TERM REPORT: UNILEVER COMPANY

Fareeha Sadaf (20191-26444)

Hrithik Kumar (20191-25803)
TABLE OF CONTENTS

 EXECTIVE SUMMERY ………………………………………………………..

 INTRODUCTION ……………………………………………………………….
 BODY………………………………………………………………………………..
- FINANCIAL ANALYSIS
- NON-FINANCIAL ANALYSIS
 RECOMMENDATIONS ………………………………………………………
 CONCLUSION…………………………………………………………………….
 REFRENCE LIST …………………………………………………………………
EXECTIVE SUMMERY

A most prominent and eminent company- Unilever- is one of the leading companies of the
world. It is a multinational company that has various brands. This company was originally
established in 1930 by the cooperation with soap maker lever brothers. In 1930 the horizons of
Unilever company started to propagate and new enterprises were are also inaugurated at the same
year. They are increasing their brands by introducing new brands and are working for
extraordinary development. Overall, Unilever has five laboratories around the globe that working
for bringing improvement. The purpose of this eminent leading company is to set highest and
exemplary standards of organizational behavior, that make a perfect and comfortable
environment for the people working within it.
INTRODUCTION

Unilever is British+ Dutch multinational company. Its headquarter is located in London and
Rotterdam. Its vision is to make sustainable living place. This vision is to place sustainability
among customers. Unilever has many products to trade. For example, its products includes
energy drinks, baby foods, cheese, ice cream, frozen pizza, chewing gums, food, candy, juice,
beauty products, toothpaste, personal care, breakfast cereals other health care products.
Moreover, Unilever is the world’s largest producer of soap.
It has very vast horizons and its products are being sold all over the world. It is one of the oldest
multinational company. It has four main categories:
- Food
- Refreshment (ice cream and beverages)
- Home care
- Personal and beauty care

It owns over four hundred brands. Moreover, it has research and development facilities in
various countries like India, China, Netherlands, United States and United Kingdoms.
In addition to that, Unilever is considered as one of the best and well known marketing
companies. This is not just enough for Unilever, it wants to become more than that- more than a
marketing company. It has become successful in managing and implementing change and
innovation in the business model and, moreover, creates value for their customers. Thus this a
leading and successful multinational company.
FINANCIAL ANALYSIS

PROFITABILITY RATIOS
It is the measure of profitability. It measures the company’s performance. It is very important for
the company to make profit because shareholders required the return for the amount they
invested in the company. Profitability simply is the ability of an organization or a company to
make a profit, and it is the leftover form the earned income after all the expenses and costs are
deducted.
Some of the profitability ratios are as followings:
 Gross profit margin
 Net profit margin

GROSS PROFIT MARGIN

The gross profit measures the company’s gross profit, this shows the percentage of the revenue.
Gross profit margin = gross profit / total revenue

The following table shows the gross profit margin of Unilever Company from 2015-2019.

Fiscal year Gross profit Revenue Margin

2015 24.398 B 57.857 B 42.2%

2016 23.665 B 55.482 B 42.7%

2017 27.872 B 64.445 B 43.2%

 2018 25.523 B 58.405 B 43.7%

2019 25.662 B 58.306 B 44.0%

Gross Profit Margin tells that how well a company controls its cost. With reference to the above
table we can infer:
- The average gross profit margin of Unilever for the fiscal year 2015 to 2019 at end of the
December is 43.2%
- Throwing light for the last five year, Unilever’s gross profit margin peaked in December
year 2019 that is 44.0%.
- In contrast, the low profit margin hits low in December year 2015 that’s 42.2%.

Net profit margin

Net profit margin is defined as the net income that is the ratio of net profit to net revenues.
NET PROFIT MARGINS= (REVENUE- COST)/ REVENUE

The table below shows the net profit margin of Unilever Company:
Generally it has been considered that a 10 % margin is average. As shown above the net profit
margins of Unilever is fluctuating between 9% and 11%, so we can assume that it has average
net income ratio.

Earnings per share

It’s also called EPS. It is an important financial term. It measure the profitability of a company.
Its formula is as follow;
EPS= (NET INCOME- PREFFERED DIVIDENDS)/ WEIGHTED AVERAGE SHARE
OUTSTANDING
EPS includes all convertible debts and securities, options as well as warrants.
The following table shows Earning per share of Unilever company:

This table indicates that Unilever has:

- The annual earnings per share of Unilever for the year 2019 was 2.4 dollars. It shows
a decline of 42.02% from 2018.
- The annual earnings per share of Unilever for the year 2018 was 4.13 dollars. It
shows an increment of 70.12% from 2017.
- The annual earnings per share of Unilever for the year 2017 was 2.43 dollars. It
shows an increment of 20.66% from 2016.

LIQUIDITY RATIOS

CURRENT RATIO:
A current ratio is defined as the liquidity ratio that measures the ability of a company to pay short
term obligations.
CURRENT RATIOS= CURRENT ASSETS/ CURRENT LIABILITIES
The following tables and graphs shows the current ratio of Unilever Company.
The above table shows that all the current assets of the Unilever Company is below 1 that means
that the company doesn’t have enough liquid assets to cover its short term liabilities against it.
Moreover, all the current assets are fluctuating though out the five years as shown above. It has
increased as well as decreased throughout. But the risk comes to the company if the current ratio
keeps on decreasing with the passage of time.

QUICK RATIO  
A quick ratio is a type of liquidity ratio which measures the capability of a company utilize its
near cash assets or the fixed cash assets to retire immediately its current liability.

QUICK RATIO= (CURRENT ASSET- INVENTORY)/ CURRENT LIABILITIES

The fallowing graphs and table shows Unilever’s quick ratios:

The above graph shows that all the quick ratios are lesser than 1, which means that Unilever
Company might not be able to fully clear its current liabilities in short intervals of time.

DEBT TO EQUITY RATIO

Debt to equity is defined as the measure of company’s financial leverage divided by its long
term debt by stakeholder’s equity.

DEBT-TO-EQUITY= TOTAL LIABILITIES/ SHAREHOLDERS EQUITY.

Unilever debt to equity ratio is represented as follow;

The debt to equity of Unilever as shown in the graph has gradually increased through three year
then it has peaked in between 2018- 2019 then it has decreased.
The increased portion indicates that Unilever has got more of its financing by borrowing money,
which tends the company to risk if the debts levels are too high. Meanwhile the decreasing graph
indicates that lower amount of financing by debt through lenders verses funds through equity and
shareholders.

REVENUES AND PROFITS

Revenue can be defined as the money received in the exchange of its sold goods or services.
The revenue and profits of Unilever is shown in the table and the graph below;
 - The annual revenue of Unilever for the year 2019 was 58.21 billion dollars. This shows
that the revenue has declined 3.31% from 2018.
- The annual revenue of Unilever for the year 2018 was 60.21 billion dollars. This shows
that the revenue has declined 0.83% from 2018.
- The annual revenue of Unilever for the year 2017 was 60.71 billion dollars. This shows
that the revenue has 4.48% increased from 2016.

Non-financial analysis:

TEAM DEVELOPMENT:
Unilever builds up effective team to work with. The entire group sets a mission just as explains
their goals. They all are submitted towards to one large goal of organization which is called
mission. Unilever keeps up the communication among the board and workers to achieve the set
goal if employees don't speak with one another they don't accomplish goal of organization if
there is good communication between them. They exchange idea, recognitions, and thoughts for
the achievement of goals. Unilever managements empowers, motivate and prepared the workers
to understand the roles and responsibilities. If we talking about the culture of Unilever sets
values beliefs, policies for the employees to handle outside and inside of the company
environment. The organization value their employees and consider them the asset of the
company. The management has been carrying on their struggles to provide Unilever a better
environment to work.

Unilever Greens policy:

In today world at where One in three people around the world use Unilever brands every day.
With this reach comes responsibility – and opportunity. That’s why Unilever made it our purpose
to make sustainable living commonplace. This isn’t just something Unilever said – it change
their decisions and shapes their actions, at every level of the business. Unilever have made
significant progress their operations. Reducing emissions means reducing energy. By the end of
2019 Unilever had reduced energy from their factories by 29% per ton of production compared
to 2008, avoiding costs of around €733 million in the process. Unilever continue to use an
internal price on carbon to fund energy projects. Since 2008 Unilever have reduced CO2
emissions from energy per ton of production by 65%. Unilever also finding ways to replace
fossil fuel energy with renewable energy. As of September 2019, 100% of Unilever grid
electricity was from renewables across five continents. And 24 manufacturing sites achieved
carbon neutral status. Unilever is now using solar power in 20 countries and are pushing for
regulatory changes to move more swiftly away from fossil fuels.
While plastic does have a role to play in the economy, it does not belong in the environment. Its
impact has rightly become a huge concern. Unilever have to rethink both the design of their
products and there business model to build a circular economy one where not only use less
plastic, but where the plastic Unilever do use can be reused, recycled or composted. Since 2010,
Unilever total waste footprint per consumer use has reduced by 32% partly through better
product design and recycling infrastructure.
Unilever use many different raw materials to make their products. Sustainable sourcing and
sustainable agriculture are vital to maintaining the supply of these natural resources while also
feeding the world's growing population. In 2010 Unilever set a target to source all of their raw
materials sustainably. 62% of all agricultural raw materials were sustainably sourced in 2019,
compared to 14% in 2010. The radical changes needed can only be made through co-operation –
across borders and between boardroom tables. So Unilever are working closely with
organizations such as the Ellen MacArthur Foundation to push towards a circular economy.

Customer care:
In today world at where technology are updating day by day at their Consumer preferences are
constantly changing. We listen for signals that predict the next 'big thing' using data and
advanced analytics. Unilever Consumer Care lines receive each year and the conversations about
their brands online. The insights Unilever get drive the innovation and marketing of their 400+
brands and help people the products they want. We know that the people in today world want
healthier and more natural products for themselves and their families, with fewer chemicals. At
the same time, concerns around waste, plastic and climate change are growing – consumers are
looking for eco-friendly products that are easy to buy and use, yet still effective. So Unilever
continuing to make their products healthier and more sustainable
Recommendation
Unilever performance is very well efficient but still there are some problem which can be
impediment in achieving Unilever’s long-term goal. Following are the recommended ways in
which Unilever Pakistan can improve its performance in the future and change its image.
The customer’s preferences are presently evolving. Unilever needs to identify the changes and
react likewise. For this reason, Unilever needs to communicate with their consumers and get
creative changes in the items and market those items rapidly and resourcefully. Unilever needs to
create brand communication strategies to pass the brand messages to the customers.
Building and keeping strong relationship with the consumers is an important. It is important to
understand what items consumers are being given on the lookout and to check the availability of
those items. If Unilever is failing to create good relationship with consumers, their business will
be affected from it. Unilever needs to build up a marketable strategy for their vital consumers to
recognize the consumer’s goals and monitor the advancement regularly.
For a long term development Unilever needs to create feasible arrangements like reducing the
environments effects, improving the health and cleanliness, utilizing recyclable bundling for the
items, decrease in the wastage and so on these maintainable solutions should be observed
routinely to quicken development in the business. These naturally inviting components will assist
the organization with catch more consumers and advantage it.
Conclusion:

Unilever is one of the most prominent and successful multinational company. It is a Dutch-
British multinational company. It has a very large horizon of selling products and marketing. It
trades many products and have large number of customers who trusts them so much because of
their good quality products. Unilever chose good team who work with them to complete the goal
of the organization and achieve mission of Unilever. Unilever provides a platform where all the
department freely communicate their ideas with each other and are trying their best to bring
innovations and change such as introducing new technology and other brand products. Moreover,
they care about their customers and always try their best to satisfy their customers to the best of
their abilities. That is the reason Unilever has customers who trusts them the most. Unilever
motivate their employees by providing them with incentives so that they may carry out their
responsibilities to meet the criteria to be best employee of this company. Unilever create a
culture and policies which saves the organization from inside and outside contingent
environment. In this world there are so many people who use Unilever products, with these so
many large market there are some responsibilities and opportunity comes that’s why Unilever
take safe the environment and find a solution which make the environment safe and don’t make
any effect to the Unilever sales and revenue. To come it into the action Unilever reduced energy
from their factories by 29% per ton by production as compare to 2008. Unilever is now using
solar power in 20 countries and are pushing for regulatory changes to move more swiftly away
from fossil fuels. While we think about plastic it play an important role in economy and also it
impact to the environment then Unilever change its all product designs to save the environment
from pollutants like plastic. Unilever total waste footprint per consumer use has reduced by 32%
partly through better product design and recycling infrastructure. In today’s world where
technology is updating day by day and consumer behavior changed. In today’s world people are
more conscious about their health and their families too, they prefer products that are harmful
chemical free and choose products that satisfies them the most. That is why Unilever built
ecofriendly products that are easy to buy and less harmful to use. Thus Unilever is the most
successful and prominent multinational company that is well known for its brands and other
useful products.
REFERENCES
- UK, Essays
- https://en.wikipedia.org/wiki/Unilever
- https://www.macrotrends.net/stocks/charts/UN/unilever
- Unilever annual report and accounts 2019