Unilever Plc · LSE:ULVR
Unilever — FY2004 Earnings Presentation
25 slides from Unilever's earnings presentation, Feb 10, 2005
Slide 1: Unilever's 2004 Results Presentation
Unilever’s 2004 Results Presentation Patrick Cescau & John Rothenberg 10th February 2005 This presentation may contain forward-looking statements, including ‘forward-looking statements ’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking s
Slide 2: 2004 Key Financials
2004 Key Financials • Underlying sales growth +0.4% • Disposals (2.5)% Turnover (2.1)% • Operating margin (beia) 15.2% (down 60 bps) • EPS beia +5% • Exceptional items €1.7bn • Further reduction in underlying tax rate • Lowered financing costs • Net debt €9.7 bn, down by €2.9 bn in the year 2 2
Slide 3: Underlying Sales Growth 2004
Underlying Sales Growth 2004 % % Europe (2.8) Savoury & Dressings 2.6 N.America 1.5 Spreads & Cooking Products 1.6 Latin America 7.2 Ice Cream & Frozen (3.4) Africa & Middle East 3.1 Beverages (3.9) Asia & Pacific 1.4 Foods (0.3) Total 0.4 Home Care (0.4) Personal Care 2.1 Home & Personal Care 1.1 T
Slide 4: Operating Margin Development 2004
Operating Margin Development 2004 bps change Gross margin (20) – pricing for competitiveness – savings offset commodity cost increases A&P (10) – step up in Q4 Overheads (30) – dilution from disposals Change in operating margin beia (60) 4 4
Slide 5: Fourth Quarter Results
Fourth Quarter Results Underlying sales growth +3.2% Disposals (2.5)% Turnover 0.6% bps change Gross margin (110) A&P spend (130) Overheads (30) Operating margin (beia) (270) • Increased market competitiveness: A&P and pricing • Higher commodity costs • One-off items, e.g. asset write-offs/disposals
Slide 6: Exceptional Items
Exceptional Items Q4 2004 Net restructuring+ €710m €845m Slim*Fast Impairment €650m €650m Brazil sales tax provision €177m €177m Exceptional Items €1537m €1672m +net of profits and losses on disposal 6 6
Slide 7: Free Cash Flow and ROIC
Free Cash Flow and ROIC FCF* 5 4.5 4 3.5 Underlying €4.2bn € bn 3 2.5 2 1.5 1 0.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20 18 ROIC 16 14 Underlying 12 % 10 11.5% to 12% 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 7 7
Slide 8: Path to Growth Scorecard
Path to Growth Scorecard Revenue Generation Target Achievement Leading Brand growth: Growth 5- 6 % 0.9% in 2004 3.6% 2000-2004 Portfolio change and brand focus 95% 95% (from 1600 to 400 brand names) Advertising and Promotions +200 bps +150 bps Cash Generation Restructuring and buying savings €3.1 bn
Slide 9: Path to Growth: Lessons Learned
Path to Growth: Lessons Learned • Boxed in by too many targets • Not playing our portfolio to its full potential • Inconsistent execution 9 9
Slide 10: Unilever's Strong Portfolio
Unilever’s Strong Portfolio Unilever’s world category position Our 12 €1bn brands Savoury & Dressings Spreads Weight management Tea Ice Cream Frozen Foods #1 in Europe Laundry #1 in D&E Household Care Focus on 2 brands Daily Hair Care #1 in D&E Skin Deodorants Oral Care Focus on country Number 1 str
Slide 11: What we are doing differently
What we are doing differently • Sustaining MARKET AGGRESSION • Making our PORTFOLIO work harder • Sharpening EXECUTION 11 11
Slide 12: The Winning Formula - pro activ
The Winning Formula - pro activ We have extended the heart health benefits of the brand from our core spreads category…. …to milk and yoghurt…. …and daily yoghurt drinks… ...and created a €300m-plus business in 3 years 12 12
Slide 13: The Winning Formula - Deodorants
The Winning Formula - Deodorants Organic sales growth 12% on 60% average pa Growth CategoryGrowth 1999-2004 Category 40% Cumulative Cumulative 20% 0% 02 03 04 99 00 01 20 20 20 19 20 20 13 13
Slide 14: The Winning Formula - US 'Go-To-Market'
BODY FROZEN CARE LAUNDRY DAIRY BEVERAGES SOUP SEASONINGS RTD TEA PIZZA SAUCE MARGARINE CHECKOUTS OLIVE OIL PASTA SAUCE DRESSINGS PEANUT BUTTER SNACKS MEAT BAKERY SEAFOOD DELI WINE CAFE BEER The Winning Formula - US ‘Go-To-Market’ 14 14
Slide 15: Unilever's Growth Potential
Unilever’s Growth Potential • Vitality • Strength in D&E • Personal Care • Presence across both Foods and HPC 15 15
Slide 16: Unilever's Financial Model
Unilever’s Financial Model Overriding ambition is to be in Top Third TSR • Growth of Unilever’s markets: 2-4% pa • Generation of free cash flow 2005-2010 €25-30bn • Progressive improvement in ROIC 16 16
Slide 17: Organising to Win
Organising to Win • Single point responsibility • Faster decision-making • Clear accountability for delivery • Leadership close to customer and consumer • Balance between market focus and scale 17 17
Slide 18: Main Changes
Main Changes Group CEO Patrick Cescau Non-Executive Chairman Antony Burgmans ExCo and Divisions replaced by single top executive team, led by the Group CEO 18 18
Slide 19: The New Structure
The New Structure CEO Patrick Cescau Regions Categories Functions President President Europe Foods Finance Rudy Markham Kees van der Graaf Vindi Banga President President Human Resources Americas HPC Sandy Ogg John Rice Ralph Kugler President Asia / Africa Harish Manwani 19 19
Slide 20: Review of Corporate Structure
Review of Corporate Structure • Comprehensive review to determine optimal structure • Led by Non-Executive Chairman • Team to include external advisors and two Non-Exec directors • Any proposals to AGM in 2006 20 20
Slide 21: Priorities for 2005
Priorities for 2005 • Regain momentum in Europe – protect and build our market share • Exploit and build on our strengths – Vitality – D&E markets – Personal Care • Accelerate savings initiatives • Maintain our market focus as we implement “One Unilever” 21 21
Slide 22: 2005 Outlook
2005 Outlook • Number one priority - sustainable top-line GROWTH • Sustained investment to protect market position through – A&P – pricing – innovation • Accelerated cost savings 22 22
Slide 23: Returning Value to Shareholders
Returning Value to Shareholders • Increased full year dividends • Conversion of outstanding €0.05 NV preference shares • Share buy-back programme up to €500m in 2005 23 23
Slide 24: LUX Rexona —$UNSILK
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Slide 25: Unilever's 2004 Results Presentation
Unilever’s 2004 Results Presentation Patrick Cescau & John Rothenberg 10th February 2005 This presentation may contain forward-looking statements, including ‘forward-looking statements ’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking s