Unilever PLC · LSE:ULVR
Unilever — CAGNY 2008
63 slides from Unilever's conference presentation, Feb 20, 2008
Slide 1: 2008 CAGNY
2008 CAGNY Jim Lawrence 20th February 2008 Chief Financial Officer 1
Slide 2: 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 3: Agenda
Agenda • Business Overview • Growth Strategy • Developing & Emerging Markets • Innovation • Business Performance 3
Slide 4: A leading global consumer company
A leading global consumer company Nestle P&G Unilever PepsiCo Kraft Coca-Cola Co L'Oreal Danone Unilever’s market Colgate capitalisation: c. $90bn $ sales* *Based on latest reported results 4
Slide 5: Operating in over 100 countries
Operating in over 100 countries Europe | $21bn | 38% Americas | $18bn | 33% Asia Africa | $16bn | 29% 2007 Turnover $55bn 5
Slide 6: Categories that meet everyday needs
Categories that meet everyday needs Savoury, Home Care Dressings & $9.9bn Spreads $19.1bn Personal Care Ice Cream & Beverages $15.4bn $10.4bn 6
Slide 7: 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 7
Slide 8: Big global brands
Big global brands 13 “billion dollar brands” Top 25 brands = ¾ of Unilever’s sales 8
Slide 9: A global management team
A global management team Non-Executive Group Chief Executive Chairman President President President President President CHRO CFO Americas Europe Asia Africa HPC Foods 9
Slide 10: Local roots with global scale
Local roots with global scale Local roots Global scale 10
Slide 11: Agenda
Agenda • Business Overview • Growth Strategy • Developing & Emerging Markets • Innovation • Business Performance 11
Slide 12: Category led portfolio strategy
Category led portfolio strategy • Businesses that are attractive • Businesses where we are already advantaged • Businesses that exploit our strength in D&E 12
Slide 13: Unilever's strategic priorities
Unilever’s strategic priorities Personal Developing & Vitality Care Emerging Markets (D&E) 13
Slide 14: Shaping the portfolio
Shaping the portfolio In the last 12 months: Disposals completed/ announced Brazil Spreads Brands US Seasonings France Cheese Disposal NA Underway Laundry Global JV Extended RTD Tea Indonesia Russia Acquisitions Fruit Drinks Ice Cream 14
Slide 15: Inmarko: the leading ice cream brand in Russia
Inmarko: the leading ice cream brand in Russia 15
Slide 16: Streamlined management
Streamlined management Management headcount 1200 1000 2007 vs 2005 800 -42% 600 400 -40% 200 0 2005 2007 VP SVP and above • New executive team • 50% of “top 100” are new appointments (<3 years) • Key external appointments 16
Slide 17: A simpler organisation
A simpler organisation • Fewer reporting units Before 2005 2007 2010+ > 200 c. 40 20 - 25 • Global category teams • Re-aligned R&D function 17
Slide 18: Reduced cost and asset base
Reduced cost and asset base 000’s of employees 300 By 2010: 250 • 50-60 manufacturing 200 sites closed or 150 streamlined 100 50 • €1.5bn savings p.a. 0 2001 2002 2003 2004 2005 2006 2007 Excluding plantations Plantations 18
Slide 19: Agenda
Agenda • Business Overview • Growth Strategy • Developing & Emerging Markets • Innovation • Business Performance 19
Slide 20: The D&E opportunity
The D&E opportunity Population in 2007 (billions) Have lots 0.5 Haves 2.6 Not yets 2.6 20
Slide 21: The opportunity in our categories
The opportunity in our categories Annual per capita consumption (US$) 22.9 6.7 6.0 12.1 1.4 2.2 1.9 1.0 1.0 0.3 a SA a il a a SA na il a di az n si di az si hi In U ne hi Br In ne U Br C C do do In In Detergents Shampoo Source: Euromonitor 2006 21
Slide 22: A big foods opportunity
A big foods opportunity Packaged food 22% Non packaged food 78% Source: Unilever estimates % of Foods market in Asia Africa 22
Slide 23: A major driver of Unilever's growth
A major driver of Unilever’s growth D&E underlying sales growth c. 8% p.a. since early 1990s % 2004 Sales % 2007 Sales Other developed Other developed 3% 3% North North America D&E America 23% 36% 21% D&E 44% Western Western Europe Europe 32% 38% 23
Slide 24: 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, One-off Items 24
Slide 25: Unilever's local roots
Unilever’s local roots Our heritage and local expertise mean that D&E is in our DNA • Understanding of the local consumer • Brands and products across a wide range of income levels • Critical mass on the ground • Corporate reputation with local stakeholders and talent pool Local roots 25
Slide 26: India
India 26
Slide 27: Unrivalled scale in India
Unilever* $3.0bn Nestle Britannia PG Dabur Marico Unrivalled scale in India Colgate GSK Tata Tea Godrej CP *2007 Unilever India Turnover 27
Slide 28: Unilever's strategy applied in India
Unilever’s strategy applied in India Industries Categories Brands Non Core Business One Top One Team DIVESTED Company Global Chemicals 35 Innovation; Leading Agriculture 110 Brands Powerful positions Local Brands Activation Plantations High One Sales Diversey growth Lever spaces Force Oils & Fats No
Slide 29: India Laundry: global category, local execution
India Laundry: global category, local execution Laundry Current Market Size $2.2bn Unilever share 38% Have Relative Market Share 3x Lots Haves Not Yets Source: AC Nielsen retail panel; Euromonitor 29
Slide 30: India's evolving trade structure
India’s evolving trade structure From General trade…… towards Modern trade 2007: 95% 2025: 75% 2007: 5% 2025: 25% 30
Slide 31: Strong market shares in the modern trade
Strong market shares in the modern trade 100 Value market share % 90 80 70 60 50 40 30 20 10 0 rs h n h a ps te s as as i Te ke de Sk as oa w rw ca w hp ts sh po nt ai ot ile di H ge ng To To d er hi an et as H D W Modern trade General trade Source : AC Nielsen 31
Slide 32: Unilever India underlying sales growth
Unilever India underlying sales growth FMCG Underlying sales growth % 15% 12.8% 11.3% 10.3% 10% USG 5% -(0.1)% 0.7% 0.0% 0% 2002 2003 2004 2005 2006 2007 -5% 32
Slide 33: China
China 33
Slide 34: Investing to win in China
Investing to win in China • Priority status: 5 year growth plan • ‘One Unilever’ organisation • New leadership team • Increased innovation capability in Shanghai (+100 FTEs) • Step-up in marketing investment • Priority allocation of talent 34
Slide 35: Learning from Indonesia: Micro-marketing
Learning from Indonesia: Micro-marketing 35
Slide 36: Lux body wash in South China
Lux body wash in South China In 200 stores 110% increase in uptake 60% sales growth 8% market share * *Source: AC Nielsen 36
Slide 37: Doubling the China business in 3 years
Doubling the China business in 3 years Unilever sales in China $1bn $0.5bn 2004 2005 2006 2007 37
Slide 38: Agenda
Agenda • Business Overview • Growth Strategy • Developing & Emerging Markets • Innovation • Business Performance 38
Slide 39: Innovation driving growth
Innovation driving growth 39
Slide 40: Rapid roll-out: Clear
Rapid roll-out: Clear Complete antidandruff and scalp care regime Centrally developed and launched simultaneously across 7 countries 40
Slide 41: Rapid roll-out: Small & Mighty
Rapid roll-out: Small & Mighty A revolutionary concentrated laundry detergent Cleans a whole wash-load with just one small capful 41
Slide 42: Proprietary technology: Pond's Age Miracle
Proprietary technology: Pond’s Age Miracle Strategy 42
Slide 43: Proprietary technology: Hellmann's Light
Proprietary technology: Hellmann’s Light Delicious light mayonnaise with only 5% fat With unique citrus fibre technology 43
Slide 44: Transfer of mixes: Axe in Japan
Transfer of mixes: Axe in Japan 44
Slide 45: Transfer of mixes: half the world doesn't use a deo
Transfer of mixes: half the world doesn’t use a deo It’s our market …and only 7 out of to grow… 100 Asians use Deos 100% Russian deo market 99-05 90% 80% 250 70% + 60% 200 50% 40% 150 30% $m n 20% 10% 100 0% Deos Oral Hair Soap 50 Non Users 80 11 7 6 Users 20 89 93 95 = 0 3bn non-users in Asia $2bn
Slide 46: Vitality: Lipton
Vitality: Lipton Tea can do that Slimming tea 46
Slide 47: Knorr convenient thick soup
Knorr convenient thick soup 47
Slide 48: Knorr convenient thick soup
Knorr convenient thick soup 99% of all soup consumption in China is in-home Knorr Soup produces the taste and nutrition of thick soup in instant soup time 48
Slide 49: Raising productivity in marketing spend
Raising productivity in marketing spend Knorr leveraging global scale Active innovation projects TV productions 300 140 250 120 100 200 80 150 60 100 40 50 20 0 0 2005 2006 2007 2008* 2005 2006 2007 2008 * * Estimate 49
Slide 50: Agenda
Agenda • Business Overview • Growth Strategy • Developing & Emerging Markets • Innovation • Business Performance 50
Slide 51: Key Financials
Key Financials 2006 2007 Turnover €39.6bn €40.2bn Change +3.2% +1.4% Acquisition / Disposal (0.7)% (0.8)% Exchange rates +0.3% (3.1)% Underlying sales growth +3.8% +5.5% Operating Margin 13.6% 13.1% Including RDI* (0.6)% (1.4)% Underlying margin change (30) bps +20 bps Earnings per share (continuing
Slide 52: 3rd year of accelerating growth
3rd year of accelerating growth 6% 5.5% 5% 4% 3.8% 3.1% USG* 3% 2% 1% 0.4% 0% 2004 2005 2006 2007 *underlying sales growth 52
Slide 53: Broad based growth
Broad based growth Regions Categories Ice Cream & Home Care Beverages Asia Africa Europe €7.3bn €7.6bn €11.5bn €15.2bn USG +6.1% USG +4.2% USG +11.1% USG +2.8% Personal Savoury, Care Americas Dressings & €11.3bn Spreads €13.4bn USG +6.7% €14.0bn USG +4.1% USG +5.0% 53
Slide 54: Investing in competitiveness
Investing in competitiveness 150 100 50 bps 0 2005 2006 2007 -50 -100 A&P change Underlying change in operating margin* *Before restructuring, disposals and one-off items 54
Slide 55: Leveraging global buying
Leveraging global buying Annual savings €mn 600 500 400 300 200 100 0 2005 2006 2007 55
Slide 56: €1bn savings in 2007
€1bn savings in 2007 Other Restructuring €0.2bn €0.3bn Buying €0.5bn 56
Slide 57: Accelerated restructuring
Accelerated restructuring €1.5bn p.a. savings by 2010 • 50 – 60 sites closed or streamlined • 20,000 headcount reduction €1.5bn €0.3bn savings in 2007 57
Slide 58: Use of cash
Use of cash • Investment in the business – Capex c. 2.5% of turnover – Restructuring costs of c. €1bn p.a. 2007-2009 • Bolt-on acquisitions • Returning cash to shareholders – Dividends – Share buy-back 58
Slide 59: Cash to shareholders
Returning cash to shareholders 4 Cash to shareholders (€bn) 3 2 1 0 2001 2002 2003 2004 2005 2006 2007 Dividends Share buyback One-off dividend 59
Slide 60: Our goals
Our goals • 2010 goals – Operating margin > 15% – Consistent, competitive growth at 3-5% p.a. • In 2008 – Underlying sales growth towards top end of 3-5% range – Further underlying improvement in operating margin 60
Slide 61: Business environment in 2008
Business environment in 2008 • Growth of Unilever’s markets c. 4-5% • Continued pressure form commodity costs until well into 2008 • Unilever well placed to respond to challenges and opportunities. 61
Slide 62: Business priorities
Business priorities 1. Growth at least in line with markets 2. Improve margins 3. Invest selectively to gain market share 62
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