Unilever PLC · LSE:ULVR
Unilever — Q3 2008 Earnings Presentation
52 slides from Unilever's earnings presentation, 2008
Slide 1: Unilever Q3 and Year to Date 2008 Roadshow
Unilever Q3 and Year to Date 2008 Roadshow 1
Slide 2: Unilever Q3 2008 and Year to Date 2008 Roadshow
Unilever Q3 2008 and Year to Date 2008 Roadshow Financial Performance Shaping the Portfolio – Major Disposals 24 Financial Highlights – Year to Date 5 Shaping the Portfolio – JVs and Acquisitions 25 Strong Organic Growth 6 Transformation Programme on Track 26 Underlying Sales Growth - Region 8 Growt
Slide 3: Safe Harbour Statement
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 1995. Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and other
Slide 4: Financial Performance
Financial Performance 4
Slide 5: Financial Highlights – Year to Date
Financial Highlights – Year to Date • Strong organic growth 7.4% • Additional A&P spend €100m – share of spend up • Underlying growth in operating profit 9% • Underlying improvement in operating margin +30bps • Earnings per share +26% • Strong balance sheet 5
Slide 6: Strong Organic Growth
Strong Organic Growth Underlying sales growth 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% * 05 06 06 06 06 07 07 07 07 08 08 08 05 20 20 20 20 20 20 20 20 20 20 20 20 20 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Annualised growth rate * days adjusted 6
Slide 7: Strong Organic Growth
Strong Organic Growth Q3 Ytd Turnover €10.4bn €30.4bn Change 1.8% 0.2% Acquisitions and disposals (1.1)% (1.0)% Currency effect (5.0)% (5.8)% Underlying sales growth 8.3% 7.4% Volume 0.6% 0.7% Price 7.7% 6.7% 7
Slide 8: Underlying Sales Growth by Region
Underlying Sales Growth by Region Americas Asia Africa 15.7 15.1 Q3 Q3 2008 Ytd Q3 2008 USG 8.2% USG 15.7% 8.2 6.5 2.5 2.4 Europe Q3 2008 Europe Americas Asia Africa USG 2.5% 8
Slide 9: Underlying Sales Growth by Category
Underlying Sales Growth by Category Americas Asia Africa Q3Q32008Ytd Q3 2008 11.6 USG 8.2% USG 15.7% 9.2 8.2 8.3 7.2 7.3 6.6 5.8 Europe Savoury Ice-Cream Personal Care Q3 Care Home 2008 Dressings Beverages Spreads USG 2.5% 9
Slide 10: Market Share
Market Share Unilever Growth Market share ** Growth * vs market Developing & Broad based gains Emerging 15% Gains: Tea, deodorants, oral care, household care W Europe 1% Losses: Spreads, dressings, savoury, hair care Gains: Spreads, mayonnaise, sauces, deodorants, skin cleansing US 4% Losses: Leaf t
Slide 11: Commodity Cost Impact on Margin
Commodity Cost Impact on Margin 900 800 700 600 500 bps 400 800 300 550 200 420 100 0 Q1 08 Q2 08 Q3 08 Q4 08 • Cost increase peaking in Q3 • 2008 full year estimate around 600bps • More benign conditions in 2009 11
Slide 12: Increased Marketing Investment
Increased Marketing Investment • €20m incremental A&P investment in Q3 • €100m incremental A&P investment ytd • Benefiting from media efficiency programmes and lower media rates • Share of advertising spend increased 12
Slide 13: Savings Continue to Deliver Strongly
Savings Continue to Deliver Strongly Local efficiency Year to date: 0.1 Restructuring • €800m total savings 0.3 Buying • €250m restructuring savings 0.4 • €490m restructuring costs On track to deliver >€1bn 13
Slide 14: Drivers of Operating Profit - Year to Date
Drivers of Operating Profit* - Year to Date 2.5 Commodity Price costs 2.0 9% Growth 1.5 €bn 1.0 Savings Programme Other A&P 0.5 Volume/ Costs Mix 0.0 Underlying Profit -0.5 Increase *Excluding RDIs, constant currency, before acq/disp 14
Slide 15: Operating Margin Development – Year to Date
Operating Margin Development – Year to Date Ytd 2007 Ytd 2008 Change Operating margin 13.7% 18.8% 5.1% Including RDIs* (1.4)% 3.4% 4.8% Underlying change 0.3% Key drivers: Cost/price/mix (2.9)% Savings 2.7% A&P 0.5% * Restructuring, disposals and one-off items 15
Slide 16: Drivers of EPS Growth – Year to Date
Drivers of EPS Growth – Year to Date 2007 2008 Change EPS (€) 1.10 1.38 26% Includes RDIs*, after tax (0.05) 0.24 (charge)/gain Key drivers: % Underlying growth in operating profit 9 Currency (6) Tax rate (before RDIs*) (5) RDIs* 26 Share buy-back 2 TOTAL 26 * Restructuring, disposals and one-off it
Slide 17: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet • ‘Strong single A’ balance sheet • Net debt reduced to €8.7bn • Cashflow from operating activities €2.5bn • Working capital improvement in Q3 • €1.5bn share buy-back 17
Slide 18: 2008 Outlook
2008 Outlook • Underlying sales growth now expected to be well in excess of our 3-5% long-term target range • Underlying improvement in operating margin 18
Slide 19: Returning Cash to Shareholders
Returning Cash to Shareholders 4 30 3,5 25 3 Cash to shareholders (€bn) 20 2,5 Net Debt (€bn) 2 15 1,5 10 1 5 0,5 0 0 2001 2002 2003 2004 2005 2006 2007 Dividends One-off dividend Share buy back Net debt • Attractive dividends with payout ratio above 50% since 2000 • Share buy-back programme of at l
Slide 20: Improved Working Capital % Turnover
Improved Working Capital % Turnover 10 Since 1997 9 8.8 % continuous 8 downward trend 7 in working capital 6 % 5 4 3 2 2.1% 1 0 1997 1998 1999 2000 2001 2002 2003 2004* 2005 2006 2007 *IFRS basis from 2004 onwards 20
Slide 21: Transformation Programme
Transformation Programme 21
Slide 22: Accelerating the Transformation
Accelerating the Transformation • Raising the bar on innovation • Shaping the portfolio including ≥ €2bn disposals • €1.5bn cost reduction to enhance margin 22
Slide 23: Innovation Driving Growth
Innovation Driving Growth • Health and wellness • Deployment of superior technologies • Rapid roll-outs across key markets 23
Slide 24: Shaping the Portfolio - Major Disposals
Shaping the Portfolio - Major Disposals 2005 Prestige fragrances 2006 European Frozen Foods 2007 Brazil spreads 2008 Cheese US Seasonings N. America Laundry Olive Oil Sale agreed 2007-8 disposals at average 1.8x Sales Multiple 24
Slide 25: Shaping the Portfolio - JV’s & Acquisitions
Shaping the Portfolio - JV’s & Acquisitions JV Extended RTD Tea Acquisitions 2007 Indonesia Fruit Drinks 2008 Russia Ice Cream 25
Slide 26: Transformation Programme On Track
Transformation Programme On Track Actual Plan % to date to date From 100 units Largely Multi-country organisations 29 to 20-25 MCOs complete Factory closures / streamlining 50-60 Closures completed 17 Closures announced 8 Streamlining announced 30 Headcount reduction 20,000 7,000 35% Restructuring S
Slide 27: Growth Strategy
Growth Strategy 27
Slide 28: Delivering Competitive Growth
Delivering Competitive Growth Relative pricing Communication • Larger economy sizes • Price tiering • Advertising up by €100m in H1 • Adapting promotions • Share of voice maintained • Innovation • Media & promotional efficiency • 18 Cannes Awards 1kg tub Building Innovation Capabilities Go-to-Market
Slide 29: Winning in an Economic Downturn
Winning in an Economic Downturn Recessionary pressures impact categories in different ways In Europe • In-home meals generally thrives • Hand & body prone to down-trading • Deodorants unaffected • Laundry using less product Example: some actions we are taking in margarines….. • Maintain or increase
Slide 30: Reasserting the Value of Our Brands
Reasserting the Value of Our Brands Are we going to compare? - the real differences: • The taste of more peanuts • No added sugars • Rich in Vitamin E Calve tastes better according to independent taste trials Calve peanut butter has been Holland’s favourite for 60 years 30
Slide 31: Strong Category Positions
Strong Category Positions Savoury Spreads Dressings Deodorants World Number 1 Tea Mass Skin Ice Cream Laundry World Number 2 Daily Hair Care Oral Care Local Strength Household Cleaning 31
Slide 32: Big Global Brands
Big Global Brands 12 billion euro + brands Top 25 brands = ¾ of Unilever’s sales Of which 12 grew > 10% in H1 2008 32
Slide 33: Unilever’s Strategic Priorities
Unilever’s Strategic Priorities Personal Care D&E Vitality 33
Slide 34: Unilever in D&E
Unilever in D&E As % of Unilever total turnover 2004 2007 Other Other developed developed 26% D&E 23% D&E 36% 44% Western Western Europe Europe 33% 38% 34
Slide 35: D&E Growth is Profitable
D&E Growth is Profitable 2007 Operating margin before RDIs* Unilever average Developed D&E D&E excl. Russia & China * Restructuring, disposals and one-off items 35
Slide 36: Sustained growth in D&E
Sustained growth in D&E Since 1990… • Underlying sales growth 9% pa on average • Volume growth 5% pa on average • Volume and value growth in every year 16% • Hard currency growth of 7% on average 14% 12% 10% 8% 6% 4% 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20
Slide 37: Performance through South East Asia 1998 Economic Crisis
Performance through South East Asia 1998 Economic Crisis Gross Margin bei Underlying Volume Growth 115 25.00% 110 20.00% Underlying Volume Growth 105 Gross Margin Index 100 15.00% 95 10.00% 90 85 5.00% 80 75 0.00% 70 -5.00% 65 60 -10.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 97 98 99 00 37
Slide 38: Unilever Indonesia: Fifteen Years of Real Growth
Unilever Indonesia: Fifteen Years of Real Growth 1998 South-East Net Earnings Asia Economic US$US$ Sales 100 Crisis 800 90 700 80 600 70 500 60 400 50 300 40 200 30 20 100 10 0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 38
Slide 39: Market Leadership Strengthened in Argentina throughout Crisis
Market Leadership Strengthened in Argentina throughout Crisis Market share % Category 2001 2005 Change Solution Wash 69 70 Fabric Conditioners 68 78 Hair 42 48 Deodorants 67 69 Skin Cleansing 47 49 Bouillon 84 81 Soups 89 93 Mayonnaise 69 72 39
Slide 40: Innovation
Innovation 40
Slide 41: Clear
Clear Complete antidandruff and scalp care regime Centrally developed, identically presented simultaneously across China, Brazil, Russia, Arabia and Turkey 41
Slide 42: Axe Chocolate
Axe Chocolate As Irresistible As Chocolate Already No.1 Axe variant in key markets 42
Slide 43: Ponds Age Miracle
Ponds Age Miracle Skin that looks and feels younger A revolutionary range of anti-ageing products designed specifically for the needs of Asian skin 43
Slide 44: Dove Go Fresh
Dove Go Fresh Campaign for Real Beauty A fragrance-driven collection of products aimed at women in their 20s 44
Slide 45: Comfort Fresh Release Strategy
Comfort Fresh Release Breakthrough technology to outperform any fabric conditioner present in the marketplace Strategy Do the moves to release the freshness 45
Slide 46: Small & Mighty in Europe
Small & Mighty in Europe A revolutionary 3-times-more concentrated laundry detergent A new breakthrough product with perceivably better cleaning, and better convenience, at the same price per wash Cleans a whole wash-load with just one small capful 46
Slide 47: Knorr Bouillon Gel
Knorr Bouillon Gel Launched in China with local insight into soup preparation 47
Slide 48: Heart Health
Heart Health “Goodness of Margarine” Omega 3 plus pro.activ (Promise activ) Packed with more Spreads, milk, yoghurt omega 3 than any and mini-drinks other spread or clinically proven to minidrink lower cholesterol 48
Slide 49: Hellmann’s Light
Hellmann’s Light Delicious extra light mayonnaise now with only 3% fat With unique citrus fibre technology 49
Slide 50: Lipton
Lipton A unique slimming tea twice as rich in catechins to help maintain your silhouette Sustainably sourced tea certified by the Rainforest Alliance 50
Slide 51: Moo
Moo Delicious ice cream for kids with as much calcium as two glasses of milk + + 51
Slide 52: Magnum Temptation
Magnum Temptation An unrivalled multi-sensorial experience using cold roller technology 52