RAWALPINDI WOMEN UNIVERSITY SATELLITE

TOWN, RAWALPINDI

FINANCIAL STATEMENT ANALYSIS

COURSE CODE: MGT-402

FINAL PROJECT
SUBMITTED TO: DR.HAFSA RASHEED
SUBMITTED BY: GROUP 2
LARAIB NASIR
SANIA ZAHEER QURESHI
ANAM ABRAR
SOBIA SAEED
MALAIKA MALIK
AREEBA NADEEM
SUBMITTED ON: JANUARY 05, 2022
DEPARTMENT: BBA
SECTION: A
SEMESTER: 7th
Topic:

UNILEVER

Table of Contents
Introduction of Unilever..............................................................................................................................2
History.........................................................................................................................................................3
MISSION:.....................................................................................................................................................4
Vision:..........................................................................................................................................................4
Objectives of Unilever:................................................................................................................................5
SWOT ANALYSIS:.........................................................................................................................................5
Strengths:....................................................................................................................................................5
Global reach:...........................................................................................................................................5
Financial position:....................................................................................................................................5
Strong brand portfolio:............................................................................................................................5
Leading Industry:.....................................................................................................................................6
Weakness:...................................................................................................................................................6
Higher funds in the technology sector:....................................................................................................6
Channel capabilities:....................................................................................................................................6
Brand connection strategy:.....................................................................................................................6
Opportunities:.............................................................................................................................................6
New markets:..........................................................................................................................................6
Business Diversification:..........................................................................................................................6
Product Innovation:.................................................................................................................................6
Threats:.......................................................................................................................................................7
Increasing competition:...........................................................................................................................7
Impact of pandemic:................................................................................................................................7
Currency Fluctuations:.............................................................................................................................7
Government Regulation:.........................................................................................................................7
Brand Categories:........................................................................................................................................7
Profitability Ratios:......................................................................................................................................7
Balance sheet:.........................................................................................................................................8
Income Statement:..................................................................................................................................9
Net Profit Margin:..................................................................................................................................10
Total Assets Turnover:...........................................................................................................................11
Return on Assets:...................................................................................................................................12
DuPont Analysis:....................................................................................................................................13
 Operating Income Margin:....................................................................................................................14
Operating Assets Turnover:...................................................................................................................15
Return on Operating Assets:..................................................................................................................16
Return on investment:...........................................................................................................................17
Return on Total Equity:..........................................................................................................................18
Total Common Equity:...........................................................................................................................19
Gross Profit Margin:..............................................................................................................................20
Conclusion:................................................................................................................................................21
Recommendations:....................................................................................................................................21

Introduction of Unilever:

Unilever is a British-Dutch company that operates in the market of consumer goods and sells its
products in around 190 countries. Another remarkable fact is that they own more than 400
brands, what means an important diversification in both risk and the products they sell, among
which there is food, personal care products and cleaning agents. In fact, twelve of these brands
have sales of more than a billion Euros. The importance of this multinational is reflected too in
the fact 2.5 billion people use Unilever products every day, being part of their daily life. They
also are responsible for the employment of 161,000 people in the different countries they
operate. Finally, they believe in a sustainable business plan in which they reduce the
environmental footprint and increase their positive social impact at the time they keep growing.

Unilever is one of world’s largest and leading multinational companies; Unilever commended
their business activities on a larger scale by setting up their first factory in Netherlands, in the
year of 1890. Operating in Pakistan for over the last four decades the company is trying to
significantly contribute towards the augmentation of the standard of living by bringing work
class high quality products at the door step of their customers. The usage of Unilever products by
over 90% of the people Pakistan stands a testimony to their successful operation. Their array
of products show that they household care, fabric cleaning, skin cleaning, oral care, hair care, per
sonal grooming, and tea based beverage products under worldwide famous brand namesWheel,
LUX, Lifebuoy, Fair and Lovely, ponds, Close-up, Sun silk, Lipton, Lipton Taza, Pepsodent, All
clear, Vim, Surf Excel, and Rexona. Unilever Pakistan (70.4%) Unilever equity) is the largest
FMCG Company in Pakistan, as well as one of the largest multinationals operations in the
country. Unilever Pakistan Ltd, a subsidiary of the Unilever Group is operation in Pakistan since
1948. The company’s main business lines are soap and detergents, personal products, cooking
oils and fats, packed Teas, and ice cream. In 1995, the company established a new factory
Lahore to manufacture the Wall’s rang of ice creams, which have become popular within a short
time. In 1996, the present group Unilever UK acquired the polka group that produce ice creams.
In 1999 Pakistan industrial promoters (private) Limited, owners of ‘polka’ brands of ice cream
wear merged with lever.
 

History:

Unilever began with British soap-maker Company named Lever Brothers. Their revolutionary
action in business was by introducing the Sunlight Soap in 1890s. That idea was from William
Hesketh Lever, founder of Lever Brothers. This idea helped the Lever Brothers become the first
company that help popularize cleanliness in Victorian England. Moreover, the product rapidly
emulated globally after that it was a success in UK and made Lever Brothers obtained more
business worldwide. One of the reasons of this success was the strategy from William that not
only prioritizes on selling the products but also focus on manufacturing them. On the other side,
in 1872 Jurgens and Van den Bergh created a company that produces margarine. Since there
were many competitors in the margarine industry in Dutch, in 1920s, Jurgen and Van de Berth
decided to strengthen their company by joining another margarine manufacturer in Bohemia In
1930, the Lever Bros merged with the Margarine Unie and even though, an international merge
was an unusual move at that time,   both of the two companies have the same vision that by
doing this merge with strong global networks would create new opportunities. Finally, the name
of “Unilever” was created by the merge of the companies. Not too long after Unilever was
formed, they got a big problem which was that their raw material companies were reduced from
30% to 40% in the first year. Since William Lever’s death in 1925, it was Frances D’Arcy
Cooper who replaced him to become the chairmen of Lever Brothers. In the 1930s, Unilever
continued to grow their business when they promoted their products in America Latin. To keep it
growing, Unilever adapted a new strategy in 1940s by widening their business areas and create
new areas such as particular food and chemical manufactures. Furthermore, Unilever recognized
that there was something more important than widening their areas; it was the relationship
between marketing and research that they must focus on. Therefore, Unilever expanded their
operation by making association by two important actuations in US, those are Thomas J. Lipton
company, manufacture of tea, and the Pepsodent brand of toothpaste in 1944. In 1957 Unilever
continued their actions by associating with U.K. frozen food maker bird’s eye, and in 1961 with
U.S. Ice cream novelty maker Good Humor. Eventually, foods, toiletries, detergents and special
chemicals were the Unilever’s core business. Nowadays, Unilever become the world’s most
consumed product brand in home care, personal care and food. In 2002, Unilever had a
worldwide revenue around â €š ¬48,760 million. Unilever has two main parenting companies;
they are Unilever NV in Rotterdam and Netherland and Unilever PLC in London, UK. However,
Unilever still has two major competitors named Nestle and Procter & Gamble. Unilever has
several worldwide products in foods such as Lipton, Knorr, Blue Band, Ben and Jerry, Walls,
and Brooke bond. In home care, they have Surf, Sun, Radiant, Domestos and Skip. In personal
care, they have Ponds, Vaseline, Rexona, Lux, Dove, Lifebuoy, Pepsodent, Sunsilk. Now
Unilever is operating in six factories at different locations around the country. The Unilever's
head office was shifted to Karachi from the Rahim Yar Khan site in the mid 60's. Unilever
Pakistan Limited (UPL) was established some fifty years ago in the newly created Pakistan. The
town of Rahim Yar Khan was the first site chosen for setting up a vegetable oil factory in 1958
and that is the first UPL manufacturing facility developed. Today Unilever Pakistan is a force to
reckon with. Its contribution to Pakistan's economic development cannot be over estimated.

Now operating six factories at different locations around the country, the company contributes a
significant proportion of the country's taxes. It employs a large number of local managers and
workers. It provides a pool of well trained highly motivated manpower to other segments and has
introduced new and innovative technologies into the country.

MISSION:

Unilever’s mission is “to add vitality to life. We meet everyday needs for nutrition, hygiene and
personal care with brands that help people feel good, look good and get more out of life.” This
mission statement underscores how the company satisfies customers in various aspects of their
lives. 

Vision:

Unilever’s vision is “to make sustainable living commonplace. We believe this is the best long-
term way for our business to grow.” This vision statement puts emphasis on sustainability,
especially among consumers. 

Objectives of Unilever:

Following are the objectives of Unilever Company:

 Increase sales (turnover)

 Increase market share Increase share price (two share prices -Unilever NV and Unilever plc)
 Increase profits
 Be socially responsible i.e. ethical e.g. sustainability
 Expand into overseas ‘markets

SWOT ANALYSIS:
SWOT analysis is a strategic planning frame that can be used by the company managers to get a
successful situation analysis of the company. The Unilever SWOT analysis framework can assist
them to realize their internal strategic factors such as strength and weakness, also their external
strategic factors such as opportunity and threats.

Strengths:

 Global reach: 
Unilever is a worldwide multinational company. It operates in 190 countries across the globe.
So, it has a great deal of the global footprint. This makes it more recognizable to the public and
helps with its publicity.

 Financial position: 

Unilever has a strong financial base. It has collected a total of more than 30 million Euros.  It has
been gaining market slowly but surely for about 190 years. It has earned the public trust as a star
company.

 Strong brand portfolio: 

Unilever is currently the owner of more than 400 brands. It garnered a total of 53.7 billion Euros
in the year of 2017. The most astonishing part is that only 13 of these brands earn more than a
billion Euros.

 Leading Industry: 

Unilever is one of the top 10 companies for consumers’ goods. Unilever is organized into three
main divisions- Food and Refreshments, Home Care, and Beauty and Personal Care products.
For the last three years, these sectors have been raising a combined 50 million Euros as revenue.

Weakness:

 Higher funds in the technology sector: 

All though spend enough money to develop its technological sites. It is still quite behind in this
matter since many of its competitors are ahead of it in this matter.

 Channel capabilities:

In the pandemic situations the online sales have gone up about 61 percent. But Unilever lacks in
technology sites like online representation. So its online sales accounted for only 9% of its total
revenue comes from online sales. This is a huge drawback.

 Brand connection strategy: 

The world is changing rapidly. So, it is high time, Unilever changed its strategies to cope with it.
Its traditional branding and communication methods need a revolution.  If Unilever is adamant
on not changing these customs, it will cost them heavily in the future.

Opportunities:
 New markets: 
As the government has agreed to lend a hand to the economic development there are new
markets in the making. This has helped Unilever broaden its already wide horizon of business.
 Business Diversification: 
Even though Unilever has plenty of products to sell, there are many new products that it could
launch. People are now aware of its presence. So, this will be advantageous for the company.
Business diversification can get people more interested and invested in the company. This will
work as publicity and raise the profit.

 Product Innovation: 
Unilever have to bring innovation to their old products this will make the people more interested
in the company. The end result will be a higher sales rate, if marketed and advertised correctly.
Threats:
 Increasing competition: 
As we know that competition is decreasing day by day so Unilever’s most deadly rivals are
Proctor and Gamble. This company outsold Unilever by 10 billion dollars in 2020. Despite the
whole pandemic situation this company had a 4.8 percent raise in its revenue. On the other hand,
Unilever saw a decline of 2.4 percent in its own revenue.
 Impact of pandemic: 
This is the time of a pandemic. Unilever is one of the lead companies in the consumer’s goods
department. This pandemic has affected manufacturing, distribution and purchasing of Unilever
products. This has fueled major changes in Unilever’s business strategies.
 Currency Fluctuations: 
In this major league health crisis the world is facing, people are confined to their houses and the
world has come to a standstill. This is the cause for these currency fluctuations. The pandemic
has forced currency fluctuations in China, Argentina, Brazil, India and many other countries.
This has resulted in a 2.4% decrease in the turnovers of 2020.
 Government Regulation: 
The rules and regulations that the government imposes may be a major threat for Unilever
because many of Unilever’s products use plastic packaging. As Unilever is responsible for a
large number of these trees to be cut down, one can easily see where the threat lies.
Brand Categories:
Brands categories of Unilever include:
 FOOD BRANDS
 HOME CARE BRANDS
 PERSONAL CARE BRANDS
 NUTRITION & HEALTH BRANDS
 HYGIENE & BEAUTY UNILEVER FOOD SOLUTIONS

Profitability Ratios:
Profitability ratios assess a company's ability to earn profits from its sales or operations, balance
sheet assets, or shareholders' equity. Profitability ratios indicate how efficiently a company
generates profit and value for shareholders. Higher ratio results are often more favorable, but
these ratios provide much more information when compared to results of similar companies, the
company's own historical performance, or the industry average.
1. Net profit margin
2. Total assets turnover
3. Return on assets
4. Operating income margin
5. Operating asset turnover
6. Return on operating assets
7. Return on investment
8. Return on total equity
Balance sheet:
Income Statement:
Net Profit Margin:
The percentage of total income you get to keep after all expenses and taxes are paid. It tells you
how efficient your business id at turning income into profit.

Formula:
Net income
Net sales

Graph:

Net Profit Margin

30%

25%

20%
Net Profit Margin
15%

10%

5%

0%
2021 2020 2019 2018 2017

Interpretation:

There is a persistent rise in Unilever net profit margin from 2017 to 2021. This tells how
efficiently it deducts its expenses and increases its revenue.
Total Assets Turnover:

The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used to indicate the efficiency with which a
company is using its assets to generate revenue.

Formula:

Net sales

Average Total Assets

GRAPH:

Total Assets Turnover

6.00

5.00

4.00
Total Assets Turnover
3.00

2.00

1.00

0.00
2021 2020 2019 2018 2017

Interpretation:
In 2018 & 2019 the company's total asset turnover decrease as compared to 2017, In 2020 &
2021 the company improves which shows company is utilizing its assets efficiently and increases
its turnover ratio.

Return on Assets:

Return on assets is a profitability ratio that provides how much profit a company is able to
generate from its assets. Return on assets (ROA) measures how efficient a company's
management is in generating profit from their total assets on their balance sheet.

Formula:

Net Income

Average Total Assets

GRAPH:
 Return on Assets
70%

60%

50%

40% Return on Assets

30%

20%

10%

0%
2021 2020 2019 2018 2017

Interpretation:

In 2018 & 2019 the company is not getting much return over its assets if we compare it with
2017. But in 2020 & 2021 the company improves and efficiently used its assets and increases its
return on assets.

DuPont Analysis:

The DuPont analysis is an expanded return on equity formula, calculated by multiplying the net
profit margin by the asset turnover by the equity multiplier.

Formula:

Return on Assets = Net Profit Margin * Total Assets Turnover

Graph:
 DuPont Analaysis
70%

60%

50%

40% DuPont Analaysis

30%

20%

10%

0%
2021 2020 2019 2018 2017

Interpretation:

It gives a broader view of the Return on Equity of the company. It highlights the company’s
strengths and pinpoints the area where there is a scope for improvement. In this DuPont analysis
the profit margin increase after 2018 but asset turnover decrease and DuPont analysis going
better.

Operating Income Margin:

The operating margin measures how much profit a company makes on a dollar of sales after
paying for variable costs of production, such as wages and raw materials, but before paying
interest or tax.

Formula:

Operating Income
 Net Sales

Graph:

Operating Income Margin

30%

25%

20%
Operating Income Margin
15%

10%

5%

0%
2021 2020 2019 2018 2017

Interpretation:

The company's operating income margin rises continuously which shows the high profitability of
company and efficient use of operating assets. Unilever has high operating income level in 2021
as compared to its previous year. Our companies operating profit margin increase every year that
is favorable for a company.

Operating Assets Turnover:

The operating asset turnover ratio is an efficiency ratio that identifies the revenue generation
capabilities of a company's operating assets.
Formula:

Net Sales

Average Operating Assets

Graph:

Operating Asset Turnover

6.00

5.00

4.00
Operating Asset Turnover
3.00

2.00

1.00

0.00
2021 2020 2019 2018 2017

Interpretation:

It increase in 2018 and then decrease 2019 which was not good but company start increase their
operating asset turnovers which mean company’s turnover

Return on Operating Assets:

The return of operating assets measures a company's ability to generate profit from the
operational assets' income.

Formula:

Operating Income

Average Operating Assets

Graph:

Return on Operating Assets

120%

100%

80%
Return on Operating Assets
60%

40%

20%

0%
2021 2020 2019 2018 2017

Interpretation:

In 2018 and 2019 the company is not getting much return on its operating assets as compared to
2017 but after that in 2020 & 2021 the company's performance improves and increases its return
and getting profitable.
Return on investment:

The return is the profit you make as a result of your investments. ROI is generally defined as the
ratio of net profit over the total cost of the investment. 

Formula:

Net Income + [(Interest expense) x (1- Tax rate)]

Average (Long Term Liabilities + Equity)

Graph:

Return on Investment
800%

700%

600%

500%
Return on Investment
400%

300%

200%

100%

0%
2021 2020 2019 2018 2017

Interpretation:
The company's return on investment was very high in 2018 than 2019 companies return on
investment comes down and now it's gradually increasing yearly.

Return on Total Equity:

Return on equity (ROE) is the measure of a company's net income divided by its shareholders'
equity. ROE is a gauge of a corporation's profitability and how efficiently it generates those
profits. 

Formula:

Net income

Average Total Equity

Graph:

Return On Total Equity

200%
180%
160%
140%
120%
Return On Total Equity
100%
80%
60%
40%
20%
0%
2021 2020 2019 2018 2017
Interpretation:

It shows companies financial health so the money is being returned by the investors in 2018 then
Return on equity is increasing slowly.

Total Common Equity:

The return on common equity ratio measures how much money common shareholders receive
from a company compared with how much they invested originally.

Formula:

Net income

Average Common Equity

Graph:
 Return on Common Equity
500%

450%

400%

350%

300%
Return on Common Equity
250%

200%

150%

100%

50%

0%
2021 2020 2019 2018 2017

Interpretation:

It shows return of shareholders are seeing on their investment so in 2018 the common Return on
common equity is increased and it goes down in 2019. Company increasing its return on
common equity gradually till 2021

Gross Profit Margin:

The gross profit margin tells you what your business made after paying for the direct cost of
doing business, which can include labor, materials and other direct production costs.

Formula:

Gross Profit

Net Sales
Graph:

Gross Profit Margin

46%

45%

44%

43% Gross Profit Margin

42%

41%

40%

39%
2021 2020 2019 2018 2017

Interpretation:

After deducting all the expenses the gross profit margin of Unilever is still rising. In 2020 and
2019 there is a decrease but in 2021 the gross profit margin increases.

Conclusion:

As we know that Unilever is one of world’s largest and leading multinational companies;
Unilever commended their business activities on a larger scale. The usage of Unilever products
by over 90% of the people Pakistan stands a testimony to their successful operation. The
Unilever is providing good quality products and services to its customers and people are satisfied
with their products. After doing all the analysis we came to know that in 2021 and 2018
Unilever’s performance is very good and it is performing its operations very well. In 2020 and
2019 the Unilever performance was not good because of pandemic. Pandemic highly affected its
performance because Unilever is not developed in its technological sites. Its sales were also
affected during pandemic due to not having online facilities. But after pandemic it came back to
its original place.

Recommendations:

Following are the recommendations Unilever has to adopt:

1. Unilever has to bring innovation to their products.

2. They have to update their technologies.
3. They have to provide door to door facilities.
4. They have to develop strategies for uncertain situations.

References:

  "Annual Results 2021" (PDF). Unilever. pp. 13, 15. Archived (PDF) from the original on

10 February 2022. Retrieved 15 February 2022.

^ "At a glance". Unilever. Archived from the original on 18 December 2021. Retrieved  15

February 2022.

^ "UK aid and Unilever to target a billion people in global handwashing

campaign". Gov.uk. British Government. Archived from the original on 23 July 2020.
Retrieved 28 March  2020.
^ Jump up to:a  b "Our approach to sustainability". Unilever. Archived from the original on
2 April 2014. Retrieved 21 March 2015.

^ Unilever R&D Locations  Archived 9 February 2014 at the  Wayback Machine, Unilever,
viewed 19 December 2013

^ Boyle, Matthew; Jarvis, Paul (4 December 2014). "Unilever Spreads Split Boosts Chance
of Exit as Shares Gain". Bloomberg News. Archived from the original on 9 December 2014.
Retrieved 12 March  2017.

^ Jump up to:a  b "'An important day': Unilever announces completion of unification

plans". Evening Standard. 30 November 2020. Archived from the original on 30 November
2020. Retrieved 30 November 2020.

^ "1920–1929: Unilever is formed". Unilever global company website. Archived from the

original on 25 July 2015.

^ "The United Africa Company Ltd". Unilever Archives. Archived from the original on 14

April 2021. Retrieved 19 March 2021.

^ Ben Wubs (2008). International Business and National War Interests: Unilever Between
Reich and Empire, 1939–45. Routledge. p. 154. ISBN 978-1-134-11652-2.

^ Jump up to:a  b  c  d  e  f Jones, Geoffrey; Miskell, Peter (2007). "Acquisitions and firm

growth: Creating Unilever's ice cream and tea business" (PDF). Business History. 49 (1):
8–28. doi:10.1080/00076790601062974. S2CID 40340372. Archived (PDF) from the
original on 20 January 2021. Retrieved 21 March 2015.

^ Jump up to:a  b Jones, Geoffrey; Kraft, Alison (2004). "Corporate venturing: the origins of
Unilever's pregnancy test" (PDF). Business History. 46 (1): 100–
122. doi:10.1080/00076790412331270139. S2CID 11532001. Archived (PDF) from the
original on 18 March 2015. Retrieved 21 March 2015.
^ "Unilever sets aside $427m for expansion". The Jakarta Post. 20 May
2011. Archived from the original on 9 August 2020. Retrieved 7 February 2020.

^ Jump up to:a  b Jones, Geoffrey (9 December 2002). "Unilever  – A Case Study". Working

Knowledge. Harvard Business School. Archived from the original on 31 October 2020.
Retrieved 10 February 2020.

^ Jump up to:a  b Greg Thain; John Bradley (2014). FMCG: The Power of Fast-Moving
Consumer Goods. First Edition Design Pub. p. 426. ISBN 978-1-62287-647-
1. Archived from the original on 19 March 2015. Retrieved  18 May  2016.

^ Manuel Hensmans; Gerry Johnson; George Yip (2013). Strategic Transformation:

Changing While Winning. Palgrave Macmillan. p. 139. ISBN 978-1-137-26845-7.

^ "1960–1969". unilever.co.uk. Archived from the original on 5 January 2016. Retrieved 21

March 2015.