Driving profitable growth Jean-Marc Huët London, 4th December 2014
Three themes today A sharpened strategy Enhancing agility EPS growth and cash delivery
A sharpened strategy over time 2005 2009 2011 One Unilever Cell strategy From 160 units From To 22 MCOs To Driving efficiencies Winning everywhere 4 categories x 8 clusters
Active portfolio management 4 strong categories Enhanced by M&A More weighted to PC 2009-2014 % Turnover Disposal cash proceeds: 5.3bn 35% 25% Foods Acquisition investment: 5.6bn 28% 36% PC Minorities, Leverhulme: 4.0bn 2008 2014
Good overall performance Personal Care Foods Home Care Refreshment Growth Margin Varied contributions by category
Sharper category choices Priority 1: Spreads Priority 2: Home Care Differentiated targets Stabilize turnover Sustain strong cash flow Sustain growth Double core operating margin Growth remains our highest priority
Priority 1: Stabilise Spreads Important part of portfolio Highly cash generative Drag on top-line growth 7% of Unilever turnover Core operating margin 14% 20% Underlying sales growth 0.9% -3.1% -3.2% 12% of D turnover 27% of Foods turnover Unilever Spreads 2012 2013 9M 2014
Good progress made Initiatives underway Gaining share in Margarines Market still declining Market growth in D markets D markets Naturalness 100bps Baking 0% -4% 0bps Melange Cooking Q3 12 Q3 14 Q3 12 Continued challenges ready for the next step Q3 14
A standalone business unit Unilever Baking, Cooking and Spreading Key facts Benefits Dedicated management team Responsible for strategy, resource allocation & performance More focus; short decision lines Freedom to take necessary decisions Own P&L, cash flow, balance sheet Improved trade-offs Developed markets only Continue to benefit from UL scale Fully operational by mid 2015
Priority 2: Doubling Home Care margin Grown 2x competition Low margin Scope for improvement 2011-2013 growth 14.0% 5.1% Ø Kick off LCBM Phase 2 Ø Radical simplification Ø Efficient media investment Unilever Peer average Unilever Home Care Balance market share gain and margin
Three themes today A sharpened strategy Enhancing agility EPS growth and cash delivery
2014: a difficult year Price deflation in Europe Slowing markets Less top-line growth UK Foods Consumer Price Inflation Market growth (%) Underlying sales growth 10% 0% 4% -2% Emerging Worldwide Developed +4.3% 2013 +3.2% 9M 2014 Sep 2012 Sep 2014 Q1 2013 Q3 2014 Source: ONS/ Market data
Agility in applying the P&L levers Project Half Realised in 2014 Reducing discretionary spend T&E expense: -20% Financial efficiency Pension changes: 250m Consultancy: -40% 2014 core tax rate: 25% Facility management in Europe: -15% Leverhulme impact: Core EPS +2%* *Annualised impact
Agility in the organisation Shorter decision lines Speed to market Better, faster services Organisation Smart complexity Enterprise & Technology Solutions 50% faster innovations Global specifications Now Future 70% of resources in D&E by 2016
Driving simplification Harmonisation No. of hair packing formats -80% Process simplification Reduced performance review steps: Fewer reports Past Now 200,000 employee hours saved Simplified recruitment process: 50% reduction in agency spend Simpler expense approval system: Now Future 20,000 employee hours saved 10,700 6,500
Three themes today A sharpened strategy Enhancing agility EPS growth and cash delivery
Driving Gross Margin Maxing the mix Price Index 100 130 Continued supply chain cost improvement Annual savings 400bps gap to peers 1bn+ Unilever Peers
Increasing efficiency in brand and marketing investment Reducing advertising production and agency fees 100m Driving media efficiency India: advertising via mobile phones Shift to digital Digital spend % advertising 8% 19% 27m subscribers 2013 2014 2009 9M 2014 2016+
Continued discipline on overheads reduction Strong track record Delivering Project Project Half Half More to come Overhead % 2013 vs. 2009 E.g. finance function costs % 1.25% <1% 0.75% 130bps less restructuring 120bps underlying OH reduction 1,700 FTEs reduction in 2014 500m annualised savings 2010 2014 2017
Driving Core EPS growth +30% +11% +10% +7% 2010 Constant FX 2011 Constant FX 2012 Constant FX 2013 Constant FX 2014
Delivering strong cash flow Capex investment phase Reducing stock levels Strong cash delivery Capex % Turnover Days MAT Free cash flow ( bn) 4% 3% 61 57 55 45 3.1 4.3 3.9 2% 2005 2009 2014 2011 2012 2013 Goal 2011 2012 2013
Three themes today Sharpening our strategy Enhancing agility EPS growth and cash delivery
Driving profitable growth Jean-Marc Huët London, 4th December 2014