Unilever N.V. (ADR)(NYSE:UN) is a renowned consumer staples firm based in London which owns numerous Euro brands. Their businesses span in more than 190 nations, with products appearing in seven out of every ten houses internationally. It indicates that they have considerable operations in both developed and growing markets. Currency impacts have weighed on their financial results, and its stock price has pulled back. Due to this, it appears like a good time to take a deeper look at the value proposition of the firm.
Unilever generates more than half of its total revenue from emerging markets. It has resulted in a higher underlying sales growth compared to what one might anticipate in a firm their size. In the first three quarters of this year, the underlying sales grew by 4.2%, with a growth of 7.2% noted in emerging markets. On contrary, volume only comprised for 1.3% and 1.6% of that growth, correspondingly, with the remainder comprising of price increases. This growth came softer in 3Q2016, especially in Latin America and China.
The company’s growth in all four divisions was faster than the entire market, indicating their prominent position in the industry of consumer staples. Their brands strength provides them a measure of pricing power in an extremely competitive space such as consumer staples. Unilever lately bought numerous firms that will likely advance rapidly compared to overall brand portfolio.
The first in this list is Dollar Shave Club, the optimistic favorite that succeeded to disrupt the shaving industry, which many would have perceived to be impossible. They ship shaving accessories and razors to men monthly for a small fee. This disruption was noticed, and Unilever supposedly is compensating $1 billion for the firm. They have been around for four years, however, have established a powerful brand in that time, particularly with a major age group.
Michael Dubin, the Founder of Dollar Shave Club, will stay on and likely continue its substantial growth. Time will disclose if the firm was worth the price, but company now owns another reputed brand in their portfolio.