Unilever PLC · LSE:ULVR
Unilever — FY2008 Earnings Presentation
34 slides from Unilever's earnings presentation, 2009
Slide 1: 2008 Full Year and Q4 Results Roadshow
2008 Full Year and Q4 Results ROADSHOW 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' o
Slide 2: 2008 Highlights
2008 Highlights • Strong organic growth +7.4% • Underlying improvement in operating margin +10bps • €2.7bn additional commodity costs • €5.3bn cash flow from operating activities • €3.6bn cash returned to shareholders • €1.8bn after tax cash proceeds from disposals Sales in 2008 2008 Q4 Turnover €40
Slide 3: Strong Organic Growth
Strong Organic Growth Underlying sales growth (%) 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 06 06 06 06 07 07 07 07 08 08 08 08 * 05 20 20 20 20 20 20 20 20 20 20 20 20 20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Annualised growth rate *days adjusted Underlying Sales Growth by Region 2008 Q4 16 14.2 13.5 14 12 10
Slide 4: Underlying Sales Growth by Category
Underlying Sales Growth by Category 2008 Q4 14 11.9 12 9.8 10 7.6 8 6.6 6.6 6.1 5.9 6.2 6 4 2 0 Savoury Ice Cream Home Care Personal Care Spreads Beverages Dressings Drivers of Operating Profit* 2008 Commodity Price costs 2.8 2.3 1.8 1.3 €bn Savings 0.8 Other programme A&P Vol/Mix costs 0.3 Acq/Disp
Slide 5: Operating Margin Development
Operating Margin Development 2008 2007 2008 Change Operating margin 13.1% 17.7% 4.6% Including RDIs* (1.4)% 3.1% 4.5% Underlying change 0.1% Key drivers: Cost/price/mix (3.4)% Savings 2.8% A&P 0.7% *Restructuring, disposals and one-off items Drivers of Operating Profit* Q4 0.9 Commodity Price costs
Slide 6: Commodity Cost Impact on Margin
Commodity Cost Impact on Margin 900 800 800 700 760 600 500 550 bps 400 420 300 200 100 0 Q1 08 Q2 08 Q3 08 Q4 08 2008 full year impact c. €2.7bn Increased Advertising & Promotional Investment • A&P investment up €50m in 2008 • Benefits from media efficiency programmes • Media rates coming down acro
Slide 7: Savings Continued to Deliver Strongly
Savings Continued to Deliver Strongly Local efficiency 2008FY: 0.2 Restructuring • €1.1bn total savings 0.4 Buying • €0.4bn restructuring savings 0.5 • €0.8bn restructuring costs €1.1bn total savings delivered 2008 Drivers of EPS Growth 2007 2008 Change EPS (€) 1.35 1.79 32% Includes RDIs*, after ta
Slide 8: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • ‘Strong single A’ balance sheet • Net debt reduced to €8.0bn • Cash flow from operating activities €5.3bn • Net pension liability increased to €3.4bn • ROIC 15.7% boosted by disposal profits Returning Cash to Shareholders > €7bn returned 07-08 4 Total cash amount (€bn)
Slide 9: Good progress in recent years; we are well placed
Good progress in recent years • Focused brand portfolio • More competitive cost structure • Management layers reduced • Leaner, faster organisation • Better leveraging scale We are well placed • Strong brands and category positions • Offerings covering all price points • Foods and HPC portfolio adva
Slide 10: Stepping up performance
Stepping up performance • Consistently grow volumes • Focus energy externally • Put consumers and customers at heart • Use recession to galvanise faster action Priorities for 2009 1. Reignite volume growth 2. Protect cash flow and margin 10
Slide 11: Priority 1: Reignite volume growth
Priorities for 2009 Reignite volume growth 1. Strengthen our brands and portfolio 2. Sharpen our go to market capabilities 3. Evolve our organisation and culture Priority 1: Reignite volume growth Strengthen our brands and portfolio • 30-day plans to close competitive gaps • Drive innovation harder
Slide 12: Improve go-to-market capability; sharpen organisation and culture
Priority 1: Reignite volume growth Improve our go-to-market capability • Cost efficient integrated supply chain • Better customer service levels • Focus on fast-growing customers • Excel in shopper understanding Priority 1: Reignite volume growth Sharpen organisation and culture • Strengthen leaders
Slide 13: Protect cash flow and margins
Priorities for 2009 Protect cash flow and margins • Create new sense of urgency • Leverage scale for buying synergies • Better return on marketing spend • Reduce overheads and working capital • Cash flow generation and conversion Use of cash 1. Reinvest in the business 2. Provide dividends to shareh
Slide 14: Outlook and Dividend Policy
Outlook • Unpredictable economic environment • Focus on short-term priorities 1. Reignite volume growth 2. Protect cash flow and margin • Confident in long term value creation Dividend Policy 14
Slide 15: Move to Quarterly Dividends in 2010
Move to Quarterly Dividends in 2010 • Aim for attractive, sustainable and growing dividend • One dividend calendar and one set of exchange rates • Requires shareholder approval at AGM’s in May 2009 • No impact on total dividend available for shareholders • More details available on www.unilever.com
Slide 16: Shaping the Portfolio: Disposals and Acquisitions
Shaping the Portfolio Disposal programme Including: 2008 Boursin Cheese Lawry’s Seasonings NA Laundry Bertolli Olive Oil Disposals completed with €1.6 billon turnover Average 1.8x sales multiple Shaping the Portfolio Acquisitions Buavita in Indonesia Inmarko in Russia TIGI Global 16
Slide 17: Partnerships and Restructuring
Shaping the Portfolio Partnerships Starbucks Ice Cream Pepsi Lipton International Productivity and Efficiency Restructuring well on track Plan 2007-2010 Actual to date From 100 units Multi-country organisations 29 to 20-25 MCOs Factory closures / streamlining 50-60 70 Closures completed 26 Closures
Slide 18: Growth Strategy
Growth Strategy 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 18
Slide 19: Big global brands
Big global brands 13 billion euro + brands Top 25 brands = ¾ of Unilever’s sales Developing & Emerging Markets 19
Slide 20: The D&E pyramid rapidly evolving into a diamond
The D&E pyramid … Population in 2007 (billions) Affluent 0.5 Aspiring 2.6 Striving 2.6 … rapidly evolving into a diamond Billions of people in D&E countries 2008 2018 Change Have lots 0.5 0.9 + 0.4 Haves 2.6 3.2 + 0.6 Not yets 2.6 2.2 - 0.4 Source: Unilever estimates 20
Slide 21: Market development opportunity
Market development opportunity Per Capita Consumption (US $ per year ) Detergents Shampoo 7.5 22.9 6.7 16.6 5.4 12.1 2.2 1.9 1.0 1.1 1.4 0.3 India China Indonesia Brazil Germany USA India China Indonesia Brazil USA Germany Ice Cream 50.9 Skin care 36.6 34.6 26.9 10.9 2.8 5.0 0.2 0.9 3.2 0.8 0.3 Indi
Slide 22: Building markets - uptrading
Building markets - uptrading Functional Teas Pyramids Double Chamber Mid-market Teabags • Great potential for uptrading D&E Conversion Teabags • Tea has 20% share of volume vs. 12% value for total Beverages Branded Packet Tea Loose Leaf Tea conversion upgrading uptrading Long-term strength in D&E Si
Slide 23: D&E Growth is Profitable
D&E Growth is Profitable 2008 Operating margin before RDIs* Unilever average Developed D&E D&E excl Russia & China * Restructuring, disposals and one-off items Indonesia – strengthened through crisis Sales and profits in hard currency • Profit level recovered in one year • Profit margin increased US
Slide 24: Argentina - strengthened through crisis
Argentina - strengthened through crisis Sales and profits in hard currency • Profit level recovered in two years US$ • Profit margin increased Turnover US$ Operating profit 2002 Peso crisis 2000 2001 2002 2003 2004 2005 2006 2007 2008 Innovation Driving Growth 24
Slide 25: Stepping up innovation
Stepping up innovation Fewer, bigger innovations • From 5000+ projects to 700 Number of Category Innovation Projects 6000 5000 4000 3000 2000 1000 0 2005 2006 2007 2008 2009 • Average project size increased 10x Stepping up innovation Faster roll-outs to more markets 52 40 markets 30 markets 25 marke
Slide 26: World-Class Research & Development
World-Class Research & Development Building R&D for competitive advantage • More focus on big wins • Leverage our unique science across our portfolio • Accelerate delivery of breakthroughs • Build world class capabilities in critical areas World-Class Research & Development Science and Technology St
Slide 27: Technology Focus
World-Class Research & Development Prioritising our big wins Science & Unilever Big Wins Technology Prioritised Portfolio jec ts Pro s i s ene G Consumer Needs Trends Brand Categories World-Class Research & Development Leverage technology across portfolio Home Care Personal Care Foods Genesis Projec
Slide 28: Knorr Stock Pots and Bertolli Frozen Meals
Knorr Stock Pots Stock Pots with new bouillon gel technology for natural tasty stock and soups Launched in China and Europe Bertolli Frozen Meals New Bertolli Frozen Meals Restaurant Taste with your Homemade Touch 28
Slide 29: Hellmann's Light and Heart Health
Hellmann’s Light Delicious extra light mayonnaise with unique citrus fibre technology Now with only 3% fat Heart Health “Goodness of Margarine” Family Goodness brings better nutrition for family growth For better taste and with less fat 29
Slide 30: Lipton and Magnum Temptation
Lipton A unique slimming tea twice as rich in catechins to help maintain your silhouette Sustainably sourced tea certified by the Rainforest Alliance Magnum Temptation An unrivalled multi-sensorial experience using cold roller technology 30
Slide 31: Clear and Axe Chocolate
Clear Complete antidandruff and scalp care regime Centrally developed, identically presented Axe Chocolate As Irresistible As Chocolate Global No.1 Axe variant 31
Slide 32: Dove Go Fresh and Small & Mighty
Dove Go Fresh Dove Go Fresh A fragrance-driven collection of products aimed at women in their 20s Rolled out to 55 markets in 2008 alone Small & Mighty in Europe A revolutionary 3-times-more concentrated laundry detergent A new breakthrough product with perceivably better cleaning, and better conven
Slide 33: Winning in Challenging Times: Ice Cream
Winning in Challenging Times Winning in Challenging Times Playing the price piano – Ice Cream Build Super Premium Renovate the premium core Re-enter mass/ economy 33
Slide 34: Winning in Challenging Times: value and pack sizes
Winning in Challenging Times More focus on value – adjusting messages Dove Smear Campaign “Soap leaves scum, Dove doesn’t” Winning in Challenging Times Optimising pack sizes Full pack size ranging in each country 250ml 400ml 500ml 750ml 34