Unilever shareholders took a bath yesterday


Unfortunately less relaxing than with Badedas

Volumes grew 4% & prices rose 1.3%

but turnover only increased 0.3%

despite 1.4% from acquisitions

EPS fell 2%, Free cash flow fell €500m to €2.4bn

and they cut their underlying margin outlook

But they’re on 20x forward earnings…

What happened?

Well, last year when we were stockpiling PotNoodle and Ben & Jerrys for the apocalypse, they didn’t need to advertise

This year they had to spend…

my apologies, “invest”,

€400m in marketing to get that 0.3% growth

Perhaps the most damaging comment was,

 “..over the last quarter, we’ve seen significant cost inflation emerge”

I hope Chair Powell wasn’t listening in because he won’t like the “i” word mentioned 28 times

“We’ve seen large increases in freight & logistics costs, the result of demand outstripping supply on sea freight and

labor shortages across the distribution industry

Packaging has also seen further price increases in the last few weeks”

So nothing about chips or used car & lumber prices we usually hear cited for this “transitory” inflation?


They continued..

crude oil up 60% – used in resins for packaging

Soyabean oil up 80% – used in dressings

“The price of palm oil, a key ingredient for our skin cleansing products is now 70% higher than its long-term average”

Hold fire..

So, these consumer products companies which are destroying rainforests to get palm oil so we can have the “soft” (oily) skin we “need”, are ESG friendly?

But oil companies cracking underground rocks & extracting dead dinosaurs aren’t?

The investment world has gone mad!

What’s next?

“Expected inflation mid-teens…the comparative will start to get tougher in the 3rd quarter”

Did you say “START to get tougher”?

I thought Unilever was one of those “quality” companies,

You know, that Portfolio Managers have been assuring us have the necessary pricing power to offset any inflation?

Yet prices only rose 1.3%, inflation killed earnings growth,

And they’re warning us that things will

“START to get tougher”

Any good news?

“deodorants grew as some living restrictions were eased?”

So only good news for the housemates of those who didn’t use deodorant last year?

oh well, at least the consultants had fun naming divisions

“Food solutions” & “Functional nutrition”

I thought all nutrition was functional?

because what’s “Dysfunctional Nutrition”?

energy drinks and fast food?

All right, get serious

In 2001 Diluted EPS was 1.46

Roll forward 10 years of endless acquisitions, disposals & re-positioning

€14bn more debt

And in 2020, with reduced marketing & travelling expenditure…

Diluted EPS was 2.12

Compound annual growth of a paltry 3.8%

including a little help from Euro depreciation of 0.8% a year

but before things

“START to get tougher”

Do you really want to pay 20x for “quality” like this?