Unilever PLC · LSE:ULVR
Unilever — H1 2007 Earnings Presentation
18 slides from Unilever's earnings presentation, Aug 2, 2007
Slide 1: Q2 and First Half 2007 Results
Unilever Q2 and First Half 2007 Results Patrick Cescau Group Chief Executive John Rothenberg SVP Investor Relations 2nd August 2007 Agenda • 2007 business performance • First half and second quarter results • Full year outlook • Accelerating change • Innovation • Shaping the portfolio • Margin impro
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: Strong organic growth
Strong organic growth Q2 H1 Turnover €10.5bn €20.1bn Change 2.6% 1.3% Acquisitions and disposals (0.7)% (0.8)% Currency effect (2.3)% (3.4)% Underlying sales growth 5.8% 5.8% Volume 4.5% 4.6% Price 1.3% 1.1% Consistent growth Underlying sales growth 7% 6% 5% 4% 3% 2% 1% 0% * * 05 05 06 06 06 06 07 0
Slide 4: Good growth in all regions
Good growth in all regions Americas Asia/Africa H1 USG +4.9% H1 USG +11.3% 28% 34% 38% Europe H1 USG +2.6% Innovation driving category growth Ice Cream and Home Care Beverages H1 USG +5.9% H1 USG +5.9% 18% 20% 34% 28% Savoury, Dressings Personal Care and Spreads H1 USG +7.9% H1 USG +3.8%
Slide 5: Savoury, Dressings and Spreads; Ice Cream and Beverages
Savoury, Dressings and Spreads H1 USG +3.8% Ice Cream and Beverages H1 USG +5.9%
Slide 6: Home Care and Personal Care
Home Care H1 USG +5.9% Personal Care H1 USG +7.9% US
Slide 7: Improvement sustained in Q2
Underlying operating margin improvement in first half 2006 2007 Change Operating margin 14.4% 13.7% (0.7)% Including RDIs - (1.0)% (1.0)% Change before these items 0.3% Key drivers: A&P 0.0% Savings 2.0% Cost/price/mix (1.7)% Improvement sustained in Q2 2006 2007 Change Operating margin 14.0% 13.7%
Slide 8: Mitigating the impact of rising commodity costs
Mitigating the impact of rising commodity costs Commodity cost impact on margin 180 160 140 Actions taken 120 100 160 140 • Price increases bps 80 150 • Reformulation 60 100 • Hedging 40 80 • Buying savings 20 0 2003 2004 2005 2006 H1 2007 2007 outlook ≥160 bps Drivers of EPS growth - First half % O
Slide 9: Balance sheet and cash flow; 2007 outlook
Balance sheet and cash flow • Net debt €8.8bn • Share buy-back: €700m repurchased to end June • Pension liability reduced to €1.2bn • Cashflow from operating activities €1.7bn 2007 outlook • USG at upper end of 3-5% range • Underlying improvement in operating margin • Accelerated restructuring: €700
Slide 10: Accelerating change
Accelerating Accelerating change change Progress to date • Growth consistently in 3-5% range • Market share gains in priority areas • Underlying improvement in 2007 operating margin • Continued strong cash flow generation
Slide 11: Building on existing programmes
Building on existing programmes • ‘One Unilever’ • c. €1bn p.a. savings during 2008 • Shared services/ outsourcing • Covering Finance, I.T., H.R : complete 2007-09 • Global buying • Savings averaging c. €400m p.a. 2005-07 • Strengthened Marketing & Customer Management • Programme roll-out 2006-08 Su
Slide 12: A platform for faster change
A platform for faster change • Growth strategy • Clear choices – where to build and where to exit • Global Categories • Improved innovation, ROI and reduce supply chain complexity • One Unilever • Access to further simplification and cost reduction Innovation Applying global concepts to local market
Slide 13: Shaping our portfolio
Shaping our portfolio Building leadership positions and high growth spaces • Organic portfolio development • Focusing resources in high potential areas • Acquisitions • In priority areas - Personal Care, D&E, Vitality • Disposals • In less attractive market positions • Brands that do not benefit fro
Slide 14: Realising value through disposals
Realising value through disposals • Over €2bn of turnover earmarked for disposal • Includes €0.8bn North America Laundry • Mostly outright disposals, but other routes to value release also possible • Impact on USG: +40bps • Impact on operating margin: broadly neutral North America Laundry • Unilever
Slide 15: Margin improvement
Margin improvement • Simplification - Multi-country organisations • Further overhead savings • Supply chain efficiency and responsiveness Multi-country organisations Example - Unilever Benelux Savings c €50m Unilever Netherlands Unilever Belgium €1.1bn €500m Dedicated Management Dedicated Management
Slide 16: Streamlined structures
Streamlined structures Simplification of the country/category matrix • From c.100 countries x 20 categories • To c.25 MCOs x 10 categories • Fewer interfaces between categories and operations • Less regional management infrastructure Overhead reduction – beyond One Unilever • The UK: • 50% reduction
Slide 17: Supply chain efficiency and responsiveness
Supply chain efficiency and responsiveness • From 1999-2006: • 600bps reduction in fixed assets as % of turnover • 100+ sites closed or sold • Cap ex held between 2–2.5 %T/O • Future plans: • 50-60 sites closed or streamlined • Significant rationalisation of distribution networks • Investment in a m
Slide 18: Accelerated restructuring; growth and margins
Accelerated restructuring Over Europe heads Cash % spend Supply ROW Chain Non Cash Growth and margins • 3-5% USG • Growth ahead of our markets • Portfolio growth potential improving over time • Accelerated improvement in operating margin • To exceed existing target of >15% by 2010