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PART A
Applicationand Critical evaluation of ecient market hypotheses for
Unilever PLC during a period from 01.01.2013 to 31.12.201
INTRODUCTION
Unilever is a British-Dutch multinational consumer goods company co-
headquartered in Rotterdam, Netherlands, and London, United
ingdom! Unilever o"ns over #$$ %rands "ith products including &ood,
%everages, cleaning agents and personal care products! 'roducts are
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availa%le in more than ()$ countries! *t is a dual-listed company
consisting o& Unilever N!+!, %ased in Rotterdam, and Unilever 'L,
%ased in London
Unilever "as &ounded in ()$ %y the merger o& the Dutch company
.argarine Unie and the British company Lever Brothers! During the
second hal& o& the /$th century the company increasingly diversi0ed
its products and e1panded its operations "orld"ide! .ost o& Unilever2s
income comes &rom 3ast .oving onsumer 4oods 53.46!
7he Dutch and U %ranches o& the company share the same %oard o&
directors and operate as a single %usiness! 7he company has t"o share
prices though, one &or Unilever N+ and one &or Unilever 'L! 8uro is the%ase currency &or all Unilever accounts, so costs, revenues and pro0ts
need to %e converted into this currency! 81change rates a9ect
Unilever2s pro0ts!
Unilever targets the su%ur%an and ur%an middle class : upper middle
segment o& the population! ;$< o& the pro0ts are created %y the top /$
%rands "ith 'ersonal are and 3ood products leading the lot! 3ood
products gives them an edge over their nearest rival 'rocter and4am%le! *nnovation and regional adaptation policies and have helped
increase their customer %ase, "ithout losing out on stringent quality
requirements! 7o meet large regional demands in Asia and A&rica,
manu&acturing processes have %een outsourced to cheaper locations!
Unilever has gro"n aggressively over the last ($ to (= years and is a
ma>or player in the 3.4 sector currently and the &uture!
833**8N7 .AR87 ?@'7?8*
7his hypothesis is %ased on the &act that it is not possi%le &or investors
to purchase undervalued stocCs and sell stocCs &or inated prices since
all the in&ormation pertaining to the said stocCs are availa%le &or
revie"! 7here%y to attain higher returns an investor has to taCe risCs
"ith his investments!
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ince the stocCs have already %een accurately priced and all the
in&ormation is transparent, the use o& any trading strategies or e1pert
stocC evaluation does not help "ith maCing or predicting pro0t or
related risCs! 7hat is, there is no &ounded scheme to &undamentally or
technically analyEe a stocC marCet trend to ensure consistent success
"ith stocC marCet trades!
7he theory has %een highly controversial over the years! ne such
argument is ho" even though priced the same, the valuation o& stocCs
may %e or seem di9erent to di9erent investors! *n addition to this the
&act that the reaction and response time o& stocCs to in&ormation and
investors vary is another point against the hypothesis! 7he &act that
human errors and anomalies a9ect stocC prices can %e used to predict
or ensure returns &rom investments! Another argument states that i&this hypothesis is true the investors can place all their assets in a given
inde1 and ensure marCet returns similar to all in the marCet and thus
minimiEe or eradicating any possi%le e1penses in the investment and
maintain the marCet inde1!
B87A
Beta is the historical measure o& risC o& a security in comparison to the
marCet as a "hole! *t also an indicator o& the security2s a%ility torespond to positive and negative s"ings as per the rally in the marCet!
7he %eta o& Unilever is $!F; "hich sho"s a very strong aGnity "ith the
marCet! 7here&ore i& the marCet has a good rally, and closes on a high,
you can rest assured that Unilever share prices "ould also increase!
As Unilever2s %eta is lesser than (, though it has a strong a tendency to
s"ing "ith the marCet, it is still less risCier than the marCet!
7he possi%ility o& Unilever2 returns is less risCy than the marCet!7he e1pected rate o& return o& Unilever %ased on risC
7he e1pected annual return o& Unilever is H!=$< "hereas the required
return as per the A'. model is #
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Evaluation of EMH for Unilever PLC- LON: ULVR
1/!/"1#- Share prices decreased by 5%
Annual report &or the year /$( "as released to the pu%lic! As per the
report, the turnover &or the year /$( had decreased %y < &rom the
previous year! 7his seems to %e reason %ehind the decline in investor
sentiment &or Unilever shares during this "eeC! 7his "as a temporary
decline triggered %y the ne"s o& a lo"er turnover! 7he shares
re%ounded the ne1t "eeC %y (
7he annual turnover o& Unilever decreased %y
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7he main reason &or the gloom in spite o& the increase in the operating
pro0t "as %ecause core operating pro0t &ell &rom ;!$= %illion 8uros to
;!$( %illion 8uros!
?ence all in all , the results "ere pale in comparison to the previous
year o& /$(/, hence the &all in share prices! *t is interesting to note thatin the previous "eeC -/$I(I/$(# -Unilever shares increased %y /ect cargo and general cargo %ased in Ke%el Ali
3ree one in the United Ara% 8mirates! 7hey customiEe comprehensive
supply chain solutions &or customers "hich are usually a com%ination
o& Marehousing, ross tuGng, 3reight, ustoms learance :
Documentation, Du%ai .unicipality *nspection and learance,?andling, *nventory .anagement and Redistri%ution!
7ri%urg has * certi0cations 5* )$$(/$$FO ?A (F$$(/$$;O
* (#$$(/$$#6 "hich is a testimonial to the stringent quality, it
incorporates into its processes and systems! 7his has made 7ri%urg
3reight ervices, the logistics service provider o& choice %y leading
companies in the .iddle 8ast! ome o& its Cey clients include
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7he unit o& measurement o& space , "hich 7ri%urg sells is Qc%m2 or cu%ic
meters "hich is essentially derived as length 1 %readth 1 height, "hich
is charged on a daily %asis!
7he rate &or ool torage is A8D (Ic%mI day "hereas &or Dry torage,
the rate is A8D $!=$Ic%mIday!
3R8*4?7 3RMARD*N4 7ri%urg moves cargo either %y sea, air or land
on %ehal& o& its customers "ithin Asia, 8urope and North America! )$o% related costs "hich are
incurred to e1ecute a particular tasC!
a6 Marehousing-i! torage costs, "hich is primarily the rent o& the &acility!ii! Utilities- D8MA!
iii! Ko% related e1penses- consuma%les liCe "rapping 0lm,pallets , straps etc!
%6 3reight 3or"arding : 7ransportationi! Actual costs paya%le to shipping lines, Du%ai ustoms,
Du%ai 'ort Morld etc!ii! 7rip charges &or trucCs procured &rom vendorsiii! Any other vendorIagency charges directly related to the
>o%!
*ND*R87 7
*ndirect costs o& 7ri%urg &or Marehousing and 3reight 3or"arding :7ransportation can %e classi0ed into the %elo" categories
i! ta9 ostsii! RegulatoryIompliance ostsiii! *nsurance costsiv! BanC osts or ost o& apitalv! *7 and ommunication osts
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vi! onsuma%les and other unallocated costs!vii! .arCeting ostsviii! 3uel osts
N! B! *n 3reight 3or"arding Dept- D8MA costs are considered as an
*ndirect ost!
H< o& its costs are .anpo"er and ta9 related e1penses , as
discussed earlier, its higher than average investments in manpo"er is
%ecause it tries to o9er e1i%ility to its customers in terms o& operating
time and e1ecution timelines as its di9erentiator &rom other logistics
companies!
&UD)ETIN) PRACTICE+
7he annual %udgeting is a very important e1ercise in 7ri%urg %ecause it
operates in an industry "here daily cash requirements are high !
7here&ore, the central theme o& the %udget is
i! 7o map the costs o& running and maintaining the e1isting
operation!ii! LinCing the %udget to drive organiEational gro"thiii! trategic Allocation o& resourcesiv! Alignment o& organiEation "ith the competitive strategy
7he %udgeting practices employed at 7ri%urg are goal driven! 7he aimis to try and achieve as much comprehensiveness as possi%le so as to
arrive at a %udget "hich is realistic and achieva%le so that
organiEational goals can %e set accordingly!
Based on the %udget, the "orCing capital requirements are determined
and arranged!
7R*BUR4 BUD4878D +I A7UAL2 /$(#
Attached is the Budgeted vs Actual 0gures o& the 7ri%urg Budget o&/$(#
*n the /$(# 7ri%urg Budget &or all divisions, the total pro>ected %udget
"as &or a revenue o& A8D H/!F million, targeting a 4ross 'ro0t o& A8D
/=! ) million and a Net 'ro0t o& A8D F million!
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7he actual achieved revenue "as A8D =F!F= million, "ith a 4ross 'ro0t
o& A8D (F!; million and a net loss o& A8D ($/,$$$!
B8R+A7*N
(! *t is noted that there is a ma>or gap %et"een the %udgeted
revenues and the actual revenues! 7his is primarily %ecause the
sales targets &or the main service o9erings o& 7ri%urg has not
%een met!/! torage ales &or Marehouse ( and Marehouse /, "hich is one o&
7ri%urg2s core services missed its %udget %y A8D !$# million! 3reight and 7ransportation "hich is another core service &or
7ri%urg did not achieve its target %y A8D /!$F million!#! 81ternal torage ales "hich is an ancillary service surprisingly
did e1ceedingly "ell and achieved more than t"ice its %udget i!e!
A8D (!F million!=! ross tuGng again a primary service &or 7ri%urg &ailed to achieve
its targeted volumes %ut it o9set some o& the gap through
un%udgeted revenue &rom it2s ancillary activities!H! Direct osts &or Marehousing have increased more than the
%udgeted rates, this is primarily due to the increase in the land
rental rates %y Ka&Ea in /$(#, increasing the storage costs!;! Ko% e1penses &or Marehousing have increased primarily due to
the increase in maintenance o& the material handling equipmentliCe 3orCli&ts, 7's etc!F! Ko% e1penses &or 3reight 3or"arding have increased %ecause o&
increase o& 7erminal ?andling harges %y D' Morld at a rate o&
A8D =$I container and 8-toCen charges %y A8D ($Icontainer
Recommendations
(! *ncrease the e1ternal storage capacity %y catering to other
industry verticals liCe chemicals, oil and gas etc!/! *ncrease the selling prices o& storage %y /$< &rom the current
rates to cover the increase in land prices %y KA3A- &or ne"customers!
! 3or e1isting customers, increase the storage tari9 %y (=< at the
time o& rene"al o& the annual contract!#! 3or &reight &or"arding customers, increase the service &ee %y A8D
$ to cover the additional cash outo"
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RE,ERENCE
.r! NoEer a%avala
4roup 3inance .anager
' Bo1 (H)), Ke%el Ali 3ree one
Du%ai, United Ara% 8mirates
7el S);( # FF(= $/= 81t! /F O .o% S);( =$ H=)$$F# O 3a1 S );(
# FF(/=$
8mail noEerTtri%urg!com
Me%site httpII"""!tri%urg!com
mailto:[email protected]://www.triburg.com/http://www.triburg.com/mailto:[email protected]Top Related