Unilever Expands Footprint in Middle East With New Facility in Dubai

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Global consumer processed goods behemoth Unilever (NYSE:UL) is set to expand its presence in the Middle East and North Africa region with a new €75 million ($82 million) manufacturing facility in Dubai. [1] The factory in Dubai is being set up with the intention of expanding Unilever’s presence in the personal care market in the region. It is expected to be operational in two years.

Unilever currently has nine manufacturing facilities in the Middle East and Africa region, which manufacture personal care and home care products, as well as tea. [2] The company plans to manufacture all core product categories of its personal care portfolio in the new facility, including shampoos and shower gels, among others. The expansion plan ties in with Unilever’s focus on consolidating its position in the personal care industry (Read: The Rise of Personal Care in Unilever’s Portfolio). The company plans to strengthen its market share in the premium personal care segment as well as expand its geographical footprint in the emerging markets over the medium term.

In 2014, Unilever derived over 30% of its revenues of $57 billion [3] from the AMET/RUB region (Asia, Africa, Middle East, Turkey, Russia, Ukraine and Belarus). This region bore the brunt of currency headwinds in 2014, and revenues thereof declined the most among the three regions in which Unilever operates. Revenues from AMET/RUB fell by 4% year on year, compared to a 2% decline in the Americas as well as Europe. In comparison, Unilever’s overall revenues contracted by 3% year on year in 2014. [4]

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It may be noted that even though Unilever failed to realize revenue growth in Africa and the Middle East region in 2014, it is currently the fastest growing market for beauty and personal care products. According to Euromonitor, the region overtook Latin America to gain the top spot in 2014, with total retail sales of $25.7 billion. [1] With its latest move, Unilever appears to be moving quickly to capitalize on this high-growth market and gain a potential first mover’s advantage in the region’s personal care industry.

We have a price estimate of $39 for Unilever, which is about 10% lower than its current market price.

See our complete analysis for Unilever here

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Notes:
  1. Unilever invests €75m into new manufacturing plant in Dubai, Global Cosmetics News, May 28, 2015 [] []
  2. Unilever expands personal care presence in Dubai with new facility creating 600 jobs, Cosmetics Design, May 27, 2015 []
  3. Based on an annual average exchange rate of $1.1766 per Euro []
  4. Unilever 2014 Annual Report []