research article on the unilever foods limited pakistan

1. Brief recording
Financial analysis of UNILEVER FOODS
PAKISTAN LIMITED
contributes significantly to the national
INTRODUCTION exchequer through tax revenue and is
Unilever is one of the largest FMCG committed to developing downstream
companies of the world, represented in capability through technology transfer to
150 countries with over 200,000 3P manufacturers, suppliers and
employees. In Pakistan, Unilever made its distributors. Globally Unilever is
debut in 1948, and today it is one of the increasingly drawing talent from its
most prominent multinationals in the operatives in Pakistan, opening new
country operating though two affiliated vistas for career development.
companies viz. Unilever Pakistan and
Unilever Pakistan Foods. The two public FINANCIAL PERFORMANCE FINANCIAL
YEAR 2010-2012
listed limited companies have 5 wholly
owned and 7 third party manufacturing In a tough operating environment, sales
sites across Pakistan and employees growth slowed from 22% in 2011 to 19%
around 1,500 people on their payroll and
many thousands indirectly. in 2012, the lowest in the last three years,
Committed to meet the growing with volume growth contributing to a
aspirations of the consumers, Unilever third . Sales of RS.4,940,251 has been in
Pakistan Foods Ltd. Has consistently last year and in FY12 Rs.5,861,096 has
provided high quality, branded products been earned but the cost on sales is
such as Energile, Knorr and Rafhan. greater than previous year but it shows
On 24th April, 2007 Rafan Best Foods
that cost of sales are also greater than the
Limited was renamed Unilever Pakistan
Foods. Limited, bringing the same FY11 and FY10.
promise of world class products for your During the year the gross profit margin
everyday needs. Unilever has a wide has been decreased by 1% by 96 bps.
reach and it's distribution network Turnover up by RS. 921 million . Profit
reaches remote regions within the from certain operations up by Rs.149
country. With a wide range of offerings, million.
including low unit priced packs, Unilever
Growth of EPS also declined from 41% in
Pakistan addresses all segments of the
socio-economic pyramid. 2011 to 16% Rs.116.14 in 2012 with
Unilever is a proud part of Pakistan’s gross margin down by 96 bps vs. previous
history, contributing to economic growth year.
of the nation and catering to the daily
needs of 170 million people. It

2. 1.2
45%
40% 1
35%
30% 0.8
25%
2012
20% 0.6 Current Ratio
15% 2011
10% 0.4 Quick Acid Ratio
5% 2010
0% 0.2
gross net profit gross sales 0
profit margin profit
2012 2011 2010
margin margin
Company financial ratio is in FY12 less disposal of fixed assets, but also due to
than 1 it is 0.96 mean company is in positive change in mix, higher scale and
problem regarding to short term current therefore better cost absorption, Profit
obligation. In FY11 market liquidity is after Tax in 2012 rose by 34%. Without
about 0.88 and as compared to FY10 is benefit of one-off adjustments, Profit after
less in the current years in FY10 current Tax growth would have been 23%.
ratio is 1.09 means company was in Despite of all challenges , such as difficult
equilibrium position but in FY12 it has economic environment within the
difference about 0.13 points. country , severe competition in the
Company has lost some sort of control on market and sharp fall in the value rupee
current assets in FY11 but it has nearly against the US dollar , the net income (
covered in FY12 but still it is not upto the income after tax has between FY12-FY11
mark as compared to FY10, the lowest in is 15.97% as between FY11 and FY10 it
the last three years, with volume growth has 40.97% it means there is a big
contributing to a third. Volume growth in the difference in their income ratio.
more mature categories – tea, soaps and INTEREST RATE RISK
detergents, which together represent two- At December 31, 2012, the Company had
thirds of the business, grew at a low 3%. In
variable interest bearing financial assets
pursuit of reshaping the business, the focus is
of Rs. 201.1 million (2011: Rs. 81.6
on growing the emerging categories which
million) and liabilities of Rs. 222.7 million
presently represent a third of our business. In
2012 these grew by 20% in sales with nearly (2011: Rs. 226.9 million), and had the
half through volume. interest rate varied by 200 basis points
Partly due to one-off reversals of prior with all the other variables held constant,
year restructuring charges and profit on profit before tax for the year would have
been approximately Rs. 0.43 million
(2011: Rs. 2.91 million) lower / higher,
mainly as a result of higher / lower
interest expense on floating rate

3. borrowings. Credit risk represents the of Rs. 14.67 million (2011: Rs. 34.73
accounting loss that would be recognized million) were past due but not impaired.
at the reporting date if counter parties The carrying amount of trade debts
failed completely to perform as relates to a number of independent
contracted. The maximum exposure to customers for whom there is no recent
credit risk is equal to the carrying amount history of default.
of financial assets. Out of total financial Company has also increased his trade and
assets of Rs. 466.35 million (2011: Rs. payables by RS.182700/-.
344.8 million), the financial assets which Final dividend at the end of the year
are subject to credit risk amount to December 31 , 2011 Rs.50 per share but
Rs.146.11 million (2011: Rs. 188.56 at the end of the year December 31 ,2012
million).December 31, 2012 trade debts Rs.50 per share it has decreased by RS.14.
Unilever food Pakistan limited
PROFITABILITY RATIOS UNIT 2012 2011 2010
Gross profit ratio Times 0.38 0.39 0.38
Net profit to sales % 12.20 12.48 11.00
EBITDA margin to sales % 18.99 19.40 17.00
Operating leverage ratio % 0.86 1.72 7.45
Pre Tax return on equity % 179.10 185.00 160.00
Post tax return on equity % 121.02 125.00 108.00
Return on capital employed % 101.77 103.00 88.20
LIQUIDITY RATIO
Current Ratio Times 0.96 0.88 1.09
Quick / Acid test ratio Times 0.38 0.36 0.51
Cash to current liabilities Times 0.15 0.08 0.12
Cash flow from operations to sales Times 0.14 0.20 0.09
ACTIVITY
Inventory turnover ratio Days 67 58 50
Debtor turnover ratio Days 10 11 8
Creditor turnover ratio Days 113 89 69
Total assets turnover ratio Times 3 3 4
Fixed assets turnover ratio Times 9 8 13
Operating cycle Days 35 (20) (11)
Liquidity position has also improved by 0.02 with respect of
The liquidity position of the company FY11 but as compare to FY10 it is not so
remained evident. in the FY11 it was not much good.
satisfied with respect of FY10 it is still not Current asset ratio has been improved by
so much good ratio stood on the 0.96 and 3.62% it means that company had current
I t is improved by 0.13.its acid test ratio asset than previous year. D/E ratio has
been declined by 0.13times.the inventory

4. turnover ratio shows that in the FY12
Company has huge inventory.
Future outlook
The business aims to continue on its
journey of profitable growth. This will not
be easy due to various external challenges
I.e. Law and order conditions, currency
depreciation, inflationary pressure,
employee attrition, poor GDP growth and
Competitive intensity. Our understanding
of consumers, access to unilever’s global
expertise, R&D capability / innovations
and better customer Service will help us
to counter the aforementioned challenges.
Besides, we will continue to provide our
consumers with Better value products
driven by strong brand equity. As a means
to achieve this, we will also leverage our
ability to attract, Develop and retain the
best talent in the country.