Topic: Evaluation and Analysis of the Financial Performance of Unilever before and After

Covid-19

Jagpreet Singh

B No.: 1020622

15/05/2023

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Table of Contents

Introduction................................................................................................................................3
Methodology..............................................................................................................................3
Literature Review.......................................................................................................................4
Analysis and Discussion.............................................................................................................5
Reference.................................................................................................................................10

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Introduction

This report was written by Unilever. Unilever is a consumer goods company

headquartered in London (Cahyaningsih and Septyaweni, 2022). Unilever manufactures
many products including groceries, flavor mixes, chocolate, frozen yogurt, household
cleaning products, beauty care products and custom items. With products sold in over 190
countries, Unilever also ranks as the world's largest pharmaceutical company (Cheng, 2021).
On September 2, 1929, the British retailer Switch Siblings and the Dutch organization
Margarine Creator merged to form Unilever. In the second half of the 20th century, the
company expanded its global reach, shifting its focus from oil and gas product production to
food production. Unilever is also a member of the FTSE 100 Index and is traded on the
London Stock Exchange. In addition, Unilever is listed on Euronext Amsterdam and a part of
the AEX index (Daryanto, Iffah, and Mahardhika, 2021). On November 30, 2020, a single
company, combining Unilever's Dutch and UK operations, was announced in London.

The company's revenue is the sum that Unilever receives from its customers in
exchange for the sale of its products and services. Unilever reported sales of £58,218 million
in 2018, £57,942 million in 2019, and £62,047 million in 2020. This is an increase of 3.31
percent, 0.47 percent, and 0.47 percentage points, respectively (Unilever, 2020). Unilever
Group received completed deals worth around €52.44 billion in 2021, an increase of more
than €1.5 long term on year (Unilever, 2021). This report's objective is to analyse Unilever's
financial results and the challenges it encounters during the coronavirus emergency.

Methodology

Qualitative and quantitative research are two categories of research procedures that
aid researchers in gathering precise data and carrying out successful study (Shaikat, 2020).
For this research study's goal of locating and gathering pertinent data and insights linked to
this topic, qualitative research is appropriate. Comparably, data gathered from his website is
used in qualitative research. We take into account general articles, in-depth research findings,
documents, and case studies that have already been investigated by different authors
(Cahyaningsih and Septyaweni, 2022). In the financial sector, qualitative research is used to
assess business performance, support critical organisational choices, and help potential
investors choose which investments to make. To do this, analysts and investors consider a

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wide range of variables, such as revenue growth, customer and staff happiness, security
levels, and firm knowledge (Cheng, 2021). As a result, this study uses a qualitative research
methodology to assess Unilever's financial analysis and strategy in the UK crisis. Scientists
can conduct auxiliary research because it uses data from earlier studies, such as work that was
written, disseminated, or gathered by other analysts. Additionally, methods for gathering data
for qualitative research, ranging from highly organised to semi-structured, are explainedl.

Literature Review

The global pandemic has had a significant influence on Unilever's overall

performance. A few industries across the country have closed, notably Unilever's €1.7 billion
food industry, which has seen agreements drop by 70%, as Hasna (2022) noted in his January
2020 report. According to Unilever's 2018 annual financial report, gross profit rose from 42%
in 2016 to 44% in 2018. The published long-term result predictions did not generally differ
considerably. According to Hayati et al. (2021), consumers started looking for products to
help prevent the spread of the Coronavirus in many areas, like the home, cleanliness, and
good skin, starting around 2019. As clients rediscover the delight of cooking at home, deals
of Unilever's food and family items are additionally expanding. Unilever observed significant
shifts in customer demand across industries and distribution channels in 2019 according to
Khan's (2020) study. Khan (2020) likewise noticed that Unilever's reaction to current turns of
events and necessities amidst a worldwide pandemic will require huge responsibility from
Unilever's group, particularly nearby staff and providers, who The article additionally makes
sense of that our items should be kept up with under severe security strategy controls. The
store has it on a shelf.

A 2021 overview of organizations and clients directed by Kumar and Kumara shows
that wellbeing mindfulness expanded essentially all through the pandemic, pushing
individuals to the first spot on their list of individuals they know and trust. increase. a belief
that it has positive effects on people's lives and causes problems. Mahesh et al. claim that
2021) support further conversation, Unilever says he faces ecological difficulties in 2019, for
example, environmental change and expanded plastic gamble. The novel coronavirus disease
(COVID-19) is affecting people and groups in a way that has never been seen before.
Unilever has acted swiftly to satisfy the demands of its various stakeholders, assisting us
through this crisis and getting ready for a new model. In 2020, income ratios will experience
significant long-term changes. The crisis has had a significant impact on nations all over the

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world, and Unilever has observed significant shifts in sales of food, household and hygiene
products, and food. As it emerges from the crisis and begins to recover, Unilever is preparing
for shifts in consumer behavior and responding to shifting demand patterns. Unilever's chiefs
draw in with the a huge number of individuals the organization upholds all over the planet,
resolving their concerns, offering extraordinary viewpoints and supporting for what's to
come.

Analysis and Discussion

In the consumer goods sector, Unilever owns many of the most successful brands. This
capability can be used by businesses to enter the market and successfully compete with other
businesses. Unilever's expansion can be seen in its broad product line. In 2019, the
organization extended its item range through consolidations and acquisitions, bringing about
hierarchical development and resulting income development (Cahyaningsih and Septyaweni,
2022). However, sales analysis may contain a great deal of useful data about the company's
operations. This percentage went from 11% in 2017 to 19% in 2018 at Unilever. As can be
seen, the 73% growth rate indicates that this business has successfully addressed the issue of
profitability (Daryanto, Iffah and Mahardhika, 2021). Value return is the second most
important indicator of how well an asset is used (ROE). At Unilever, this number has
changed, increasing from 37% in 2017 to 80% in 2018. In general, Unilever's organization
continued to be productive and successful in developing its business in 2018. Additionally, a
number of issues in 2018 slightly reduced Unilever's earnings. Fithry, Hariyanto and Utami
(2021) show weaknesses, following the main principles used in analyzing Unilever's profit
margins before the COVID-19 crisis. They also emphasized the importance of difference,
innovation and business improvement.

The coronavirus emergency that lasted from 2020 to 2021 has had a tremendous impact on
people and the global economy. Unilever has taken swift steps to assist our partners, resolve
the emergency and support us in preparing for normal development. Finally, in January 2020,
Unilever experienced a steady decline in transaction volume, yields fell 0.2% and revenue
increased 2.5%. In September 2020, Creation Markets fell 1.8% and Created Markets fell
2.8%, which helped the business develop. Unilever's total revenue increased by 0.2% and
transactions were positive by 0.6%, but working capital and interest rates were negatively
impacted by 0.4%, boosting quarterly earnings to 2021 (Unilever, 2021) . This situation
shows how important it is for us to keep our promise to use our size and brand to create

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positive interactions during and after the epidemic. Unilever evaluates all spending based on
the current situation and will continue to invest in our brands and provide cash back to the
best performing companies. Analyzed area. Unilever, on the other hand, is unable to estimate
the damage due to uncertainty over the strength and duration of the pandemic and few
domestic regulations that favor its financial management (Ullah, 2021). According to the
agreement, Unilever reported 2.1% underlying earnings growth in the third quarter, and the
company's shares fell 2.5% in January 2021 while the European blue chip index remained
flat. That was beneath the rundown normal gauge of 3.7%. ( 2021), Unilever Deals volume,
which estimates the expense of items sold, expanded by 0.3%, underneath master conjectures
of 1.8% and 1.9% development in Q1 and Q2 (Unilever 2020). For Unilever, it is undeniably
more critical to empower every client to change over the quickest development into income
per unit as development eases back and obligation gambles are moderated. Exchange among
divisions and levels is significant as Unilever has had an impact on the manner in which it
chooses and sources generally important data. Get ready data from different sources, for
example, bank explanations, current liquidity circumstance, information on receivables and
liabilities, reports depicting required income thinking about blend of installment history and
arranged income (Swazi, Sulyaninsum) and Pamunkas, 2021). A year-over-year correlation
features the arrangement of Alan Jope as President in 2019, following the renunciation of
Paul Polman toward the finish of 2018. Because Alan Jope's fixed salary was set higher than
Paul Polman's, the CEO's salary was reduced from 2018 to 2019. In addition, benefits for UK
workers in general, including pensions, increased by approximately 20% in 2019 (Unilever,
2019). According to Swazi, Slyaninsum, and Pamunkas (2002), the transition from the new
budget to WL3 resulted in an increase in wages for UK workers despite a workforce
reduction of 3.8% in 2018 and 2019. Unilever is also obligated to publish additional UK
turnover statistics. When compared to the salaries of workers in the UK, the above wage rates
are more valuable. In contrast, only Octavia, Angleny, and Kudri (2021), who make up a
small portion of Unilever's front office staff in the UK, are required by UK regulations to
disclose the following percentages:

At the same time, Unilever's annual report documented the company's overall performance,
which improved in 2020. During the UK Census, staff salaries increased by about 1.29
percent. The Management Co-Investment Plan (MCIP)'s connection to this collaboration was
advantageous. By examining working capital, liquidity, and capital ratios, the same
conclusion can be reached. Measurements of velocity have changed, going up from 47% in

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2013 to 57% in 2018. The speed rate was 13% in 2017. In 2018, it was 16%. Last but not
least, working capital costs will continue to be negative between 2017 and 2020. Overall,
these measurements suggest that Unilever's current situation is in serious jeopardy. A review
of performance indicators shows that the company will face serious issues with its current
operations unless the economy significantly improves. Final decisions regarding the
management of current credit risk can only be made after carefully considering the results of
the weighted indicators (Unilever, 2019).

By the end of November 2020, the debt-to-equity indicator should show a company's ability
to refinance existing debt with equity (Khan, 2020). This ratio has changed from 2.14 in 2019
to 3.8 in 2020. As you can see, in 2013 the company was unable to pay its entire debt with
equity and in 2020 things got worse. It is worth noting that only a few of the world's largest
corporations are able to service their debt. The debt-to-standard ratio is the most important
variable in understanding how well Unilever's business strategy handles credit. This shows
the change in this index from 0.67 in 2019 to 0.79 in 2020. The increase in performance is
shown in the first part of the analysis of financial data, which is corroborated by Unilever's
increased reliance on debt. This comes from results. Survey of solvents and business
results. Consequently, maintaining the current model while the company is still developing
could pose serious problems for it. Different investments can result in various perspectives on
how ESG regulations impact risk and growth. The coronavirus catastrophe is now anticipated
to occur in 2021 by Unilever.

Unilever's first ever negative ROI was reported in December 2020, proving the value of asset
leveraging as a revenue-based income stream. According to Ullah (2021) Unilever's return on
investment decreased from 1.09 in 2020 to 0.85 in 2021. This outcome can be seen as a
decrease in the company's wealth management initiatives. Results of inventory turnover
demonstrate how well a business is using its resources. Like the Abundance The board File
examined before, it fell marginally from 7.38 in 2020 to 6.68 in 2021. Unilever products can
quickly result in losses for long-term intelligent wealth management. The company's bleak
future prospects are based on this result, as well as indicators of solvency and low product
quality. Unfortunate credit the executives and the gathering's plan of action are the
organization's main two long haul chances (Putri, Usman, Virginia, 2021). The risks
associated with current debt management can be eliminated by utilizing an organization's
fixed assets and resources. The absence of conversation about the significance of changing
Unilever's drawn out system is additionally reflected in the absence of spotlight on its current

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model, which has brought about Unilever's powerlessness to completely reimburse its
obligation with its resources and its monetary presented to the gamble of misfortune. . A
significant portion of Unilever's current debt management issues can be attributed to the
company's efficient manufacturing strategy and low labor costs. The company's production of
consumer goods has decreased over the past five years, according to a survey of product
managers conducted from 2017 to 2021. This reality intends that without getting more to help
resource values, organizations can not keep up with their current profit given the gamble of
beating the ongoing credit misfortunes (Hayati et al, 2021).

Ratio analysis

Conclusion

It was reasoned that there were a few issues connected with monetary flimsiness, changing
work prerequisites and lockdowns during the Coronavirus emergency that emphatically
affected Unilever's monetary position. Unilever's five-year annual report shows that the
company has done everything it can to avoid a long-term loss and get out of this crisis.

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Unilever's ability to respond effectively in 2020 is an additional post-pandemic goal. The
management of Unilever ought to concentrate on locating alterations to its business model in
order to enhance the performance of the factory's ongoing production and inventory
management. In this circumstance, it is essential to modify the business model so that the
organization's primary source of revenue is enhanced productivity with current tools.
Implementing this policy may assist the business in resolving its current liquidity and
solvency issues in the long run. Based on our vision, Unilever will then enhance its business
model, believing that improved performance across multiple partners will result from
sustainable and responsible business practices. We believe that the most effective strategy for
generating consistent and substantial shareholder value is to satisfy the requirements and
interests of all Unilever stakeholders.

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Reference

Cahyaningsih, C. and Septyaweni, A., 2022. Corporate social responsibility disclosure before
and during the Covid-19 pandemic. Jurnal Akuntansi dan Auditing Indonesia, pp.11-22.

Cheng, Y., 2021, February. Analysis of the Opportunities and Challenges of Unilever's
Differentiated Competition by Using SWOT and PEST. In 6th International Conference on
Economics, Management, Law and Education (EMLE 2020) (pp. 280-284).

Atlantis Press. Daryanto, W.M., Iffah, M. and Mahardhika, R., 2021. Financial Performance
Analysis of Construction Company before and during COVID-19 Pandemic in Indonesia.
International Journal of Business, Economics and Law, 24(4), pp.99-108.

Fithry, A.N.I., Hariyanto, M.I.Z.P. and Utami, E.S., 2021. The Impact of Consumer
Behaviour Megashift on Unilever's Product Strategy During COVID-19 Crisis. UNEJ e-
Proceeding, pp.61-65.

Hasna, S., 2022. Analysis of Blue-Chip Stock Price Movement Before and During the
Pandemic Covid-19. International Journal of Social and Management Studies, 3(1), pp.144-
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Hayati, H., Rofizar, H., Savitri, A. and Syahputra, A., 2021. FINANCIAL PERFORMANCE
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dan Bisnis, 10(2), pp.22-29.

Khan, G., 2020. COVID-19 and the related accounting considerations in preparing financial
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Kumar, M.P. and Kumara, N.M., 2021. Market capitalization: Pre and post-COVID-19
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Unilever, F., 2019. Assets.unilever.com. Available at:

https://assets.unilever.com/files/92ui5egz/production/1e37dec387a6647bd6bd1c8d1bc8a86cd
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