Unilever Faces Skeptical Investors
Shares in Unilever have tumbled so far this year, making them look inexpensive compared with the competition. But many investors say that the maker of Lipton still isn't their cup of tea.
The global consumer-goods titan has been struggling with slow-growing categories -- think margarine, toothpaste and frozen foods -- against the might of Procter & Gamble, which has been earning up a storm even in the downturn. Unilever, whose stable of products includes Ragu spaghetti sauce, Dove soap, Hellmann's mayonnaise and Calvin Klein perfume, also is trailing some other food groups, such as Danone of France.
But rather than viewing Unilever's shares as a buying opportunity after they have slid more than others such as Nestle, some investors think the company needs to face a hard fact: The targets it has set appear unrealistic given the set of businesses Unilever has.
Those targets are enshrined in Unilever's much-ballyhooed Path to Growth, a five-year plan launched in 1999. The plan involved an overhaul of the company's portfolio and set ambitious sales and profits targets. It has gone a long way to achieving the revamp, selling hundreds of laggard businesses and acquiring large U.S. food group Bestfoods, ice-cream brand Ben & Jerry's and diet-products company SlimFast.
But having consistently insisted those moves will speed the sales growth of the company to a long-term rate of 5% to 6%, the company stunned investors last month when it conceded it wouldn't hit its goal for the year and instead would deliver 4% growth. Its shares fell 11% in one day -- and led many who had given the company the benefit of the doubt to revise their thinking. Now, they say, management needs to take a tough look at the type of products Unilever sells. They argue that some U.S. rivals take a tougher approach to underperforming assets.
"They've got to stop chasing their dream of 5% to 6% growth and accept reality," says Andrew Wood, an analyst with Sanford C. Bernstein. "It doesn't need to be a drastic revolution, but they should start talking about evolving their portfolio."
Adds Scott Meech, U.K. equities fund manager for Threadneedle Investment: "They've been harshly treated by the market, but they're partly responsible for having set expectations too high." His firm holds about 1% of Unilever's shares and moved to an underweight position in the stock earlier this year.
Unilever Co-Chairman Niall FitzGerald begs to differ. In an interview, he says the natural "momentum" annual growth rate of Unilever's categories is just under 4%, meaning that 5% to 6% is within reach with smart management. "If there were a moment when we felt we had to take it down, we would do it," he says. "But we don't think we have to do that right now."
Mr. FitzGerald emphasizes that Unilever, which has headquarters in London and Rotterdam, Netherlands, is well aware of the laggards in its portfolio and is constantly evaluating whether changes in consumer trends demand that the group dump them and go for growth through acquisitions in hotter categories, as its rivals have done. In the past year, Nestle bought snacks group Chef America, while Procter & Gamble bought German hair-care company Wella.
"There isn't a year in which we don't look at the bits that are underperforming," he says. "If they can't produce a credible plan of action, we would consider our options."
Mr. FitzGerald's comments followed the release Wednesday of first-half results. The company's first-half net profit rose to �1.87 billion ($2.14 billion), up 2% from �1.83 billion a year before. That included exceptional items and amortization of goodwill and intangibles totaling �609 million.
Revenue fell 3% to �23.4 billion, largely because of asset disposals. Stripping out the effects of those disposals, sales grew 2.1% in the half. Sales of leading brands grew by just 3.1%, as the company telegraphed last month, but Unilever still expects them to grow by 5% in the second half.
Unilever suffered from a fall in sales of perfumes, SlimFast products and supplies to places such as restaurants and hotels, which have been affected by a decline in eating out by consumers. The company said those are one-off factors that should dissipate in the second half. Ice cream as well as the Dove and Axe deodorant brands, by contrast, performed strongly.
The results come as Unilever and other European food stocks have suffered their second-worst quarterly stock-market performance since 1990, trailing behind the broader market. But even by that measure, Unilever has been a laggard. It has lost 19% this year, underperforming the Morgan Stanley Capital International's Europe index by 22%, according to Bernstein's Mr. Wood. In the U.S., Procter & Gamble's shares are virtually unchanged so far this year. On Wednesday, Unilever's shares rose 1.6% to close at 512 pence ($8.31 or �7.26) in London.
The company argues the stock is undervalued. In a conference call Wednesday, Chief Financial Officer Rudy Markham said, "Based on our current share price, our valuation implies no free cash-flow growth in real terms. This is not what we plan, nor is it what our track record suggests."
Some analysts and investors agree the shares are undervalued by some measures. At a price-to-earnings multiple of 12.6 times 2003 consensus earnings as estimated by data provider JCF Group, Unilever's stock is trading at a 5% discount to European food and beverage companies and is far below its U.S. peers, which trade at about 20 times 2003 earnings.
But many also see a stock constrained by a portfolio of brands that, while improved, simply can't deliver the high growth on a sustainable basis that the company predicts. According to Credit Suisse First Boston, Unilever's home and personal-care division, which has been a main driver of growth, would have to expand by 8% on a sustainable basis to offset the food unit, which will struggle to do better than 4%.
Then there is the question of what the company will do when the current Path to Growth expires next year. A new one is expected to be unveiled in February.
Some investors say the company would do well to settle on a medium-term growth target of 4% to 4.5%, and, to make sure it reaches it, it should dump tricky categories such as frozen foods, toothpaste and perfumes.
Mr. FitzGerald won't discuss possible disposals. "We'll be building on what we're doing now," he says. "I wouldn't expect another major restructuring."
联合利华眼高手低投资者多冷眼相对
虽然今年联合利华公司(Unilever)股价大幅下挫，使它与竞争对手相比显得更为廉价，但许多投资者表示，这家立顿(Lipton)茶的制造商仍不被他们所青睐。
这家全球消费品巨头一直受累于某些增长缓慢的产品，如人造黄油、牙膏及冷冻食品。这与宝洁公司(Procter & Gamble Co., 又名：宝硷公司)处境大相径庭，后者即便在经济疲软之际也赚的盆满钵满。联合利华的产品包括：Ragu牌意大利面条沙司、多芬(Dove)香皂、Hellmann蛋黄酱及Calvin Klein香水。该公司表现也不及诸如法国的达能(Danone)等食品集团。
联合利华股价跌幅大于雀巢公司(Nestle SA)等竞争对手，但并这没有被投资者视为买进良机，一些投资者认为联合利华必须面对一个严峻的事实：鉴于公司业务表现，公司设定的目标显然不太现实。
该公司在鼓吹"增长之路"(Path to Growth)五年计划的过程中设定了一系列目标。该计划于1999年推出，内容包括：调整公司业务组合，并设定野心勃勃的销售及收益目标。
公司业务调整颇费了一番周折：出售了数百个经营不善的业务，并收购了大型美国食品集团贝斯特食品公司(Bestfoods)、冰激凌品牌Ben & Jerry's及减肥产品公司SlimFast。
公司一直表示，上述举措将加速公司销售增长，使长期增长率达到5%-6%，但上个月公司突然宣布，今年不能达到上述增长目标，年销售增幅将仅为4%，这令投资者吃惊不小。当日该股应声下挫11%，并令许多原本看好该公司的投资者转变了看法。
这些投资者现在认为，联合利华管理层需要对其产品组合进行严格检讨。他们称，一些美国竞争对手对表现不佳的资产采取的举措更为严厉。
Sanford C. Bernstein的分析师安德鲁?伍德(Andrew Wood)称，管理层应该接受现实，停止追逐销售增长5%-6%的美梦了。不需要进行剧烈的变革，但管理层应该开始考虑调整产品组合的问题了。
Threadneedle Investment英国证券基金经理斯考特?密奇(Scott Meech)认为，公司管理层已经遭到了市场的报复，但他们或多或少也应该为目标定得过高承担责任。Threadneedle Investment持有联合利华大约1%股份，今年早些时候已经对该股进行减仓。
联合利华联席董事长尼奥?菲恣格拉德(Niall FitzGerald)却有不同看法。他在接受一次采访时表示，公司自然增长率略低于4%，这意味著5%-6%的目标通过精明管理还是可以实现的。将来如果有必要下调目标，管理层会采取相应举措。但现在没有这个必要。
菲恣格拉德强调称，公司已经意识到产品组合落后的问题，并经常在评估消费需求趋势的变化，并与对手一样通过收购热门资产提高公司增长能力。去年雀巢收购了小食品公司Chef America，而宝洁则收购了德国护发产品公司威娜(Wella)。
菲恣格拉德上述言论是在昨天公布上半年收益之后作出的。公司上半年净利润为18.7亿欧元（21.4亿美元），较上年同期的18.3亿欧元增长2%。该数字包括总计6.09亿欧元的特殊项目以及商誉和无形资产摊销。
受资产处置拖累，公司上半年收入下降3%，至234亿欧元。不包括资产处置的影响，公司上半年销售额增长2.1%。主打品牌销售额仅增长3.1%，但公司仍预计下半年主打品牌销售额将增长5%。
香水、SlimFast产品及餐馆和酒店供货的销售下滑影响了联合利华上半年的业绩。公司称，这些都是一次性因素，不会影响到下半年业绩。而冰淇淋、多芬及Axe除臭剂销售则表现强劲。
第二季度联合利华及其他欧洲食品公司的股票经历了1990年以来极为糟糕的一个季度，落后于大盘的整体走势。而联合利华的表现又滞后于其他公司。
Bernstein的伍德称，该股今年迄今为止下跌19%，较摩根士丹利资本国际欧洲指数同期表现落后22%。美国的宝洁同期为持平。周三伦敦股市联合利华收盘上涨1.6%至512便士（8.31美元）。
联合利华则认为公司股价被低估。公司首席财务长鲁迪?马克海姆(Rudy Markham)在昨天的电话会议上称，目前股价意味著公司自由现金流不会增长，这远低于公司预期，也与过去业绩不符。
一些分析师和投资者表示，从某种角度来看该股的确被低估。该股本益比为12.6，较欧洲食品和饮料公司低5%，并远低于美国同行20倍本益比水平。
但许多人认为公司产品组合不能实现公司自己预计的大幅增长，这限制了该股表现。据瑞士信贷第一波士顿(Credit Suisse First Boston)称，联合利华的主要增长动力－－家庭及个人护理部门的销售必须增长8%才能抵消食品子公司表现不佳的影响，其食品子公司增幅可能最多仅为4%。
还有一个问题：明年当"增长之路"计划到期后，联合利华又会采取什么举措呢？预计一项新的计划将于明年2月份公之于众。
一些投资者称，联合利华最好能够实现4%-4.5%的中期增长目标，而为了确保实现该增长，公司应该处理掉那些诸如冷冻食品、牙膏和香水等繁杂的产品系列。
菲恣格拉德并未谈及可能进行资产处置。他表示，公司将立足于目前业务，预计不会再进行一次大规模的业务调整。
