The New Unilever Simpler, Faster, Stronger Jean-Marc Huët

Transcription

1 The New Unilever Simpler, Faster, Stronger Jean-Marc Huët

2 Agenda 1 Driving sustainable growth ahead of the market 2 Delivering steady, sustainable margin improvements 3 Deploying cash effectively to fund our growth 4 Becoming more agile simpler, faster, stronger

3 Exciting and far reaching ambitions! 80bn 40bn environmental impact

4 Ideally positioned to capture D&E growth population value share relative market share China 1.4bn >10% 0.4 India 1.3bn >35% >2 Indonesia 230m >40% >1.5 Brazil 195m >35% >1.5 Pakistan 170m >35% 0.9 Bangladesh 160m >50% >2 Philippines 90m >40% >1.5

5 Significant potential in emerging markets bath and shower US$ spend per capita 20 Developed markets Emerging markets Vietnam Indonesia China India Turkey Mexico Argentina Australasia Brazil USA United Kingdom Source: Euromonitor

6 Market development is a major growth driver in BRIC alone, by 2020 kitchen sinks +115% washing machines +230% fridge freezers +190% inside toilets +100% microwave ovens +130% Source: CMI 129

7 White spaces are a significant opportunity Key Countries 100% white space 50% brand presence 0%

8 Innovations are getting bigger, better, faster bigger 7x 6x projects in 10+ countries +75% 50 it/o Axe ito / Hair project US / country Yr 1 100m investment in quality faster 35 markets markets better

9 We are reaching consumers more consistently on-shelf availability up customer service level targets on-track bps Q309 Q409 Q110 Q210 Q310 0 Jan-09 Jul-09 Jan-10 Jul-10 # top 20 countries meeting customer service targets

10 Accelerated overall performance volume shares up uvg stepped up improved brand equities Q3 MAT 0.1% 2.3% 6.0% Q3 YTD Conviction scores up Communication improving This is despite the toughest economic and competitive market environment

11 2 Delivering steady, sustainable margin improvements

12 Commodity costs trended upwards 320 % Unilever commodity index commodity spend % Jul-00 Jan-03 Jul-05 Jan-08 Oct Jul-10 - Packaging Chemicals Food ingredients Oils and fats Others Largely driven by oils and fats Tighter supply demand: fight for acreage Weaker USD Speculation

13 3 levers to offset commodity increases in Pricing 2 Continuous supply chain savings 3 Volume leverage and mix

14 1 Pricing positive in 2011 upg -1.2% YTD stable in-quarter pricing -2.0% UPG positive by end % -3.3% Latin America UPG positive since Q3 Q4 09 Q1 10 Q2 10 Q3 10 In quarter price growth

15 2 Continuous supply chain savings bn Globalise procurement further >1 Drive value improvement programmes Further rationalise logistics network Continued streamline of manufacturing

16 3 Volume leverage and mix uvg 7.6% 5.0% 5.7% 4.8% Portfolio shift towards personal care Innovate at higher margins Secure the benefits of volume leverage Q4 09 Q1 10 Q2 10 Q3 10

17 We also have significant scope in Indirects as % turnover 50 bps p.a. Good progress already made Drive continuous improvement mindset > 200bps higher than best in class 2006 Today Best in class

18 Leveraging scale, standardisation, continuous improvement Unilever Enterprise Services Information Management Consumer and Customer centric organisation Leveraging global scale One set of common: Performance culture Better service/lower cost Information standards External focus Driving standardisation Master data / warehouse Fewer layers Global business services Real time information Continuous improvement mindset

19 A&P spend up 1.0bn since 2008 A&P spend around 5.5bn in 2010 reduce production/agency fees -15% A P Target 2/3 rd HPC vs. 1/3 rd Foods 55% in emerging markets c. 1bn spend p.a.

20 Closer to driving the virtuous circle of growth Profitable Volume Growth Cost Leverage + Efficiencies Innovation A&P / R&D Cost Savings

21 Operating margin up steady and sustainable 10bps 20bps 30bps Q3 YTD underlying operating margin change

22 3 Deploying cash effectively to fund our growth

23 : balance sheet strength now restored sources of cash uses of cash net cash from Net operating cash from operations activities excl. excl pensions pensions disposals Disposals dividends and SBB Repayment of debt deleveraging Dividends capex interest and pensions Interest and and share Capex additional buy backs pensions acquisitions Acquisitions other Other Historical focus on debt repayment, disposals and distributions

24 We are stepping up capex investment capex % turnover Stage 1: under-invest Stage 2: kick-start growth Stage 3: sustainable levels % 4% 3% 2%

25 Capex focus on emerging markets and innovation 2010 capex by type 50% of investment for growth: innovation and capacity 60% in emerging markets 20% investment in IT/Maintenance Innovation / Capacity IT / Maintenance Others R&D Savings

26 Working capital reduction to fund growth trade working capital free cash flow 5% MAT Average TWC % T/over Closing TWC % T/over 4.1bn 2.5bn 2.4bn 0% -5% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q contribution from working capital

27 We have invested in various bolt-on M&A Hair / Skin Alberto Culver Personal Care Sara Lee Frozen Foods Italy Tomatoes Brazil 2010 / 2011 Dec 2010 Nov 2010

28 M&A has indeed helped shape our portfolio 2009 Portfolio Current Portfolio 20% 19% 33% 47% 29% 52% Foods Ice Cream & Beverages HPC

29 An attractive and growing dividend Dividend payout today 8% CAGR

30 4 Becoming more agile simpler, faster, stronger

31 Entire company behind compelling vision Consumer and customer focus Simple 12 point action plan Fully aligned personal targets

32 A simpler organisation 2005 Pre-One Unilever Country/ Category matrix Multi-country organisations From 100 to MCOs Factory closures / streamlining One Unilever Headcount reduction 20,000 Restructuring savings 1.5bn 2009 MCO s Restructuring charges 3.0bn Fewer touch points Quicker decisions Improved performance

33 Long term growth model universally understood Lever 1 revenue growth Lever 2 operational leverage Lever 3 cash flow leverage = EPS growth + dividend yield TSR

34 Moving to one universal common language internal reporting gross margin (internal) inflation in working capital external reporting gross margin (external) trading result trading margin financing charge trading contribution operating profit operating margin trading working capital ungeared free cash flow operational cash flow trade working capital free cash flow Fully diluted EPS pre-rdi Basic EPS pre-rdi Fully diluted EPS Basic EPS Fully diluted EPS

35 A more focused set of key performance indicators Leading brands Top line growth Operating margin Ungeared free cash flow 25bn- 30bn Low double digit EPS growth Return on invested capital Profitable volume growth Sustainable and consistent improvement in underlying operating margin Strong cash flow

36 Risk management another example From Today 1. Standalone risk management an industry in itself 2. Complicated corporate policies (87) 3. Bureaucratic processes 1. part of your everyday job 2. Simplified framework of concise policies (26) 3. Paper light responsibility high

37 Straightforward external communications Focussed largely on financial performance Complex, multiple metrics 8 pages commentary Externally focussed on key growth drivers: categories and brands Simpler, clearer, fewer metrics 4 pages commentary

38 Speed to market - an agile emerging Unilever Rexona Naturals UK 10 weeks from sign off to on-shelf availability new business units - Own Pepsodent Philippines 6 weeks from sign off to onshelf availability

39 There is still much more to do! From To Reduce financial reporting time from 5 to 2 weeks by 2013 Reports from 20,000 to < format, centralised reporting Management accounting metrics collection reduced 20%

40 Delivering against our priorities volume growth accelerated underlying margin increasing strong cash flow delivery bn 6.0% 0.1% 0.2% 0.3% % 2.3% FY08 FY09 YTD Q3 YTD YTD 08 YTD 09 YTD 10 Net cash flow from operations

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