Jefferies downgrades Unilever over emerging markets risks

2nd Oct 2018 12:58

(Sharecast News) - The risk of a slowdown in emerging markets and a potential charge in leadership has prompted analysts at Jefferies to downgrade Unilever, the Anglo-Dutch consumer goods group.In a note to investors, analysts said that Unilever offered "an investable combination of a deliverable plan for profit and cashflow improvement, underpinned by a strong cultural imperative as the result of the failed Kraft bid".But they added that this was already been "fairly rewarded" in Unilever's current valuation, "relative to which we think forecast risk is migrating to the downside, with slowing emerging markets a growing risk. A likely change of chief executive on a 12-month view, and technical risks consequent on the single listing proposal, are further complications."Jefferies has therefore reduced its recommendation to a 'hold' from a 'buy'.Unilever, which earlier this year saw off a £115bn hostile takeover bid from US rival Kraft Heinz, will later this year end its historical Anglo-Dutch structure. The maker of Dove, Marmite and Ben & Jerry's, which has made significant in-roads into emerging markets around the world, intends to make Rotterdam its main headquarters, become one legal Dutch entity and reorganise the business into three core divisions.The decision is not without critics, however. Many had hoped the group would make London its headquarters, especially as the group is expected to drop out of the FTSE 100 once the move is completed in December. A number of shareholders have indicated they will vote again the switch.Paul Polman has been chief executive since 2009 and speculation is growing that he will not remain in the post long term.