Unilever expects to grow its margins in emerging markets, including India, even as the fast moving consumer goods sector battles with an unprecedented rise in raw material costs.
The growth in margins would be chiefly led by more price increases and operational cost cutting measures to make Unilever slimmer and more efficient. The company had in August 2007 revealed a plan to cut a further 20,000 jobs globally over the next four years.
“Prices for food commodities and energy are stubbornly high. For example, who would have expected crude oil to touch the $109 level even a few months back? That is bound to have some knock-on effects. But we will not sacrifice our margins and market share,” Patrick Cescau, Group CEO of Unilever, the Anglo-Dutch parent of Hindustan Unilever (HUL), said here today. “We have to grow as fast as the markets we are operating in grow,” he said.
Cescau, who is on his third visit to India in as many years, told reporters here today he sees no drop in demand for the company’s products even as their retail prices go up.
Unilever's operating margins have remained more or less unchanged at around 13 per cent but it is targeting a margin in excess of 15 per cent by 2010.
Increase in prices of products contributed 50 per cent to Unilever’s growth in sales globally and in HUL this year.
The other four ways that the company has employed to counter escalating cost pressures are: changes in formulations through innovation, smart buying of raw materials, group restructuring and optimising supply chain efficiencies. The company is expected to save 2.5 billion euros through these measures.
Cescau said margins were not just about costs and prices but also depended a lot on the mix of product portfolio. Unilever is also developing products which offer a higher value proposition in the premium range, an example being Pond's Age Miracle.
Unilever's dominant market share in emerging markets like India will help, he said. More than 44 per cent of the company's sales now come from emerging economies, compared with 38 per cent when Cescau took over. And the company is planning to increase it to 50 per cent by 2010.
The company would keep foods a priority in India and D&E through the brands Lipton, Knorr and Kwality. However, the biggest category in terms of sales in D&E is personal care, with 50 per cent of the share in its revenues here.
"Our aim here would be to increase the pie more than fighting for the share of an existing pie," Cescau said.
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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