Unilever Plc · LSE:ULVR
Unilever — Q3 2003 Earnings Presentation
23 slides from Unilever's earnings presentation, 2003
Slide 1: Unilever Roadshow Q3 & First Nine Months 2003
Unilever Roadshow Q3 & First Nine Months 2003 Path to Growth progress Driving the levers of value creation SAFE HARBOUR STATEMENT: This presentation may contain forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act 1995) based on our best current informa
Slide 2: Path to Growth: Levers of value creation
Path to Growth: Levers of value creation Levers of Value Path to Growth Creation Portfolio improvement Top line 5-6% Focus on leading Free Top brands Operating margin Cash 16+% 1/3 Simplification Flow TSR Capital efficiency Growth World Class Supply 600 bps down Chain Cost of capital Enterprise Cult
Slide 3: Outlook for 2003
Outlook for 2003 ◆ Leading brands growth below 3% ◆ Leading brands 90%+ of total portfolio ◆ EPS (beia) growth - low double digits ◆ Planned restructuring exceptionals €500 million Update on factors impacting H1 sales growth ◆ No further sharp de-stocking in HPCNA ◆ Broad based pick up in momentum o
Slide 4: Development of leading brand growth
Development of leading brand growth % Leading H1 Q3 Brands Growth Growth 89% 4.3% improved to 5.1% 8% (1.4)% improved to 0.6% Household Care & Frozen 3% (13.7)% declined to (27.6)% Slim.Fast & Prestige Growth of the leading brands - the year in context ◆ 2001 and 2002 leading brand growth 5.3 and 5.
Slide 5: Supporting our brands - delivering on profitability
Supporting our brands - delivering on profitability ◆ At the start of the year we showed how we created headroom to deliver both profit and respond to a tougher business environment ◆ Sales shortfall has used initial headroom…………….. ………but we have created more headroom through: ◆ additional procurem
Slide 6: Levers of Value Creation: Top line: Improving the portfolio
Levers of Value Creation: Top line: Improving the portfolio ◆ Acquired more powerful brands; Disposed of 110 businesses for €7.2bn ◆ Momentum growth rate up by 100bps from 3 to 4% ◆ Growth in nineties 3.5 - 4% - improved portfolio raises this to 4.5 - 5% ◆ Further benefit to come from tail reduction
Slide 7: Development of leading brands: Home & Personal Care
Development of leading brands: Home & Personal Care H1 Q3 Leading brands growth % 2000 2001 2002 2003 2003 Personal Care 7.5 9.0 10.8 8.6 9.6 (excl. Prestige) Prestige 2.8 (7.2) 1.3 (8.0) (25.8) Total Personal Care 7.0 7.6 10.1 7.6 6.9 Laundry 3.2 5.3 1.9 1.3 2.3 Household Care 2.0 7.1 2.6 (3.6) 1.2
Slide 8: Levers of Value Creation: Home Care strategy
Levers of Value Creation: Home Care strategy Focus on CIF & Domestos Household Care First Half performance not satisfactory 15% of Portfolio Second Half strong innovation programme Historic growth rate 4%+ Laundry Operating margin static pre Path to Growth 85% of Portfolio Strategy: ‘earn the right
Slide 9: Personal Care innovation 2003
Personal Care innovation 2003 LATAM Europe Europe Axe Anti-Perspirant Rexona Crystal Sunsilk Japan Lux Spa North America Moist Soap Suave liquid & bar Personal Care innovation 2003 - Dove LATAM NA Europe, NA, LATAM Dove Deodorant Facial care products Exfoliating Bar Europe NA ‘Supreme Silk’ liquids
Slide 10: Home Care innovation 2003; Development of leading brands: Foods
Home Care innovation 2003 Aloe Vera Fragrance - liquid, tablets, liquid gel Snuggle new variants Cif & Domestos New variants & markets New variants Development of leading brands: Foods H1 Q3 Leading brands growth% 2000 2001 2002 2003 2003 Savoury & Dressings 6.0 4.2 5.1 3.4 2.0 Tea Based Beverages 4
Slide 11: Development of leading brands: Foods
Development of leading brands: Foods ◆ Current performance below our ambition…but ◆ 3 years prior to Path to Growth average USG was <1% ◆ Since 2001 USG has averaged 2.5%… ● within this leading brands have averaged 3.5% ◆ Plans in place to address Slim.Fast and strong innovation programmes underpin
Slide 12: Knorr - a brand for all seasons; Tea Based Beverages
Knorr - a brand for all seasons Reach out Reach up New consumers Nutrition / Fresh New occasions Ethnic New channels Gourmet Vie New channels Frozen snacks & meal solutions Chilled / Frozen Wet single serve Wet Cup-a-Soup Mealmakers Ramen Noodles Dry Sauces Dry Soups Ramen Bricks USG Reach down Toma
Slide 13: Spreads & Cooking products; Health & Wellness
Foundations for sustained, profitable growth: Spreads & Cooking products Sustained growth delivered of above 4% in both 2001 and 2002 u Leading brands now 75%+ of sales, growth YTD -0.6% u Growth in Heart Health brands 6% YTD u Price competition in Family brands u 2 key innovations rephased u Good i
Slide 14: Slim.Fast innovation 2003; Ice Cream
Slim••fast innovation 2003 Ready to Drink Soy Vanilla & Chocolate Deliciously Layered Nutritional Meal Bars SlimFast Succeed Zero-Sugar Carb Snack Bars Hot Meal Options Great Tasting and Nutritional 3 Soup & 3 Pasta Recipes Foundations for Sustained, Profitable Growth: Ice Cream Global leader - gro
Slide 15: Frozen Foods; Foods innovation 2003
Foundations for Sustained, Profitable Growth: Frozen Foods Earned the right to grow - now need to do it…and sustain it K Now purely a European business - number 1 K ROCE = 30% K 2001 growth:+3% but not sustained K Step up in growth Q3 below expectations H1 -0.2% to Q3 +0.3% K Continuing to build on
Slide 16: Executing the restructuring and integration
Executing the restructuring and integration Q3 MAT 1999 2003 Operating Margin % (beia) 11.1 14.9 Procurement €1.6bn achieved ✔ Bestfoods synergy €0.8bn achieved ✔ Restructuring €1.1bn €0.4bn to go Restructuring charge €6.2bn 97% authorised €5.3bn charged 110 Businesses sold, €7.2 billion sale procee
Slide 17: Capital efficiency & operating margin
Levers of Value Creation: Capital efficiency & operating margin Operating Margin F. Assets + W. Capital beia % (MAT) as % of Sales 16 40 38 Operating Margin (beia) % 14 36 34 12 32 30 10 28 26 8 F. Assets + W. Capital as % of Sales 24 22 6 20 Q4'95 Q4'96 Q4'97 Q4'98 Q4'99 Q4'00 Q4'01 Q4'02* Q3’03 MA
Slide 18: Optimising the balance sheet; Summary
Levers of Value Creation: Optimising the balance sheet Net Debt 2000* A&D 5.5 CFO Currency Retranslation Net Debt Dividends 2003 3.4 Q3* 4.1 Tax 26.5 20.1 Capex & 5.0 Fin Invest. Interest 14.4 3.8 Other 4.0 Underlying Tax Rate Cost of Capital Down by 200 bps Down by 100bps *2000 closing EUR/USD 0.93
Slide 19: Backup Charts
Summary: Levers of Value Creation ◆ Top third TSR overarching ambition ◆ Progress on all levers of value creation; improved brand & business portfolio; operating margin; capital efficiency; improved balance sheet ◆ Free cash flow now running at €4.3bn for the last 12 months ◆ Confirmed outlook for 2
Slide 20: The key drivers of growth
The key drivers of growth ◆ Powerful “reshaped” portfolio of brands in fragmented markets − Build strength in the core ◆ Innovate in fastest growing segments with Brands on trend with the consumer ◆ “Space for growth” - move from category to brand mindset Space for Growth − Extending brands across c
Slide 21: Commodity prices; Leveraging our strength in D&E
Commodity prices Breakdown of raw materials & packaging % turnover Raw Materials & Packaging % Turnover Oils and Fats Packaging 9% 4% turnover Raw Materials 24% Tea 1.3% turnover Leveraging our strength in D&E ◆ 2006: D&E purchasing power will exceed the developed world ◆ 2010: c. 90% of world’s Ref
Slide 22: Route to consumer; price and volume in D&E markets
Underlying price & volume in D&E markets Average across D&E markets Leading brands: 2002 Q3 2003 YTD 2003 Price change 6.7% 4.0% 4.3% similar to Volume/mix 2.3% 4.6% 4.7% historic L.B. growth 9.2% 8.8% 9.1% average 20 Illustration 2001 Devaluing Countries 15 10 5 0 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 0
Slide 23: Impact of implementing FRS17
Impact of implementing FRS17 Pension & Other Benefits elements 2002 2003 (Estimate) Impact on: (€ mln) SSAP 24 FRS 17 FRS 17 Operating Profit (beia) (274) (381) (400) Charge to Interest 0 108 (190) Profit before Tax (274) (273) (590) Net Profit (beia) (184) (183) (395) Net Assets (after tax) €bn (2.