Unilever looks high enough for now as economic downturn trims profits

While that may seem pretty comprehensive, five years ago Unilever had more than 1,600 brands. A plan to reinvigorate sales has led to the sale of 1,200 brands, involving the disposal of 140 companies and 50,000 jobs. The company announced yesterday the completion of a deal to sell yet another part of its stable, its upmarket fragrance business. This has been sold to a US consumer goods company, Coty, adding $800m (£455m) to its coffers.

The disposal programme, part of Unilever's five-year Path-to-Growth plan, has raised more than €6bn (£4bn), helping to halve Unilever's debts. No bad thing, but the growth part of the plan failed. Instead of the 6 per cent annual growth it was meant to deliver, the company managed only a 0.4 per cent lift in 2004 underlying sales.

Enter Patrick Cescau, who replaced the long-standing Niall FitzGerald and has been more general in his approach to targets. He saidPath to Growth was a "straitjacket" that allowed the company to fall out of touch with its customers. Slim Fast, for example, was a market leader, but when the Atkins diet craze swept the US and UK, Unilever did not adapt quickly enough. The first quarter of 2005 showed some improvement in growth, but over the next five years, the company does not expect to outperform market growth of 2 to 4 per cent.

No matter how much vigour M. Cescau brings to the company, it still faces a consumer-spending downturn. Most of the eurozone is in the grip of a curb on spending, while unemployment and economic uncertainty remains high. The UK is also feeling a squeeze, and most retailers have reported a slide in sales.

Undeniably, Unilever has a powerhouse of brands, 11 of which are truly global. Its Pro.activ products, for example, which supposedly reduce cholesterol, tap into the market of health-conscious consumers. But at 551p, about 15 times 2005 earnings, Unilever's shares look fully valued.

Potential for new rail contracts makes growing Mouchel Parkman a good bet

While many of Britain's best known support services groups have found themselves struggling over the past couple of years, Mouchel Parkman, one of the sector's smaller firms, has been busy making the most of its competitors' misfortune.

Yesterday, it announced it had won yet another contract - from Rochdale Metropolitan Council - promising at least £187.5m of revenues over the next 15 years, and taking Mouchel's current order book past £1bn for the first time. The deal represents the company's biggest individual contract win to date, and adds to a collection that also includes the maintenance of the M25.

As well as delivering strong organic growth, Mouchel has also been on the acquisition trail, snapping up the engineering services company Servigroup at the end of May.

But Mouchel's shares have not exactly shot the lights out in recent months. Although the stock has risen more than 15 per cent since this column last tipped it 15 months ago, the shares have struggled since reaching a high of more than 282p in February this year. Trading on a price of about 18 times next year's earnings, it is not a bargain.

But Mouchel shares are a solid bet. With most of its expected revenues for the current year already in the bag, and some great potential for new contracts on the London Underground and elsewhere in the UK rail industry, it continues to look one of the best placed companies in its sector.

Trading fears dampen spirits at Ultimate Leisure

Ultimate Leisure, the owner of 31 nightclubs and late bars in the North of England, said yesterday competition in the sector was taking a toll on the group.

A statement from the company revealed trading had worsened since it updated the market in April. Ultimate said it did not expect things to improve, and profits for the coming year were likely to be "materially less" than the financial year just ended.

In light of this, the group's house broker, Brewin Dolphin, expects profits for the year to June 2006 to fall one-quarter on 2005 results.

Ultimate's problems stem from the fact that drinkers have had a growing army of outlets to go to, and while Ultimate's customers' spend per head has remained at roughly the same level, customer numbers have fallen.

Weaker consumer spending power is also sending revellers home before they get to Ultimate's late-night venues. Worse still, recent licensing reform will allow more operators to stay open later, resulting in even more competition for Ultimate.

Still, all its properties are freehold-owned and its assets are valued at about £65m. But this reliance on freehold property is hampering its growth. It had been opening three or four bars a year, butnow it prefers to spend on existing estate to try to win back customers.

Takeover speculation is rife. Dawnay Day, the investment vehicle owned by Guy Naggar, who recently took the Chez Gerard restaurant group private, owns about 21 per cent of Ultimate and may stage a takeover. For this reason, hold on to its shares.

Suggested Topics
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

Bill Cosby rape allegations explained

Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

You know that headache you’ve got?

Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

Michael Dawson: I’ll thank Spurs after we win

Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

Frank Warren column

Dr Wu has big plans for the professionals yet he should stick to the amateur game
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines