Ratio Analysis & Time Series Analysis

Md. Ariful Islam

ID No: 2011210000065

Performance of Unilever Bangladesh

INTRODUCTION

Unilever Bangladesh is a leading Fast Moving Consumer Goods Company with a heritage of over 48 years. Unilever started its onshore operations in Bangladesh in 1964 when its soap factory was set up at Chittagong. Unilever Bangladesh is market leader in 7 of the 8 categories it operates in, with 16 brands spanning across Home and Personal Care and Foods. Unilever Bangladeshs operation provides employment to over 10,000 people directly and indirectly through its dedicated suppliers, distributors and service providers. 99.8% of Unilever Bangladesh employees are locals. We also have a large number of Company employees working abroad in other Unilever companies as expatriates. Unilever Limited is one of largest multinational business firm in the world. Over the last four decades, Unilever Bangladesh has been constantly bringing new and world-class products forth Bangladeshi people to remove the daily drudgery of life. Over 90% of the countrys households use one or more of our products. It provides sixteen verities brands and try to mitigate all types of human demand by introducing with new innovative products. Unilever Operations in Bangladesh provide employment to over 10,000 people directly and through its dedicated suppliers, distributors and service providers. 99.5% of UBL employees are locals and they have equal number of Bangladeshis working abroad in other Unilever companies as expatriates. Unilever wants to attract the best graduates to join in their leadership actionsHISTORICAL BACKGROUND OF THE UNILEVER

Unilever Bangladesh is a company that has its own history intrinsically built with the development of our nation and our culture. It has been part of the Bangladeshi household since the 19th century with the same intention of bringing cleanliness and convenience to households as we do today. Back then Sunlight soap was marketed through Lever Brothers India limited throughout the undivided India. Later on, Lever Brothers Pakistan limited started its operation in Bangladesh on a larger scale. In 1964, our soap manufacturing facility was setup in Kalurghat, Chittagong.With time it gradually evolved and diversified into manufacturing personal products like skin care creams, toothpastes, shampoos, detergent powders, and so on. Accumulating manufacturing experience over 40 years, we have a legacy of leading the market with international brands offered at affordable prices. Today, with 13 different brands in 8 different categories, Unilever Bangladesh stands as one of the most progressive partner in development for the Government of Bangladesh.1964-1972Productions started off with Sunlight soap and Lifebuoy soap. After the war of independence in 1971, Bangladesh became an independent country. At this time, Lever Brothers Bangladesh Ltd. was constituted with Unilever owning 60.75% shares and the Government of Bangladesh owning the remaining 39.25% shares.

1972-1980 Post liberation period evidenced accelerated growth for the company. Demand started rising and the company continued its mission to meet consumer needs by producing quality soaps, introducing Lux - the beauty soap and Wheel. Launched in 1972 Wheel entered the merchandised laundry category, traditionally dominated by cottage soaps. It appealed to the consumers with unique care benefits for hand and fabric, a generic weakness in cottage soaps. It gradually became the secret ally of Bangladeshi women by extending the caring hand to ease her daily laundry chores.1980-1990The early eighties witnessed expansion of the company through diversification. Calibrating direction, the mission now included enhancing quality of life through other personal products aspiring aestheticism like sparkling white teeth, fresh breath, beautiful hair, and glowing skin. A Personal Product Plant was established to manufacture shampoo, toothpaste, and skin care creams. Sunsilk Shampoo, Closeup Tooth paste, Fair and Lovely for skin care and Vim for dish washing was produced and marketed to bring great international and regional formulations to Bangladeshi households at affordable prices. 1989 heralded the beginning of a fairy tale story the initiation of LUX photogenic contest that brought the real life experience of glamour, fame and fortune to the doorsteps of young girls throughout the country.1990-1998In the early 90's Unilever Bangladesh entered the tea-based beverage market introducing Lipton Taaza, Lever's flagship packet tea brand, with the objective to be the most preferred tea of the Bangladeshi consumers. World renowned Ponds cream and Pepsodent the dental hygiene expert began to be manufactured from our Kalurghat factory. Washing drudgeries of the busy homemakers were washed away with the introduction of Wheel washing powder and Surf Excel for premium wash. In 1996-1997, our manufacturing facility owned and run by a third party was set up outside Dhaka for wheel washing powder. With formulations suitable for local conditions, the washing powder concept brought about a huge revolution in fabric washing habits in the country.1998-2004These are the golden years in the history of Unilever Bangladesh as the company turned around from severe losses due to competitive backlash - to a company with 6 years of consecutive growth. Around the end of November 2001, our new personal products factory Sankalp in Kalurghat started production which helped us meet the market needs from a shift on our dependence on soaps to diverse personal grooming categories.

This is also the era when Unilever Bangladesh introduced many exciting new products such as Ponds face wash to end soap related facial skin woes or Lipton double chamber tea bags for more zest in our tea cups and the markets responded enthusiastically. In 2001, we brought about a new excitement in the kitchen care sector with the introduction of Vim bar, the dish cleaning soap a concept of convenience and common household habits combined together.

In a companywide move to come out from behind the great brands and be known as Unilever worldwide, Lever Brothers Bangladesh limited officially changed its name to Unilever Bangladesh in December 2004.PRODUCTS & SERVICESVaselineProduct Overview

Our mission is to provide the knowledge, advice and products that enable everyone to enjoy great, healthy looking skin every day.

Vaseline makes accessible, everyday skin care products. We dont believe in quick fixes. We believe that health of any sort is about the combination of all the small choices you make each day. We know that our products have profound, multiple benefits - and can play a really important role as part of your overall skin regime.

We make market-leading products in every region of the world, including Hand and Body Lotions, Body Washes and Petroleum Jelly. We offer products, but we also offer advice. And we try to share everything we've learned over all those decades about how skin works and how to keep it in great condition.Lifebuoy

Product Overview

As the worlds leading health soap, Lifebuoy aims to make a difference by creating accessible hygiene products (soap) and promoting healthy hygiene habits. With this in mind, Lifebuoy aims to change the hand washing behavior of 1 Billion people by 2015.The desire to be clean, active and healthy is intrinsic to every one irrespective of age or economic status. Lifebuoy understands this need and champions the cause for hygiene and health around the world.An inspiring vision for more hygienic, healthier and ultimately more vital communities is the driving force behind the Lifebuoy brand. To realize this vision, Lifebuoy looks to consistently innovate and provide accessible hygiene and health products to a wide variety of consumers.The vision also commits the Lifebuoy brand team to visible action, inspiring projects that motivate consumers to improve their hygiene behavior.Sunsilk

Product Overview

Sunsilk believes that everyone deserves beautiful hair.

Thats why were collaborating with the worlds top hair experts and applying their knowledge and secrets to our range. Each one of our Sunsilk Co-Creators specialises in a different element of hair care from cutting-edge catwalk styles to sleek straight looks, captivating colour, or covetable curls. With their help, Sunsilk is designed to help you get perfect results, whatever your hair type.

LuxProduct Overview At LUX, we are proud to tell our age! We have been creating exquisite beauty products since 1925 when Lux launched the worlds first mass market beauty bar, made like the costliest French soap. Since then, Lux has been associated with over 400 of the worlds most glamorous actresses from Hollywood legends like Elizabeth Taylor, Audrey Hepburn, and Grace Kelly, to Bollywood Royalties such as Ashwarya Rai and Katrina Kaiff.

Our Product PhilosophyIts quite simple really: its all about pleasure. Lux is committed to creating indulgent skin treats women crave to provide an exceptional experience in and out of the shower. We aim to bring the best of beauty to every woman in the world. We infuse our products with fine fragrances crafted by the worlds best perfume experts. We craft amazing, state of the art textures, rich in indulgent ingredients, all designed to exceed consumer expectations. Lux is not just a soap that smells good; its a fine fragrance you can bathe in.

Dove

Product Overview Dove believes that beauty - feeling and looking your personal best - is the result of proper care. Dove always aims to deliver products which tangibly improve the condition of skin or hair and give a pleasurable experience of care, because when you look and feel beautiful, it makes you feel happier. Its a feeling every woman should experience every day. From the beginning Dove has always celebrated real women at the heart of everything the brand does and believes. Real beauty embraces diversity - no woman is or should feel excluded from the world of beauty that the brand represents. Real women are the brands true inspiration.

Rexona

Product Overview

Rexona wont let you down. Thanks to the unique technology developed by Unilever scientists, which releases extra protection when you need it most; you can be certain Rexona will keep you feeling fresh all day.

Our research and development experts know that men and women have very different demands when it comes to deodorants. Thats why weve developed products to meet their individual needs. Our proprietary body-responsive technology means Rexona can sense when your body needs extra protection and provide it on cue.In fact, Rexona scientists discovered that theres a difference between the way your body produces sweat when youre hot, and the way you start sweating when youre stressed or anxious. Rexona is designed to deliver anti-perspirant protection on both counts.

And with our No White Marks technology, your clothes will stay looking as fresh as youll feel. Rexona was the first brand to introduce its Crystal range deodorants which go on completely clear, eliminating the white marks aerosols and sticks can leave on dark clothes.Lipton

Product Overview Lipton is one of the worlds greatest refreshment brands. Its the worlds best-selling tea brand, has been established for more than 100 years, and is available in more than 100 countries. Weve learned a lot about tea over the past century and Lipton now offers an array of tea-based drinks, from leaf tea to tea bags, Lipton Ice Tea soft drinks, zero calorie infusions and healthy green tea thats packed with antioxidants. Were proud of our heritage but were certainly not afraid to innovate. Our experts broke with teabag tradition to come up with the Lipton Pyramid tea bag which allows tea leaves more room to move and infuse for a better brew. And our Lipton Cold Brew tea bags, which make instant ice tea easy, are another example of how were reinventing one of the worlds favorite drinks.

Surf ExcelProduct Overview

Surf is on a mission to make laundry delightful through great cleaning and gorgeous fragrances. Surf works with experts in aromas from the leading perfume house in the world to develop products with amazing fragrance using exciting ingredients such as essential oils and natural extracts to lift up your laundry and inspire your senses. And of course, Surf detergent offers brilliant clean and multi-sensorial satisfaction at affordable prices.

The suds, the scent, the freshness, the colors and the cleaning all add up to provide a delightful laundry experience.

The Surf brand launched in 1959 and is now available in Europe, Latin America, Asia and Africa with a comprehensive range of offerings including bars, powders, liquids, tablets and capsules.RATIO ANALYSIS

Ratio Analysis is used as a way of analyzing the performance of a company. It covers five major areas, namely, (i) Liquidity, (ii) Leverage, (iii) Profitability, (iv) Efficiency and (v) Market Value.

Liquidity Ratios are used to measure the short-term solvency of a company. They show the ability of the company to quickly convert its assets into cash to pay its short-term debts. The higher the ratios, the more liquid the company and the less likely the company experience financial distress in short-term basis.

Current Ratio = Current Assets / Current Liabilities

Interest Coverage Ratio = Earnings before Interest and Tax (EBIT) / Interests

Quick Ratio = (Current Assets -Inventory) / Current Liabilities

Leverage Ratios are used to measure the extent of the company's financing with debt relative to equity and its ability to cover interest and other fixed charges. They address the company's long-term ability to meet its financial leverage. The higher the ratios, the more indebtedness the company owes, which signal the possibility the company, will be unable to earn enough to satisfy its debt obligations.

Long-term Debt/Equity Ratio = Long-term Debt / Equity

Total Debt/Equity Ratio = (Short-term Debts + Long-term Debts) / Equity

Profitability Ratios measure the overall earnings performance of a company and its efficiency in utilizing assets, liabilities and equity.

Net Profit Margin = Net Profit after Taxation / Turnover

Operating Profit Margin = Operating Profit / Turnover

Return on Equity = Net Profit after Taxation / Equity

Return on Total Assets = Net Profit after Taxation / Total Assets

Return on Capital Employed = Net Profit after Taxation / (Total Assets - Current Liabilities)

Efficiency Ratios demonstrate how efficiently the company uses its assets and how efficiently the company manages its operations.

Inventory Turnover = Turnover / Inventory

Assets Turnover = Turnover / Total Assets

Market Value Ratios are used for value comparison. These Ratios are not contained in financial statements and they can only be calculated from publicly traded companies.

Price Earnings Ratio = Current Stock Price / Earnings per Share (EPS)

Market-to-Book Ratio = Market Value of Equity / Book Value of Equity

RATIO ANALYSIS OF UNILEVER COMPANY LTDCapital structure of the company (2004-2008)1. Calculation Current RatioFormulaCurrent Asset / Current liabilities

20045478963587/3985371982 = 1.37 times

20058769354789/6985123478 = 1.26 times

20066231476324/3121191718 = 1.98 times

20078976987456/3223516224 = 2.78 times

20087692458963/3231531631 = 2.38 times

2. Quick or Acid-test ratioFormula(Current Asset / Inventory) / current liabilities

2004(5478963587-1674353758) / 3985371982 = 0.95 times

2005(8769354789-2456378926) / 6985123478 = 0.90 times

2006(6231476324-4256315789) / 3121191718 = 0.63 times

2007(8976987456-5254789134) / 3223516224 = 1.15 times

2008(7692458963-5689745623) / 3231531631 = 0.62 times

3. Cash RatioFormulaCash / Current liabilities

2004682589645/3985371982 = 0.17 times

200589542368/6985123478 = 0.01 times

20062145698756/3121191718 = 0.69 times

20072356712937/3223516224 = 0.73 times

20081976985463/3231531631 = 0.61 times

4. Interval Measures

FormulaCurrent Assets / Average daily operating cost

= Current Assets / (COGS / 365 days)

2004547863587/ (2348695789/365 days) = 851.46 days

20058769354789/ (3125249723/365 days) = 1024.17 days

20066231476324/ (2791371864/365 days) = 814.83 days

20078976987456/ (43569872921/365 days) = 75.20 days

20087692458963/ (3256479137/365 days) = 862.20 days

5. Interval TurnoverFormulaCost of goods sold / Inventory

20042348695789/1754440288 = 1.34 times

20053125249723/1956874239 = 1.50 times

20062791371864/1139762485 = 2.45 times

200743569872921/26983746125 = 1.61 times

20083256479137/1453259746 = 2.24 times

6. Days sale of InventoryFormula365 days / Inventory turnover

2004365 days / 1.34 = 272.38 days

2005365 days / 1.50 = 243.33 days

2006365 days / 2.45 = 148.97 days

2007365 days / 1.61 = 226.71 days

2008365 days / 2.24 = 162.95 days

7. Receivable turnoverFormulaSales / Account receivable

20043986512478 / 4875693479 = 0.82 times

200543156988279 / 5965879812 = 0.72 times

20064868924735 / 5321476986 = 0.91 times

20075798134798 / 6793498576 = 0.85 times

20083478965218 / 1784569863 = 1.94 times

8. Days sales in receivableFormula365 days / Receivable turnover

2004365 days / 0.817629839 = 446.41 days

2005365 days / 0.723396785 = 504.56 days

2006365 days / 0.914957397 = 398.92 days

2007365 days / 0.853482898 = 427.65 days

2008365 days / 1.949469892 = 187.23 days

9. NWC turnoverFormulaSales / NWC

= Sales / (Current asset-Current liabilities)

2004398652478 / (5478963587-3985371982) = 0.38 times

20054315698279 / (8769354789-6985123478) = 0.41 times

20064868924735 / (6231476324-3121191718) = 0.52

20075798134798 / (8976987456-3223516224) = 0.66

20083478965218 / (7692458963-3231531631) = 0.74

TIME SERIES ANALYSISWhat Is Time Series Analysis?

A time series is a set of data observed over time

Examples:

Stock market returns each trading day over the last month

Monthly rainfall in Manchester

Number of recorded property crimes each year for the last 50 years

Weekly online sales by Unilever since 2005 Current ratio

Years20042005200620072007

Unilever Company Ltd.1.37times1.26times1.98times2.78times3.38times

Quick or Acid test ratio

Years20042005200620072007

Coca-cola Company0.95

times0.90

times0.63

times1.15

times0.62

times

Cash ratio

Years20042005200620072007

Square Group0.99

times0.56

times0.89

times0.75

times0.85

times

Cash ratio

Years20042005200620072007

Bashundhara Group0.55

times0.68

times0.72

times0.78

times0.83

times

Opportunities and threat of the Unilever since 2006

In 1999, Unilever implemented what they considered to be an ambitious strategy named 'Path to Growth' which they believed achieved a lot in terms of 'brand focus, global buying, operating margins and capital efficiency' (Cescau & Rivers, 2007b). However, according to the then Group Chief Executive Patrick Cescau, the 'strategy failed to transform growth performance' (Cescau & Rivers, 2007b, 1). Consequently, adjustments were made to the strategy between 2005 and 2006, aimed at reorganizing and streamlining Unilever's organization and to increase awareness of the Unilever brand (Johnson & Scholes, 2006).

The changes improved Unilever overall between 2006 and 2009 despite the economic downturn which was to occur during the course of the strategy implementation. Between this time period Unilever primarily focused on four areas: innovation, disciplined execution of strategy, focused cost cutting and driving a performance culture (Unilever, 2009a).

In terms of innovation, Unilever delivered 'bigger and better innovations, rolled out faster and to more markets' (Unilever, 2009, 5). The tremendous success in fast and effective rollout of innovations was enhanced greatly by the one organizational structure (One Unilever) introduced into the business as a result of the adjustments made to Path to Growth (Unilever, 2009a). For example, the Dove Minimizing Deodorant has been rolled out across 37 markets and Clear Shampoo across 37 markets. The success in this area has also been reward by the business publication Fast Company which 'recently recognized us as the fourth most innovative company in advertising and marketing.

Financial Performance

Brand Awareness

According to Unilever, 'brands and innovation are at the heart of everything we do. We develop our products to keep pace with changes in consumer lifestyles and to appeal to people at all income levels. Success means getting bigger and better innovations into the market faster, supported by the very best marketing' (Unilever, 2009, 8). These statements are indeed backed up by initiatives undertaken in the last few years in the UK to increase brand awareness. Some of these initiatives will be briefly described.

According to Mathiesen (2009, 19), 'a recent campaign for Lynx for Men, one of Unilever's men's deodorants, resulted in a 56% increase in (prompted) brand awareness in the UK'. This campaign was done through mobile marketing. The campaign sought to achieve the following objectives (Mathiesen, 2009):

To enhance awareness of the Lynx brand

To market to the 16-24 year old male who are traditionally hard to reach through traditional advertising methods

To promote the Lynx brand as attractive to women and modern

The success is not only evidenced by the 56% promoted awareness, according to Mathiesen (2009), 86% could recall the Lynx advert and 44% of people felt more positive about Lynx after seeing the add.

Not only are Unilever working on improving product branding, they have most significantly moved to increase the company brand image. In March 2009, Unilever UK and Ireland began putting the 'corporate branding on its product brand advertising including TV, posters and press (Unilever, 2009b), starting with Flora. This move was influenced by research which showed that 'consumers in the UK and Ireland have relatively low awareness and knowledge of our company, compared to some of our competitors.Recommended Strategy for Unilever

'We work to create a better future every day. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business that will allow us to double the size of our company while reducing our environmental impact' (Unilever, nd).ConclusionI realize I am writing to you for the last time after 35 years of service with Unilever. The changes within Unilever over this period have been truly transformational both in terms of product portfolio and geographical spread. Our turnover in Western Europe has declined from 65% to 34% of Unilever sales. The expansion has been picked up by the developing countries which represent over 40% of our turnover. Moreover, 35 years ago 25% of Unilever sales were outside the fast moving consumer goods sector. Reference

Annual report 2004-2008, Unilever Bangladesh Limited.

Internet

www.unilever.com.bdwww. consumer.com

www.jobscnel.com

www.innovationzen.com www.product & service.com

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