Unilever. Q2 and First Half 2007 Results. Agenda business performance. Accelerating change. Patrick Cescau Group Chief Executive

Transcription

1 Unilever Q2 and First Half 2007 Results Patrick Cescau Group Chief Executive John Rothenberg SVP Investor Relations 2 nd August 2007 Agenda 2007 business performance First half and second quarter results Full year outlook Accelerating change Innovation Shaping the portfolio Margin improvement

2 Safe harbour statement This presentation may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and other similar expressions of future performance or results, including financial objectives to 2010, and their negatives are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including, among others, competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. Further details of potential risks and uncertainties affecting the Group are described in the Group's filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F. These forward-looking statements speak only as of the date of this presentation Highlights first half year Sustained sales growth and underlying improvement in operating margin Broad-based growth across all regions and categories Better innovation and in-market execution Personal Care, D&E and Vitality driving performance Positive margin development despite cost pressures

3 Strong organic growth Turnover Change Acquisitions and disposals Currency effect Underlying sales growth Volume Price Q2 10.5bn 2.6% (0.7)% (2.3)% 5.8% 4.5% 1.3% H1 20.1bn 1.3% (0.8)% (3.4)% 5.8% 4.6% 1.1% Consistent growth Underlying sales growth 7% 6% 5% 4% 3% 2% 1% 0% Q1 2005* Q Q Q4 2005* Q Q Q Q Q Q Annualised growth rate * days adjusted

4 Good growth in all regions Americas H1 USG +4.9% 28% Asia/Africa H1 USG +11.3% 34% 38% Europe H1 USG +2.6% Innovation driving category growth Home Care H1 USG +5.9% Ice Cream and Beverages H1 USG +5.9% 18% 20% 34% 28% Savoury, Dressings and Spreads H1 USG +3.8% Personal Care H1 USG +7.9%

5 Savoury, Dressings and Spreads H1 USG +3.8% Ice Cream and Beverages H1 USG +5.9%

6 Home Care H1 USG +5.9% Personal Care H1 USG +7.9% US

7 Underlying operating margin improvement in first half Change Operating margin 14.4% 13.7% (0.7)% Including RDIs - (1.0)% (1.0)% Change before these items 0.3% Key drivers: A&P Savings Cost/price/mix 0.0% 2.0% (1.7)% Improvement sustained in Q Change Operating margin 14.0% 13.7% (0.3)% Including RDIs (0.6)% (1.1)% (0.5)% Change before these items 0.2% Key drivers: A&P Savings Cost/price/mix (0.1)% 2.1% (1.8)%

8 Mitigating the impact of rising commodity costs Commodity cost impact on margin bps H outlook 160 bps Actions taken Price increases Reformulation Hedging Buying savings Drivers of EPS growth - First half % Operating profit Finance costs JVs Associates and noncurrent investments Tax rate EPS from continuing operations Discontinued operations EPS (3) (1) 9 % Underlying sales growth 6 Currency and disposals (5) Operating margin pre-rdis 2 RDIs* (6) (3) *restructuring, disposals and impairments

9 Balance sheet and cash flow Net debt 8.8bn Share buy-back: 700m repurchased to end June Pension liability reduced to 1.2bn Cashflow from operating activities 1.7bn 2007 outlook USG at upper end of 3-5% range Underlying improvement in operating margin Accelerated restructuring: 700m to 1bn Possible disposal gains in H2

10 Accelerating Accelerating change change Progress to date Growth consistently in 3-5% range Market share gains in priority areas Underlying improvement in 2007 operating margin Continued strong cash flow generation

11 Building on existing programmes One Unilever c. 1bn p.a. savings during 2008 Shared services/ outsourcing Covering Finance, I.T., H.R : complete Global buying Savings averaging c. 400m p.a Strengthened Marketing & Customer Management Programme roll-out Supported by normal restructuring to deliver: USG in 3-5% range 2010 operating margin > 15% Building on our growth agenda Growth remains our number one priority Competitive Profitable Consistent Reinforced by steps to accelerate performance Raising the bar for innovation More aggressive shaping of our portfolio Cost and asset reduction to further enhance margin

12 A platform for faster change Growth strategy Clear choices where to build and where to exit Global Categories Improved innovation, ROI and reduce supply chain complexity One Unilever Access to further simplification and cost reduction Innovation Applying global concepts to local markets Increasingly global platforms Simpler interface between categories and operations Better technology

13 Shaping our portfolio Building leadership positions and high growth spaces Organic portfolio development Focusing resources in high potential areas Acquisitions In priority areas - Personal Care, D&E, Vitality Disposals In less attractive market positions Brands that do not benefit from global leverage and are no longer essential to go to market operations Disposal of non-strategic assets 2005 Unilever Cosmetics International Frozen pizzas (Europe) Cooking oils (UK, Ireland, South Africa) Karo corn syrup (Mexico) 2006 European Frozen Food Mora frozen snacks (Netherlands) Finesse and Aquanet hair brands (US, Canada) Plantations (India) 2.3bn of turnover disposed

14 Realising value through disposals Over 2bn of turnover earmarked for disposal Includes 0.8bn North America Laundry Mostly outright disposals, but other routes to value release also possible Impact on USG: +40bps Impact on operating margin: broadly neutral North America Laundry Unilever North America Laundry business - profitable but not growing Recent developments in US Laundry market favour consolidation and make our business an attractive asset Does not compromise our scale in North America or Unilever s global ambitions in laundry

15 Margin improvement Simplification - Multi-country organisations Further overhead savings Supply chain efficiency and responsiveness Multi-country organisations Example - Unilever Benelux Savings c 50m Unilever Netherlands 1.1bn Dedicated Management Team Unilever Belgium 500m Dedicated Management Team Unilever Benelux 1.6bn Single Management Team

16 Streamlined structures Simplification of the country/category matrix From c.100 countries x 20 categories To c.25 MCOs x 10 categories Fewer interfaces between categories and operations Less regional management infrastructure Overhead reduction beyond One Unilever The UK: 50% reduction in top management (c. 40 roles) c. 350 roles administrative roles in total Up to 70m p.a. of overheads savings identified Italy: Sales and Admin from 1500 FTE s ( 06) to 900 ( 08)

17 Supply chain efficiency and responsiveness From : 600bps reduction in fixed assets as % of turnover 100+ sites closed or sold Cap ex held between %T/O Future plans: sites closed or streamlined Significant rationalisation of distribution networks Investment in a more flexible, customer responsive supply chain Benefits Aggregate savings c. 1.5bn p.a. by exit 2010 Savings invested behind brands and accelerated margin improvement

18 Accelerated restructuring Europe Over heads Cash % spend ROW Supply Chain Non Cash Growth and margins 3-5% USG Growth ahead of our markets Portfolio growth potential improving over time Accelerated improvement in operating margin To exceed existing target of >15% by 2010