Unilever Investor Event Graeme Pitkethly, CFO Singapore, 2 nd December 2015
Agenda 1 First principles of our business model 2 Creating value through our portfolio 3 Getting to the next level on costs 4 Delivering attractive long-term returns
Our 4G growth model Consistent growth Competitive growth Profitable growth Responsible growth
Sustained investment over time Brands and Marketing Investment Supply Chain GDP growth (%) Total investment* ( bn) 12 7 9 IT People 4 2 6 3-1 World GDP growth 2005 weighted by our markets 2015 0 *B&MI+Capex+R&D
Global strength, leveraged locally Deep experience Strongly local Clear P&L responsibility >80% local leadership* 25% 20% 15% 10% 5% 0% 13% Unilever Indonesia 10% $0.5bn 94 96 98 00 02 04 06 08 10 12 14 Sales (US $) 3,500 22% 3,000 $2.9bn 2,500 2,000 1,500 1,000 500 0 *Directors and above in our top 12 emerging markets
With Sustainable Living a foundation Health and hygiene Nutrition Greenhouse gases Water and waste Sustainable sourcing Less risk 55% of agricultural materials sustainably sourced More growth Brands with purpose growing 2x faster Lower costs 200m cost saving More trust No.1 employer in 32 countries
Agenda 1 First principles of our business model 2 Creating value through our portfolio 3 Getting to the next level on costs 4 Delivering attractive long-term returns
A strong, resilient portfolio Meeting a broad range of consumer needs 2 billion consumers use a product on any day Distribution strength 70% coverage via exclusive distributors in SEA +170bps growth in Thailand from LeverEdge Scale benefits across the value chain World s No. 2 advertiser e.g. social media partnerships No. 1 buyer of many materials e.g. 5bn+ annual packaging Increasing throughput 3m stores in India Global science & R&D e.g. university research centres
With sharper category strategies Personal Care Grow the core Build premium Home Care Step up profitability Scale household cleaning Foods Accelerate growth Strong cash flow Refreshment Grow ice cream cash flow Grow faster in tea Driving resource allocation
Driving more cash, and better balance What.. How.. Margin-accretive innovation FCF Premiumisation Profitable growth in EMs FCF Strong cash generation in DMs Mix improvement FCF Low Cost Business Models Premiumisation FCF ROIC focus
Allowing reinvestment for growth In new markets In our brands Dove Advanced Hair Series US Dry spray Squeeze bottle Zendium Baby Dove Prestige Spreads with blends of butter Iran Pre-treaters Scale household cleaning Myanmar Magnum Pink & Black Speciality teas
R&D and Capex aligned with strategy Embedded R&D Differentiated by Category Capex prioritisation Category R&D structure R&D budgets (%) Capex (% turnover) R&D R&D R&D R&D Deploy Design Innovation Personal Care Strategic Science Group Discover Emerging Markets
Active portfolio management Building premium through acquisitions Pruning through disposals Structurally addressing underperformance in Spreads
Portfolio delivers consistent results Underlying Sales Growth Core Operating Margin Free Cash Flow 2014 2015 9 months 2014 2015 First Half 2014 2015 First Half 2.9% 3.8% +40bps +50bps 3.9bn * + 0.2b n vs 2014 *Adjusted for tax on disposals
Agenda 1 First principles of our business model 2 Creating value through our portfolio 3 Getting to the next level on costs 4 Delivering attractive long-term returns
Continuous improvement Best-in-class global business services Simplification 20% SKU reduction 50% fewer reports Standardised processes Low-cost locations Strategic partnerships From 400 IT applications to 25 platforms
Transforming costs to underpin value delivery Supply chain savings New functional models Global ZBB Cost % of turnover 1bn+ per annum Support Core 2014 2018 21 locations 12 categories 80% of global expenditure Owned by Accenture Ongoing, re-invested Programme runs 2016 and 2017 FY savings c. 1bn from 2018, B&MI and Overheads
Agenda 1 First principles of our business model 2 Creating value through our portfolio 3 Getting to the next level on costs 4 Delivering attractive long-term returns
2010 2014: A strong track record USG COM* Core EPS** FCF Dividend +5% p.a. +40bps p.a. +8% p.a. 18bn cum. +8% p.a. * Includes 25bps from lower restructuring
ROIC a longer-term guide rail for value creation 20% 18% Acquisition of Alberto Culver FX impact: US$ goodwill and debt 16% 14% 2009 2010 2011 2012 2013 2014 ROIC definition : Core Operating Profit after Tax Average (PPE + Inventories + Trade receivables - Trade payables + Assets held for sale + Goodwill + Software)
Applying ROIC more deeply where required 2 business targets 2 strategic targets ROIC 2015 vs. PY +300bps
Pulling all levers of ROIC 4G growth Capex Working Capital Acquisitions Consistent Competitive Responsible Profitable 4% 3% Underinvestment Capex % turnover Catch-up Steady-state Annual moving average trading working capital +0.3% - 3.2% -3.8% -5.0% -5.4% 45 Disciplined criteria Strategic fit IRR > Cost of capital ROIC / WACC crossover 2% 2005 2009 2015 2009 2012 2014 Q2 2015
Put together - long-term shareholder returns Sharper Category choices The Compass Grow the core Build premium Step up profitability Scale HHC Winning with brands and innovation Winning in the marketplace Winning through continuous improvement Competitive sales growth Steady margin improvement Core EPS FCF ROIC Shareholder returns Accelerate growth Strong cash flow Grow IC cash flow Grow faster in tea Winning with people Capital efficiency Sustainable Living: more growth, lower costs, less risk, more trust
Unilever Investor Event Graeme Pitkethly Singapore, 2 nd December 2015