Moats at work
Jul 27, 2022
Unilever, a core holding in our European value portfolio, published Q2 results yesterday where the company demonstrated impressively its resilience in an inflationary environment. The owner of global brands like Dove, Knorr, Magnum or Rexona increased its unit prices by a stunning 11.2% y-o-y in Q2. The consumer did not substitute on a big scale the Unilever products by cheaper products as volumes only dropped by 2.1%. The result: Unilever could fully absorb the higher input costs and showed flat net earnings despite a fall of 180 bps of its underlying operating margin. That is why we as value investors like companies with moats like strong brands giving them pricing power.