---
endpoint: analytics
pattern: Consumer
status: done
latency_ms: 198109
conversation_id: 2cc7d7f1-94c3-4291-9b94-700efb19ab0d
citations: 2
created: 2026-05-31 19:49:48Z
---

# What is Unilever Indo’s core business franchise and the key components of its operating model?

# Unilever Indonesia (UNVR IJ) — Core Business Franchise and Operating Model

## 1. Core Business Franchise

**Corporate purpose and footprint.** PT Unilever Indonesia Tbk (UNVR IJ) is a fast-moving consumer goods (FMCG) operating company whose corporate objective is "to engage in the **manufacturing, marketing and distribution of consumer goods**," managed as an "integrated business field" [12]. It is 85% owned by Unilever Indonesia Holding B.V. (the parent Unilever group), with ~15% free float, ~95% foreign shareholding, ~38.15bn shares outstanding and a market cap of US$3.2bn as of April 2025 [10].

**Two reportable segments.** UNVR is run on a **two-segment** operating model [12]:

| Segment | Description | 9M25 Net Sales (Rp bn) | 9M25 Gross Profit (Rp bn) | 9M25 Segment Result (Rp bn) |
|---|---|---|---|---|
| **Home & Personal Care (HPC)** | Household cleaning products and cosmetics/personal-care products | **17,530** | 8,827 | 3,940 |
| **Foods & Refreshment (F&R)** | Food and beverage products, including ice cream | **10,084** | 4,559 | 1,894 |
| **Total** |  | **27,613** | **13,386** | **5,834** |

Source: UNVR 9M25 financial statements [12].

- **HPC is the larger and structurally more profitable engine** — at ~63% of revenue, and historically the higher gross-margin segment. CLSA's quarterly tracking shows HPC gross margin running ~50–56% through 2018–2023 vs. F&R at ~43–45% [9].
- **F&R** is the smaller portfolio (~37% of revenue) and is being further reshaped: in November 2024, UNVR signed a business transfer agreement to **divest its ice-cream business** to PT Magnum Ice Cream Indonesia as part of the Unilever group's global ice-cream spin-off, with transaction value before tax of **Rp7tn**; UNVR's ice-cream value share had already fallen to 48% by 2023 vs. rising competition from Aice, Joyday, Campina and Glico (per CLSA's 26-Nov-2024 note on the divestment).
- In 4Q24, HPC contributed Rp4,833bn of Rp7,722bn total sales (~63%) and F&R Rp2,888bn (~37%), with HPC gross margin 44.9% vs. F&R 44.0% [9]. By 1Q25, group sales recovered to Rp9,465bn with gross margin restored to 48.2% [8].

**Premium brand positioning.** Most of UNVR's products are priced "at quite a premium vs peers," making the portfolio sensitive to trading-down when purchasing power weakens [11]. CLSA flags **55–60% of COGS as US$-linked**, so the business is also exposed to rupiah moves and to commodity inputs (oil, CPO) [11].

**Market share.** UNVR is a category leader across HPC and F&R, but its share has been compressing during a multi-year transformation:

| Period | Value Share | Volume Share |
|---|---|---|
| FY22 | 38.2% | 31.0% |
| FY23 | 37.1% | 30.7% |
| FY24 | 34.7% | 28.2% |
| 1Q25 | **33.5%** | **26.7%** |

Source: CLSA, UNVR [7]. The share trend is the most important "negative space" in the franchise — the brand portfolio is still #1, but losing both value and volume share each year through the reset.

**Related-party export network as a hidden franchise asset.** UNVR functions as a regional manufacturing/export hub within the global Unilever group. In 1H25 it shipped product to **Unilever Asia Private Limited, Unilever Philippines, Unilever Malaysia, Unilever Thai Trading, Unilever Singapore, Unilever Vietnam, Unilever Japan, Unilever Taiwan, Unilever Hong Kong, Unilever RFM Ice Cream (Philippines)** and Unilever Manufacturera (Mexico) [13]. Related-party sales were 3.24% of total net sales in 1H25 (1H24: 2.90%) [13] — small, but a structural channel embedded in the parent's global supply chain.

---

## 2. Key Components of the Operating Model

UNVR's operating model is currently in the middle of a multi-year **"transformation"** programme intended to fix demand erosion and rebuild brand equity. CLSA frames the model around four pillars [4][5]:

### A. Route-to-Market — "More stores, better stores"
Coverage and quality expansion of UNVR's **direct-coverage** stores (the high-touch part of GT). Status as of 1Q25: **On track** [5].

### B. Distributive Trade (DT) Digital Transformation
Digitisation of the indirect distributor channel — sales force automation, e-ordering, and analytics built on top of the distributor network. Status: **On track**, with rollout sequenced across 2024–2025 [4][5].

Concrete metrics disclosed by management for the DT transformation (Q3 2024 baseline → Mar-2025):
- **Price harmonization improvement: +24%** (alignment of price points across channels)
- **Implied profitability improvement: +34%**
- **Labour productivity: 7 → 8.5 → 9.7 tons/FTE (2023 → 2024 → Q1 25), ~+14%**
- **Service level: +22%**
- **Distribution/logistics cost per ton: –9.4%** (2023 → Q1 25)
- **Non-factory people cost as % of sales: 3.5% (2023) → 3.5% (2024) → 3.1% (Q1 25)**
(Each bullet is taken from CLSA's Figure 9–10 distribution-transformation page — see chunk references [5].)

### C. Customer Stock Reduction
Working with distributors to drive **faster sell-through** and lower channel inventory, eliminating the demand-distortion from over-stuffed trade pipes. Distributor stocks were reported at the **lowest level in 10 years, down ~50% from 2021** [6], improving working capital and reset visibility. CLSA: **COMPLETED in 1Q25** [5].

### D. Price Harmonization
Narrowing the **price gap across channels** (modern trade vs. general trade, online vs. offline, distributor list vs. retailer shelf) — historically wide gaps had been eroding market share, particularly in modern trade where shelf prices spiked after harmonisation [1]. CLSA: **COMPLETED in 1Q25** [5].

### E. Brand-Equity & A&P Investment
With the operational fixes "done," management's next priority is **enhancing brand equity** — UNVR explicitly says it will take several quarters [2]. Advertising & market-research spend was ~9.25% of sales in 1Q25 (Rp800bn), and management is also expanding distribution and pushing cost efficiencies in parallel [2]. CLSA framed the broader investment thesis the same way: "business division segmentation which allows for faster decision-making, allocating higher marketing budgets, customer stock reduction (faster replenishing at distributor level), and narrowing their price gaps across different channels" [3].

### F. Cost & Capacity Efficiencies
- Automation and headcount/efficiency programmes drove non-factory people cost down to 3.1% of sales in 1Q25 vs. 3.5% in 2023 [5].
- 1Q25 gross margin recovered to 48.2% (vs. 44.5% in 4Q24) and net margin to 13.1% (vs. 4.6%), driving NPAT +236% QoQ to Rp1,237bn — evidence the efficiency leg is starting to deliver [8].

### G. Portfolio Reshaping
The ice-cream divestment (announced Nov 2024, Rp7tn pre-tax) removes a structurally challenged sub-category from F&R and may fund a special dividend to shareholders (CLSA reference to the analogous 2018 Blue Band divestment) — the trade-off is ~6–9% of group earnings exiting the P&L at a 20–28x implied PE multiple. CLSA viewed the deal as net **neutral** given the competitive backdrop in ice cream [the Nov 2024 CLSA note on ice cream divestment, doc 607945483].

---

## 3. Operating-Model "Negative Space" — what's missing / at risk

A complete read of the operating model has to include the divergence between management's framing and what the segment data shows:

- **Volume is still negative.** HPC sales declined every quarter from 1Q23 through 1Q25, finishing at –13.4% YoY in 1Q25; F&R turned only marginally positive at +0.6% YoY in 1Q25 [7]. Margin recovery, not volume, drove 1Q25 [1].
- **Market share continues to leak** despite "completed" pricing/stock work — value share dropped from 38.2% (FY22) → 33.5% (1Q25) and volume share from 31.0% → 26.7% over the same window [7].
- **Premium-positioning vulnerability** to trading-down, rupiah moves (55–60% USD-linked COGS), and commodities (oil, CPO) remains the structural risk envelope [11]. CLSA also flags residual **boycott impact** affecting some categories.
- Sales growth, not margins, is the **key rerating catalyst** — UNVR is now operationally "lean" but its franchise quality will only be re-established once volume turns positive at the segment level.

---

**Bottom line**: UNVR's franchise is a two-pillar Indonesian FMCG portfolio — **Home & Personal Care (~63% of sales, the higher-margin engine) and Foods & Refreshment (~37%, being reshaped via ice-cream divestment)** — manufactured and distributed locally and exported through the global Unilever network [12][13]. The operating model has been rebuilt during 2023–2025 around four explicit transformation pillars: **store-coverage upgrade, DT digital transformation, customer stock reduction (completed), and price harmonization (completed)**, layered on top of cost efficiencies and a renewed brand-equity push [4][5][1][2][3]. Execution-wise the operational reset is largely done; the remaining open question is whether brand-equity investment can re-stabilise the still-eroding value and volume share [7].

---

**Sources**
[1] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF
[2] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF
[3] CLSA — Unilever Indo - HLD (Challenging moments), 13-Feb-2025 — 607950575LinqAlpha.PDF
[4] CLSA — Unilever Indo - HLD (Challenging moments), 13-Feb-2025 — 607950575LinqAlpha.PDF (Figure 8, transformation initiatives table)
[5] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF (transformation initiatives + DT metrics, Figures 9–10)
[6] CLSA — Unilever Indo - HLD (Challenging moments), 13-Feb-2025 — 607950575LinqAlpha.PDF
[7] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF (value/volume share table)
[8] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF (1Q25 result table)
[9] CLSA — Unilever Indo - HLD (Challenging moments), 13-Feb-2025 — 607950575LinqAlpha.PDF (4Q24 segment table)
[10] CLSA — Unilever Indo - HLD (Holding steady), 24-Apr-2025 — 607956782LinqAlpha.PDF (stock data/shareholder)
[11] CLSA — Unilever Indo - HLD (Challenging moments), 13-Feb-2025 — 607950575LinqAlpha.PDF (investment risks)
[12] PT Unilever Indonesia Tbk — Interim Report, period ended 30-Sep-2025 (English) — Note 30 Segment Information
[13] PT Unilever Indonesia Tbk — Interim Report, period ended 30-Jun-2025 — Note 24 Net Sales (Related Parties)

## Citations

- [12] **PT Unilever Indonesia Tbk (UNVR-ID) - Interim Report for period end 30-Sep-2025 (English) - PDF** · external
- [13] **PT Unilever Indonesia Tbk (UNVR-ID) - Interim Report for period end 30-Jun-2025 (Indonesian) - PDF** · external

