Unilever

Unilever is a global consumer goods company whose vast portfolio of products operate within four broad segments: Personal Care, Foods, Refreshment and Home Care. Brands you might recognise include Dove, Domestos and one of their more innovative acquisitions: Dollar Shave Club, a US-based razor subscription brand that has built itself a strong following.

In March 2018 we were told that Unilever were planning to become an entirely Dutch entity, instead of the dual listing which stands today. The plans have since been scrapped following push back from the UK shareholders, but to a certain extent management have now shown their hand. The decision to consolidate the listings was a reaction to Kraft Heinz making a provisional offer in early 2017, which although was swiftly rejected, does shine a light on the amount of pressure Unilever are under.

Operating margins are considerably below those of their global competitors. The plan had previously been to narrow the gap slowly in order not to strangle investment in their brands and therefore future growth. Whilst this had been effective, management have slightly changed tack and the margin progression is accelerating. Given the lack of protection that resulted from the dual listing, management may have their work cut out to fend off another predator.