Unilever Plc · LSE:ULVR
Unilever — Q1 2004 Earnings Presentation
26 slides from Unilever's earnings presentation, 2004
Slide 1: Unilever Roadshow: First Quarter Results 2004
Unilever Roadshow First Quarter Results 2004 Certain of the comments and materials in this presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and assumptions regarding an
Slide 2: Sustaining Value Creation in current markets
Sustaining Value Creation in current markets u Strong savings & improved mix l fully funding increased brand investment • tactical actions: +200 bps trade investment responding to competitive markets, and… • gross margins still move ahead by 110 bps • innovations going to market as planned, and... •
Slide 3: Development of price & volume in leading brands
Development of price & volume in leading brands u Overall pricing flat compared to 1.4% in 2003. u In D&E markets: 2002 2003 2004 Q1 Price 7% 4% 0% Volume 2% 4% 8% LB Growth 9% 8% 8% Overall D&E growth at 8% in-line with our past record. u In Developed markets pricing generally runs at flat to 1%; Q
Slide 4: Drivers of long term Value Creation 2005-10
Drivers of long term Value Creation 2005-10 Priority is sustained top-third TSR . . . . by pulling the right combination of value drivers in any given situation u generation of free cash flow (>€30bn ‘05-’10) u development of our return on invested capital (³17% by 2010) u managing our weighted aver
Slide 5: Building our business through brands
Personal Care performance in Q1 2004 Getting behind Q1 top line performance: • +11% leading brand growth in prior year giving tough comparator • Also impacted by 1 less trading day in this quarter • Currently seeing lower market growth rate in developed world. • Competitive markets particularly in U
Slide 6: Development of Leading Brands: Personal Care
Development of Leading Brands : Personal Care Q1 Leading brands growth % 2000 2001 2002 2003 2004 Mass Personal Care 7.5 9.0 10.8 7.9 2.5 Prestige 2.8 (7.2) 1.3 (18.1) (14.8) Total Personal Care 7.0 7.6 10.1 6.1 1.5 Mass personal care reflects strong prior year and competitive markets in Hair. Stron
Slide 7: Skin and Deodorants current innovation
Skin current innovation Lux soap bars, bath & shower products Pond’s launched in Indonesia Oil and selected countries Control in Europe Extension of Dove Face Care Dove firming range in the US for lotion in Europe Sensitive Skin Pond’s relaunches & launches in Asia, China & US Deodorants current inn
Slide 8: Oral innovation; Leading Brands: Home Care
Oral current innovation Close Up variant initiatives in Asia and Latin America Rollout of successful launch of Signal whitening kits in France Relaunch of Signal “complete care” toothpaste in selected markets Launch of low cost toothbrush Development of Leading Brands : Home Care Q1 Leading brands g
Slide 9: Home Care innovation; Leading Brands: Foods
Home Care current innovation Improved Cif & cleaning “Fizz” Domestos product rollout innovation focused on the core OMO “pockets” successfully New fragrances & launched & rolled out in Latin variants behind America and Africa - with new Comfort & Snuggle formulations, packaging, fragrance & advertis
Slide 10: Savoury and Dressings current innovation
Savoury current innovation Rollout of Rollout of Cubitos in new Mealmakers to D&E markets new markets Rollout & extension of Rollout of Mealkits range in Knorr Europe Soup Solutions Carb Options launch in the US Extension of nutritious Range of Mexican soup range in Europe sauces in US including fro
Slide 11: Tea innovation; Leading Brands: Foods
Tea current innovation Lipton Aquae Lipton Carb launched in Options launched France in the US Build on launch of Lipton Lipton Ice Light Green in 10 countries in launched in Europe 2003 Europe Rollout Fruit Fusion range in Europe Development of Leading Brands : Foods Q1 Leading brands growth% 2000 2
Slide 12: Spreads & Cooking and Health & Wellness innovation
Spreads & Cooking current innovation Cholesterol lowering yoghurt and milk Rollout Savoury launched under the Spreads pro.activ brand in Europe Cremefine Dairy Cream Alternatives range roll-out in Europe Relaunch of Flora/Becel in parts of Europe - new Skippy Carb Options formulation, packaging laun
Slide 13: Ice Cream and Frozen Food current innovation
Ice Cream current innovation Cornetto “Love Carb Smart Potion” in Europe in the US Magnum Intense Range of low-fat, no sugar launched in added and sugar free options Europe across leading brands in the US Carte d’Or and Magnum Light launched in Solero Europe relaunch in Europe 0% fat Frozen Food cur
Slide 14: Progress on Path to Growth
Progress on Path to Growth Path to Growth: Levers of economic value Levers of Path to Growth Economic Value Portfolio Accelerate top-line improvement growth Focus on leading Free Top brands Boost operating Cash margin 1/3 Simplification Flow TSR Raise operating Growth World class supply asset effici
Slide 15: A more powerful and relevant brand portfolio
A more powerful and relevant brand portfolio u Portfolio of Global Brands & Local Jewels u 400 brands - 200 brand positions u Disposed of 150 businesses with proceeds of €7.5 billion u Leading brands: 75% (1999) 94% (Q104) 95% (2004) u 12 leading brands with turnover of €1 billion (4 in 1999) u 40 g
Slide 16: Improving asset efficiency - releasing cash
Improving asset efficiency - releasing cash % Sales 1995 1999 2003 Fixed Assets 27.6 21.4 16.5 Working Capital 10.5 7.6 3.7 Total Operating Assets 38.1 29.0 20.2 Path to Growth targets and achievements Path to Growth target of 23% exceeded Reduce factories by 130 ü Improvement programmes continue in
Slide 17: Unilever 2010: Path to Growth progress to date
Path to Growth progress to date Progress on levers of economic value Free Cash Top line: Flow Improved brand & business portfolio (ungeared) Leading brands from 75%-94% of the portfolio >€16bn since the start of Path Operating margin: to Growth Operating margin MAT 15.8% up 470 bps Capital efficienc
Slide 18: Consumer Hotspots and Mission Statement
Consumer Hotspots Multiple Desire to Better Small Personal shopping improve quality of incomes, responsibility for channels standard of living life big own welfare aspirations Information & Need to Health as a entertainment communicate birthright Increase in travel Protect the on demand with anyone,
Slide 19: Winning through consumer intimacy; Management Guidance
Winning through consumer intimacy Technology to Global scale, local Power in the local Invest in support touch shopping basket Corporate Reputation differentiation Winning Availability Strong brands Building Stay in touch with where the where consumers build trust Relationships the consumer people a
Slide 20: The framework based on Value Creation
The framework based on Value Creation Priority is sustained top-third TSR The drivers: l Growth of free cash flow over time l Growth in economic profit - the basis for the generation of future cash flows Linking growth in economic profit to growth in return on invested capital l Weighted average cos
Slide 21: Further improving capital efficiency
Further improving capital efficiency Capital expenditure to average around 2.5% of sales over the period Asset efficiency enhanced through: l intra-regional sourcing l moving outsourcing from 15 to 25% l selective cross-regional sourcing Working capital management further improved including more dir
Slide 22: Momentum growth rate and operating margin drivers
Momentum growth rate Market volume growth rate close to 3% Additional growth of 50-100bps from market share gain Partly offset by: normal retailer destocking Pricing around 1% Average underlying sales growth 2005 - 2010 3-5% Drivers of operating margin Operating margin improvement 4 years 2000 - 200
Slide 23: Uses of free cash flow; financial plan framework
Uses of free cash flow u Strategy and plans based on organic growth u Net debt already reduced from €26.5 billion to €12.6 billion, well ahead of schedule u €4.0 billion of reduction from currency movement u Current optimal debt level consistent with financial strategy around €10 billion u Surplus c
Slide 24: Backup
Drivers of long term value creation 2005-10 Priority is sustained top-third TSR . . . . by pulling the right combination of value drivers in any given situation u generation of free cash flow (>€30bn ‘05-’10) u development of our return on invested capital (³17% by 2010) u managing our weighted aver
Slide 25: Commodities and Retail Own Brands
Commodities u Operate across Foods, Homecare and Personal Care in more than 100 different countries u Broad range of inputs - no single input represents more than 4% of sales u Exposure mitigated through market pricing, hedging and formulation management u Currently see a modest upward pressure but
Slide 26: Knorr - a brand for all seasons
Knorr - a brand for all seasons Reach up Reach out Nutrition / Fresh New consumers Ethnic New occasions Gourmet New channels New channels Good for You Frozen snacks & meal solutions Chilled / Frozen Wet single serve Wet Cup-a-Soup Mealmakers Ramen Noodles Dry Sauces Dry Soups Ramen Bricks Reach down