Strategic Corporate Finance of PLC Unilever: A Financial Analysis

This report provides a comprehensive analysis of PLC Unilever's strategic corporate finance, examining its financial performance, financing strategies, corporate governance, capital structure, capital alteration policy, dividend policy, and merger and acquisition activities. The report evaluates Unilever's performance over the past few years, considering factors like sales revenue, operating profit margin, and key financial decisions such as acquisitions and disposals. Furthermore, it delves into the efficient market hypothesis and its implications on security market prices. The report also explores Unilever's corporate governance policies and their impact on financial performance, highlighting the company's commitment to sustainable development and corporate social responsibility. The analysis includes an overview of key success factors, operational excellence, and the company's efforts to reduce environmental impact. The report concludes with an assessment of Unilever's overall performance and its suitability for investment decisions.

Running head: UGB363 STRATEGIC CORPORATE FINANCE
Strategic Corporate finance of PLC Unilever
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Strategic Corporate finance of PLC Unilever
Executive Summary
The aim of this report is understand the business strategy of the PLC Unilever, Unilever is a
British-Dutch multinational consumer goods company with a headquartered in London. The
objective of the report is to measure the financial performance of the company based on the
certain financial & accounting concepts like financing strategy of the company, corporate
governance, capital structure, capital alteration policy, dividend policy and the company
merger & acquisition. The company has delivered a solid performance in the all the major
product segment, despite of the many challenges faced by the company, like various
geopolitical scenario,
In the second part of the report a detail discussion has been done on the Market efficient
hypothesis, which explain that different classes of assets prices of the product like bond,
security market are fully reflected on the market price. Further the different market efficiency
has been discussed which are necessary for the efficient market hypothesis.

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Strategic Corporate finance of PLC Unilever
Table of Contents
Part-A: Evaluating the Business performance of the PLC Unilever.........................................3
Introduction................................................................................................................................3
Company brief information....................................................................................................3
Evaluation of the business performance of Unilever Corporation based on the different
parameter................................................................................................................................4
Financial performance of Unilever in the last few years.......................................................5
Unilever Corporate Governance policy...................................................................................10
Part-B: Efficient market Hypothesis and security market price...............................................13
Conclusion................................................................................................................................18
References................................................................................................................................19

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Strategic Corporate finance of PLC Unilever
Part-A: Evaluating the Business performance of the PLC Unilever.
Introduction
This report is about the business analysis of a consumer durable company named PLC
Unilever. The purpose of the report is to measure the financial performance of the company
based on the certain financial & accounting concepts like financing strategy of the company,
corporate governance of the company, capital structure of the company, capital alteration
policy, dividend policy and the company merger & acquisition (Kim and Mauborgne, 2014).
Apart from the above, in the second part of the report a critical examination has been done on
the efficient market hypothesis concept and principles.
Company brief information
Unilever is a British-Dutch multinational consumer goods company with a
headquartered in London. The company sell house domestic as well as the consumable
products. The range of product include food and beverages, beauty product, personal care and
cleaning products (Herciu, and Ogrean, 2017). Unilever is recognized in Europe as the 7th
most prominent and valuable company. In this part the different strength of the market
efficiency has been discussed which are important in the determining the stock price of the
company. At the end of the report a concluding remarks has been added on the performance
of the company for the shareholder in order to decide whether the company is suitable for
making investment decision.

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Strategic Corporate finance of PLC Unilever
Evaluation of the business performance of Unilever Corporation based on the
different parameter.
Unilever is multinational company with a brand spread across 190 countries in the
world. The company deals in various types of product which is from consumer durable
goods. The company is having 400 house hold brand which includes Lipton, Dove, Rexona,
Hellmann’s and many other. In the year 2018 the company has set a records of one of the
largest fastest moving consumer goods corporation globally. In the year 2018 the company
has a 12 prominent brands which is contributing to the company revenue over billions of
Euro’s per year (Kim and Mauborgne, 2014).
Based on the market penetration and consumer interaction, it has noted that out of the
world top 50 most influential FMCG brand, the top 13 brands are owned by the Unilever. The
company believe in the sustainable development and equitable growth model for sustaining
the business of the organization for longer period.
Picture depicting the product process cycle of Unilever

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Strategic Corporate finance of PLC Unilever
Financial performance of Unilever in the last few years
The company has delivered a solid performance in the all the major product segment,
despite of the many challenges faced by the company, due to various geopolitical scenario,
the Company is managing its business operation in the various parts of the world. The
company over all sales revenue grew by 3.1%, the business of the company has shown a
tremendous growth as a results the company operating profit margin has increased to 18.4%
which is 90 basis points above the previous profit. The company overall business
performance result is encouraging. The company has achieved a good balance in the price
and volume growth which has been the contributing factor for the company growth.
Some of the major financial decision taken by the company for the business
Expansion and growth has been enumerated below.

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Strategic Corporate finance of PLC Unilever
Equilibra Acquisition: Unilever has acquired 75% stake in the Italian personal care beauty
and well-being brand named Equilibra. This will help the company in penetrating its business
in the Italian market which was earlier captured by the competitive rivals (Ghiassee-Tari,,
and Nilsson 2014).
Recognition in DJSI: Dow’s jones sustainability index (DJSI) has recognized Unilever as a
leader in the personal care product industry. The company has achieved industry best score in
many areas including the brand management, innovation, packaging and environment
change.
Promoting digital cleaning: For the promotion of the company in the digital world, the
company has built a network of Unilever trusted publisher. This move of the company will
protect it from the people who are intentionally involved in defaming the company brand.
Acquisition of the Garancia: The Company has made an acquisition of French cosmetic
brand named Garancia, which was a leading cosmetic brand in France, the company sell 38
kind of cosmetic and beauty care product through a pharmacy channel in France.
Reconsidering food packaging: the company has tied a Partnership agreement with a
startup named Lonica and world largest producers of Pet resin. This agreement has been done
to convert PET wastage into pure grade material to be used in the food packaging industry.

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Strategic Corporate finance of PLC Unilever
Consolidated Income statement of the company showing the financial performance.

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Strategic Corporate finance of PLC Unilever
Picture depicting the share price movement of PLC Unilever in a period of Five year.
Analysing the movement of the company the share price
Important news and parameter which are responsible for influencing the share prices of the
company.

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Strategic Corporate finance of PLC Unilever
 The percentage change in Unilever’s waste impact (packaging that is not recycled and
leftover product), a reported 31 % decrease in the waste associated with the consumer
use of product.
 Unilever PLC and Unilever N.V buy back their share with an aggregate market value
equivalent of up to 6 billion Euro. This action of the company increases the debt to
EBITDA ratio of 2.0x.
 The company is regular in the payment of the dividend to the company shareholder
directly into their bank account. The company paid to the shareholder on quarterly
basis. The company dividend reinvestment strategy is a suitable, easy method to build
your shareholding in Unilever PLC by using the cash dividend to buy additional
shares.
Company Acquisition and merger
The company has done some of the major acquisition and disposals in the following
years.
 In the year 2018 the company announced the acquisition of 75% stake in Equilibra,
the Italian personal care and wellbeing brand.
 On July 2018, Unilever’s announced the sales of the spread business to KKR and
Remgro.
 On 1st march 2018, the company has made an acquisition of the Quala’s beauty &
personal care and home care brands.
 On 2nd January the company acquire Schmidt’s Naturals which is beauty and
personal care Company based in Portland, Oregon.
 On 18 December 2017, Sundial - a fast growing company of new-York related to hair
and skin care.

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Strategic Corporate finance of PLC Unilever
 On 11 December 2017, the acquired the TAZO brand from Starbucks. TAZO is
leading brand in the Tea category.
 On 1 December 2017, Unilever acquire Mae Terra a fastest growing and well- loved
brand in Brazil, which sell organic and nutritious food product.
Unilever Corporate Governance policy.
Unilever sustainable governance and its relation with the financial performance.
The company strong governance principle and the strong lines of the accountability
are the major force working on the sustainable development plan of the company. The
company has successfully incorporate their commitment towards the business goal of the
organization in the mission, vision and the Unilever sustainable living plan. The company
brand, innovation, sourcing and operation are important factors in achieving the Unilever
sustainable living plan.
The company is contributing their corporate social responsibility, by the working on the
four main areas of the organization which include the following:
 Adoption of the business strategy which are working on the climate change and
protection of the forest and wildlife (Baah, Tawiah, and Opoku, 2014).
 Improving the standard of living of the people across globe, and generating more
opportunity for the women to work.
 The company aimed at improving the health and the well-being of the people
particularly in the water, sanitation and hygiene
 Adoption of the business strategy to tackle the problem of the food security
 Development of sustainable agriculture and the focused use of land.

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Strategic Corporate finance of PLC Unilever
 The company has given special preference in improving the role of women in the
eradication of poverty, and accelerating the global development.
At the core of the transformational change in the policy of the company, the aim is two-
fold like combating the climate change and the promotion of the human development. The
company has been successfully able to create more opportunity for the women across the
value chain (Baah, Tawiah, and Opoku, 2014).
Key success factor of the company in determining the company competitive advantage.
 Customer focused: The customer chooses to buy the product of the company in
comparison of the competitive business.
 Well planned strategy: Implementation of the powerful company business strategy
which help in the taking the competitive advantages.
 Recognition: Unilever is a widely recognized company in the fast moving consumer
industry, with a large customer base.
 Market understanding: The Company has the ability to take advantage of the
economies of the scale, and learning and experience curve effects.
 Technology: The Company has the superior capability in the cost advantages, product
innovation, proven skills in improving the product process, a good reputation of the
customer service and the sophisticated use of the E-commerce technology in the
customer service.
 Costing: The Company is expanding its business operation in the new geographic
market and the product segment like expanding the customer product line to meet a
broader range of the customer needs. The company is using the internet and e-
commerce technology to dramatically cut down the cost and search for new sales
growth opportunity (Mohamed, M.S. and Banu, M.S., 2015).