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Unilever Buy Pitch

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on 21 October 2014

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Transcript of Unilever Buy Pitch

Unilever SRI Pitch: April 30, 2014
RISE
Consumer Durables Group

What is Unilever?
Anglo-Dutch multinational consumer goods company
Third largest consumer goods company measured by 2012 revenue, following P&G and Nestle
Owns over 400 Brands, 14 main produce >1b euros in revenue
4 main areas- Food, Refreshment (beverages and ice cream), Home Care, and Personal Care

Highly recognizable brands
Agenda
Introduction: What is Unilever?
Investment Thesis
Brief Look At Financials
ESG Criteria and IVA report
Recommendation

Why Invest in Unilever?
1. Diversified
2. Stable and Steady Growth
3. Recognizable Brands
4. Long Term Value
5. Dividends

Investment Thesis
1. Financial Benefits
Unilever is a well established, well diversified consumer staples company with brands selling in most consumer markets around the world. Earnings yields are low and slow, but given a long time horizon, its’ strong brands and consumer loyalty combined with increasing income per capita will create long term value for our portfolio.
2. ESG Benefits
Scoring an A overall its IVA report, Unilever has been an industry leader in responsible sourcing of raw materials, carbon usage, fairness in the supply chain and the workplace, water use, etc.



1. Highly Diversified
190 countries around the globe
Emerging markets=55% of business
# 1 fast-moving consumer goods employer of choice among graduates in 20 countries
2 Billion people per day

2. Stable and Sturdy
Less volatile even than S&P (Beta= .73)
Steady upward growth since conception (excluding financial crises)
Faster growth in developing countries offset by slower in developed countries

3. Recognizable Brands Enable "Competitive Moat Effect"
Consumer brand loyalty
“Competitive moat”-being able to be the lowest cost producer and having a powerful brand are essential to keeping competition from eroding market share
Exception to Efficient Markets Hypothesis
Established sales and distribution channels
Economies of scale=lower production costs

4. Long Term Value
Increasing income per capita in developing countries
Global economic growth leads to more discretionary income, low elasticity of demand for food, home products etc esp. in middle class
Overall profitability growing 2-3x faster than economies of scale and margins are improving

5. Dividends
Cash generation in excess of capital reqs leads to share buybacks and dividends
Strong dividend of 3.3%
Can expect to be consistent and increasing in an economy of scale

Financials Overview
Current Price: $42.68 (0.41%)
1 year target Est: $44.00
Beta: .73
52 Week Range: $36.57-$42.99
Market Cap: 124.84 B
P/E: 19.86
ROE: 32.57
ROA: 11.48
ESG Considerations
Sustainable Living Plan
source: Unilever.com
Environmental-IVA 92nd percentile
Greenhouse Gases
Since 2008 have reduced Co2 from energy by 32%
62% reduction since 1995
Committed to halve emissions across supply chain by 2020
All newly built factors will have less than half the emissions of 2008 baseline
Reducing GHG from washing clothes, transportation, refrigeration, offices

Environmental Goals Cont'd
Water Use and Sustainable Sourcing
On track to halve water use by 2020-industry leaders in this area.
They buy 12% of the world’s black tea and 3% of all palm oil-deforestation
48% of their agricultural raw materials were sustainably sourced by the end of 2013
By 2020 will source 100% of their raw materials sustainably, 50% by 2015

Social-18th
percentile
Will implement UN Guiding Principles on Business and Human Rights
On track for goal to ensure total fairness along the supply chain by 2020
Advancing opportunities for women by empowering 5 million women through gender balanced structure, safety, and providing opportunities for women in our value chain-Shakti project
Developing inclusive business by improving the livelihoods of 500,000 smallholder farmers; creating and improving the incomes of 5 million small-scale retailers in our distribution network; and increasing the participation of young entrepreneurs in our value chain.
Governance
62nd percentile
Currently 43% of managers are female and goal to increase to 50% by 2015
IVA Overview
Recommendation
BUY (in a little while...)
Currently a little bit above fair value price
Put a buy hold on once stock pulls back 3-5%
Short term currency weaknesses w/ euro might create short term losses and an opportunity to buy but this will even out
Showing forward momentum towards CSRI
2020
Best MSCI rating for a large consumer staples company
Full transcript