Unilever Sees Growth in Russia, Emerging Markets for Beauty Products

+11.56%
Upside
50.19
Market
55.99
Trefis
UL: Unilever logo
UL
Unilever

Unilever (NYSE:UL) has completed its acquisition of the leading Russian beauty products company, Concern Kalina, with a stake of 82%, after obtaining regulatory clearances in Russia and Ukraine. With better growth prospects, Unilever’s recent acquisitions have focused on the personal care segment, and the company may look at more such acquisitions, mainly in emerging markets. Unilever is the second largest consumer goods company in the world after Procter & Gamble (NYSE:PG).

View our detailed analysis for Unilever here

Strengthens Presence in Russia

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With an annual turnover around $400 million, Concern Kalina has a strong product portfolio in Russian Skin and Hair Care segments that include Black Pearl and Clean Line in Hair Care, 100 Recipes of Beauty and Silky Hands in Skin Care, and 32 and Forest Balsam in Oral Care. The acquisition will lift Unilever’s market position in the skin care and hair care segments, as well as give it entry into the oral care market of the high growth markets of Russia and Commonwealth of Independent States (CIS).

Focus on Personal Care Segment

Unilever’s Personal Care business that includes Dove, Lux Skin & Hair Care and Deodorants Division (together contributing to more than 40% of the stock price) has been performing exceptionally well compared to the food business. Growing 5% over the first six months of FY 2011, the segment became Unilever’s largest category contributing to one-third of the company’s sales this year so far.

At the same time, Unilever is reducing its exposure to the food business where potential for growth is weaker. The recent acquisitions highlight the company’s shifting focus from food business to personal care business. In addition to Concern Kalina, Unilever acquired beauty care products maker Albert Culver in October 2011; household, beauty and personal care brands from Sara Lee in 2010; and TIGI in 2009.

We value Unilever with a $32 Trefis price estimate of its stock.