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Unilever PLC ADR UL

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Morningstar’s Analysis

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Unilever's Decent Fourth Quarter Overshadowed by Investments to Come

Analyst Note

| Philip Gorham, CFA, FRM |

Unilever's fourth quarter was better than our forecasts, but a sequential slowdown from the strong third quarter. Revenue was roughly in line with our estimates, although solid cost control meant that margins held up slightly better than we had anticipated, and this trickled down to a modest EPS beat. Free cash flow of EUR 7.7 billion was also impressive. The negative reaction of the market in early trading on Thursday is most likely attributable to the revelation that Unilever will incur restructuring expenses of EUR 1 billion in each of 2021 and 2022. While this was a good quarter, we think the trajectory of the underlying business and the news of this incremental spending support our thesis that the customer acquisition cost is likely to rise for Unilever going forward. We retain our medium-term estimates, our EUR 50 fair value estimate, and our wide economic moat rating. 

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Company Profile

Business Description

Unilever, plc is a diversified personal product (42% of 2020 sales by value), home care (20%), and packaged-food (38%) company. The firm's brands include Knorr soups and sauces, Hellmann's mayonnaise, Lipton teas, Axe and Dove skin products, and the TRESemme hair-care brand. The firm has been acquisitive in recent years, and high-profile purchases include the mail-order men's grooming business Dollar Shave Club and Seventh Generation cleaning and personal-care products.

100 Victoria Embankment
London, EC4Y 0DY, United Kingdom
T +44 2078225252
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2010
Fiscal Year End Dec 31, 2021
Stock Type
Employees 149,000