Unilever struggles to find believers

Institutional support for Unilever has been thin on the ground, and expectations ahead of the companies Q4 figures suggest this is unlikely to change.

PG Tips, a Unilever brand
Source: Bloomberg

On Tuesday 20 January, Unilever is set to release its fourth quarter figures, which are expected to come in at €12.255 billion – fractionally higher than last quarter’s €12.244 billion. When looking at the company’s figures, it is worth noting the fact that the last quarter has seen the value of the euro drop by 7.7% against the dollar.

Unilever has a greater exposure to the emerging markets than many of its competitors, and at present 60% of the company’s revenues are attributed to this area. The largest of these are Brazil, accounting for 13%, Russia 3%, India 7% and China 5%. In 2014 emerging market growth was 4%, helping to drag the company’s global growth up 2%.

The biggest issues facing the company in 2015 will be deflation in the eurozone, a region that still accounts for 28% for the company’s revenue, and the slowing growth in China and Brazil. With the majority of the company’s revenue being derived from outside the UK, continuing headwinds from the currency markets will weigh on profits. Unilever shares are up 224p, up some 8.3% in little over a year. The last eight months have seen Unilever shares make fleeting attempts to break above the 2700p level, and on each of those occasions sellers have come in to knock the shares back down. At present the 2713p level remains above the 50-, 100- and 200-day moving averages that are all converging around the 2615p region.

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