When I think of consumer goods company Unilever (LSE: ULVR) (NYSE: UL.US) , two factors jump out at me as the firm’s greatest strengths and top the list of what makes the company  attractive as an investment proposition.
1) Emerging market penetration
In 2013, around 57% of Unilever’s revenue came from markets classified as emerging, such as those in Latin America, Asia and Africa. With such up-and-coming markets being so important to the firm, it’s satisfying to see underlying sales growth in such areas come in at 8.7% with the recent full-year results.
Overall, underlying sales growth is up 4.3% with developed markets continuing to wallow in the mire. Unilever’s CEO reckons the firm is makingprogress transforming itself into a sustainable growth company despite on-going trading headwinds and fierce competition in both developed and emerging markets. He cites underlying sales growth and strong cash flow as reasons to be cheerful. The firm’s financial record looks like this:
| Year to December | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Revenue (€m) | 39,823 | 44,262 | 46,467 | 51,324 | 49, 797 |
| Net cash from operations (€m) | 5,774 | 5,490 | 5,452 | 6,836 | 6,294 |
| Adjusted earnings per share (cents) | 121 | 140.66 | 145.83 | 161.08 | 162.76 |
| Dividend per share (cents) | 41.06 | 81.9 | 93.14 | 97.22 | 109.49 |
Unilever’s focus on costs and product innovation keeps the firm moving forward in difficult times. Â From such a position of strength, higher growth rates could follow if the macro-economic environment continues to improve worldwide.
2) Consumable branded products
It’s always exciting when a company expands into fast-growing markets, but it’s even better when the firm has a stable of consumable brands with strong repeat-purchase credentials as has Unilever. The firm markets a catalogue of brands across the personal care, foods, refreshment and home care sectors, with well-known names such as Lipton, Wall’s, Knorr, Hellman’s, Omo, Ben & Jerry’s, Pond’s, Lux, Cif, Sunsilk, Sunlight, Flora, Bertolli, Domestos, Comfort, Radox and Surf.
The consumable nature of the products is what keeps Unilever’s cash flow so strong, as customers return over and over again to re-buy. However, the company is not taking success for granted and drives its growth by constantly researching, developing, marketing and acquiring new brands to add to its pipeline of potential blockbusters.
What now?
Unilever’s forward dividend yield is running at about 3.8% for 2015 and the forward P/E ratio is just over 18. City analysts expect earnings to grow by about 8% that year, so there seems to be quite a lot in the price for future improvements in the firm’s growth rate.