28 share HYP, I am intending to top up my ULVR holdings soon, to nudge them up to nearer the average capital value weighting of my HYP shares.

Ian.

A cracking history of inflation increases in dividend, share price a bit less encouraging especially recently but for a HYP I'd not usually have tagged 3.5% as high but if they can keep paying over the next few months it might certainly be above average with all the cuts I've seen so far with more to come.

[ADrunkenMarcus]

They account for just over 3% in capital value terms of my 28 share HYP, I am intending to top up my ULVR holdings soon, to nudge them up to nearer the average capital value weighting of my HYP shares.

Ian.

A cracking history of inflation increases in dividend, share price a bit less encouraging especially recently but for a HYP I'd not usually have tagged 3.5% as high but if they can keep paying over the next few months it might certainly be above average with all the cuts I've seen so far with more to come.

That’s it and HYPers want a high and *rising* income. I doubt many of the cutters will fully restore anytime soon.

[idpickering]

Unification of Unilever's legal structure

Unilever today announced plans to unify its Group legal structure under a single parent company, Unilever PLC, creating a simpler company with greater strategic flexibility, that is better positioned for future success.

After a comprehensive review over the last 18 months, the Board continues to believe that moving from the current dual-headed legal structure to a single parent company will bring significant benefits by:

· Increasing Unilever's strategic flexibility for portfolio evolution, including through equity-based acquisitions or demergers. Such flexibility is even more important as we anticipate the increasingly dynamic business environment that the Covid-19 pandemic will create.

· Removing complexity and further strengthening Unilever's corporate governance, creating for the first time an equal voting basis per share for all shareholders. Upon completion, there would be one market capitalisation, one class of shares and one global pool of liquidity, whilst maintaining the Group's listings on the Amsterdam, London and New York stock exchanges.

Unilever remains committed to its strategy of long-term growth across all three Divisions and last year began a full evaluation of its current categories and brands, with a view to accelerating the pace of portfolio change. This review has underlined how a simpler legal structure would give Unilever greater strategic flexibility to grow shareholder value, providing a catalyst for accelerated portfolio evolution and greater organisational autonomy.

The ongoing strategic review of Unilever's tea business has further demonstrated that the dual-headed legal structure can create disadvantages for the Group. For example, a demerger of the tea business is one potential outcome of the review and, as was previously the case with the disposal of the company's Spreads business, this would be significantly more challenging under the current legal structure than under a single parent structure.

https://www.investegate.co.uk/unilever- ... 00076488P/

Also posted on HYP Practical Board.

[tjh290633]

That removes the possibility of exclusion from the FTSE indices, which is a GOOD THING, as 1066 and all that would have put it it.

TJH