Internal Code: MAS7036
Unilever is one of the largest FMCG company in the world, including personal care, foods, homecare and refreshment four segments. Unilever makes the best-known brands and Its products are used by 2.5 billion people every day The underlying growth of net sales is 3.7% in 2016. The operating profit margin also increases 50bp to 14.8%. Unilever also has healthy cash flow and operating at a low risk with 3.32 equity multiplier. In terms of the non-financial part,13 brands have sales of more than €1 billion a year. The personal care and foods creative over 60% turnover and 80% profit and they are still growing. Unilever holds positive options in their potential markets so it completed the acquisitions of food and personal care companies like 7th generation and Murad. Unilever also performed well in the field of social responsibility. 169,000 people work for Unilever and 46% of managers are women. They do a good job to improve health and well-being, reduce environmental impact and enhance livelihoods. By 2016, over 600 Unilever sites were sending zero non-hazardous waste to landfill. Generally speaking, Unilever performance is impressive as a large FMCG group in the weak economic environment especially in 2016 the GDP growth of the world is only 2.3% which is the lowest since 2009. Unilever has clearly defined strategies with the common goal of growth that is consistent, competitive, profitable and responsible. Each of Unilever’s four-category strategies includes specific priorities aimed at growing sales and delivering improved financial metrics against a backdrop of continued low growth in markets globally.
Personal Care’s strategic role is to deliver competitive growth of the core brands while premiumising the overall portfolio and the growth of the core brands was fueled by innovation
The category’s strategic role is to accelerate top-line growth while maintaining profitability and its strong cash contribution. To achieve this, the category has three priorities: accelerating growth in emerging markets; modernizing the portfolio to address changing consumer habits; and preserving value in the Baking, Cooking and Spreads business
Home Care’s strategic role is to step up profitability and scale household care. It achieved this by simplifying its operations, increasing efficiencies and providing consumers the opportunity to trade up through premium offerings.
Refreshment’s strategic role is to grow ice cream returns on capital and accelerate growth in tea. they focus on their core brands, premiumising the portfolio and delivering best in class retail execution, both in customers' stores and Unilever’s own retail channels.
COLGATE & PALMOLIVE
From the net sales data information, we can see that the Colgate did not perform well in these two years, the net sales declined by 5% compared with that in 2015. The gross profit margin maintained a stable level around 59% and increased to 60% in 2016. The operating cash flow in 2016 was $3141 million, rising 7% from 2015, however, declined when compared to the 2013 and 2014. The operating margin had experienced a large surge from 17.4% in 2015 to 25.3% in 2016. When analyzing the data from shareholders’ perspective, the diluted earnings per share is $2.72 in 2016, seems flat on a dollar basis, however, increased double-digit on a currency- neutral basis, 79% rise from $1.52 in 2015, which may be a good indicator for shareholders. While the shareholders’ equity did not look good in these two years, even the negative in 2015, which caused by the challenging macroeconomic conditions worldwide, unstable foreign exchange rate and slowing category growth probably. As for Colgate, compared to other fast-moving consumer brands, Colgate's firm size is much smaller and its market mainly focus on personal care product. From the 2016 net sales by geographic region and 2016 net sales by market maturity, it is clear that Colgate performs very well on emerging market especially Latin America and the Asia Pacific. The reason behind the phenomenon is that Colgate makes a strong contribution to those areas’ advertisement. In that advertisement, Colgate advocates its ‘Bright Smiles, Bright Futures’ oral health education program and appeal to improve children’s oral health. Colgate also announced that the program has helped over 50 million children in 2016. (Colgate, 2016) Due to the undeveloped condition for health care in those developing countries, these kinds of advertisement would be very effective because it makes consumers feel the company really want to make a contribution to the social responsibilities. As a consequence, the brand image of Colgate is well established and its product become popular such as toothpaste. Sustainability commitment would be another important non-financial performance indicator of fast moving consumer goods company cause the impact of global warming. Since the year 2002, the water use per tons in productions has been reduced approximately 48 percent and those tons of water saved by Colgate can even fill 20000 Olympic-sized swimming pool. What’s more, 78% of Colgate’s package was recyclable. (Colgate, 2016)
Although RB is the smallest company among the 4 companies, it performs best in terms of operating margin between 20% to 30% due to its strong gross margin expansion and fixed cost control. Its net sales have increased continuously since 2014. A 9% rise in 2016 is caused by
the contribution of foreign exchange in earnings outside the UK. Lower in debt reflecting on stronger free cash flow to allow them to use for payment of dividends, repayment of debt, to fund acquisitions or other strategic objectives. Diluted earnings per share dropped in 2016 after the previous continuous growth due to a downward performance in Homecare category from the specific issue in South Korea. The issue leads also to the pre-tax exceptional charge of £367 million for compensation in 2016. Brands - Even though Reckitt Benckiser owns more than 40 major brands and numerous local brands, 70% of its net revenue comes from just 19 brands.
C.S.R – Even though it is the smallest of the four companies, Reckitt Benckiser has one of the best C.S.R portfolios in the world. It invests in health and hygiene awareness programs in backward areas as a way of community outreach and possibly creating new customers given a majority of its revenue is from its personal care brands.