Unilever Plc · LSE:ULVR
Unilever — FY2006 Earnings Presentation
63 slides from Unilever's earnings presentation, 2007
Slide 1: 2006 Full Year Roadshow
2006 Full Year Roadshow Handout version 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. These forward-looking statements are based upon current expectations and
Slide 2: Unilever's 2006 Results
Unilever’s 2006 Results Consistent growth 2 Drivers of growth in 2006 Broad-based growth 3 Personal Care 33 Operating margin 4 Dove Clear 34 Drivers of EPS growth 5 Sunsilk North America 35 Uses of cash 6 Dove Summer Glow 36 2007 Outlook 7 Home Care 37 Our long term ambition 8 Domestos with C-Tac 38
Slide 3: Consistent growth
Consistent growth Underlying sales growth 6% 5% 4% 3% 2% 1% 0% 02 03 04 05 06 * * 05 05 06 06 06 06 05 05 20 20 20 20 20 20 20 20 20 20 20 20 20 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q4 * Days adjusted 2
Slide 4: Broad-based growth
Broad-based growth 2006 Underlying sales growth (%) Foods Europe 1.0 Savoury, Dressings 2.6 and Spreads Americas 3.7 Ice Cream and 3.7 Asia/Africa 7.7 Beverages Total 3.8 HPC Home Care 2.3 Personal Care 6.3 3
Slide 5: Operating margin
Operating margin 2005 2006 Change Operating margin 13.2% 13.6% 0.4% Including: - RDIs (1.5)% (1.3)% 0.2% - Q4 2006: US health care, UK pensions - 0.7% 0.7% - Q2 2005: property sale 0.1% - (0.1)% Change before these items (0.3)% Key drivers: A&P (0.3)% Savings 2.3% Cost/price/mix (2.3)% 4
Slide 6: Drivers of 2006 EPS growth
Drivers of 2006 EPS growth (%) Operating profit 7 Interest and pensions financing 4 JVs and associates 2 Tax rate 4 Preference share provision (6) EPS growth from continuing operations 11 Discontinued operations 16 Total EPS growth 27 5
Slide 7: Uses of cash
Uses of cash 3 25 Cash to shareholders (€bn) Net debt 20 Net debt (€bn) 2 15 10 1 5 0 0 2001 2002 2003 2004 2005 2006 Dividends Share buyback One-off dividend Net debt Share buyback of €1.5bn planned for 2007 6
Slide 8: Outlook 2007
Outlook 2007 • Little change to the business environment • Underlying sales growth within 3-5% range • Commodity cost increases easing • Operating margin above 13.6% • Restructuring in the 50 -100bps range 7
Slide 9: Our long term ambition
Our long term ambition Overarching ambition remains top one-third TSR Long term targets: FCF €25-30bn during 2005-2010 Improved ROIC Through: Underlying sales growth of 3-5% pa Operating margin in excess of 15% by 2010 after normal restructuring Improved capital and tax efficiency 8
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Slide 11: Strategy, Change, Performance
Strategy Change Performance 10
Slide 12: Building blocks of change
Building blocks of change • A strategy for growth - concentrating resources behind growth opportunities • An organisation to support the strategy 11
Slide 13: Our portfolio
Our portfolio Foods Home & Personal Care Savoury & Dressings Skin Spreads Deodorants World Number 1 Laundry - #1 in D&E Weight Management World Number 2 Daily Hair Care - #1 in D&E Local strength Tea Household Care Ice Cream Oral Care Our 12 €1bn+ brands 12
Slide 14: Unilever's growth priorities
Unilever’s growth priorities Building a winning portfolio Drive Build strength leadership in high growth positions in spaces key markets Focusing resources behind business priorities Vitality Personal Care D&E 13
Slide 15: Sales in D&E markets
Sales in D&E markets As % of total turnover 2004 2006 26% 25% 36% 41% 34% 38% D&E Western Other Europe Developed 14
Slide 16: Priorities driving growth
Priorities driving growth Personal Care D&E Deodorants 6% 8% 11% Underlying sales growth 2006 15
Slide 17: The relentless rollout of Dirt Is Good
The relentless rollout of Dirt Is Good 5%+ USG in 2006 3 Asia AMET Europe €2.5bn 2 Latin America €bn Turkey 1 Brazil €450m 0 2004 2006 16
Slide 18: Reshaping the portfolio - disposals
Reshaping the portfolio - disposals 2005 2006 Unilever Cosmetics International European Frozen Food Frozen pizzas (Europe) Mora frozen snacks Cooking oils (UK, Ireland, South (Netherlands) Africa) Finesse and Aquanet hair brands Karo corn syrup (Mexico) (US, Canada) Friol cooking oil (Italy) 17
Slide 19: Unilever's organisation
Unilever’s organisation CEO Americas Asia/Africa Europe Foods Regions Finance HPC HR Categories Functions 18
Slide 20: Clear, distinct, complementary roles
Clear, distinct, complementary roles Categories Regions Deliver global platforms Execute on the ground Responsible for: Responsible for: Brand development Managing the business Innovation Deploying brands and innovations Research and Development Customer management Accountable for: Accountable for:
Slide 21: Better category strategies, better mixes, faster delivery
Better category strategies, better mixes, faster delivery Portfolio development – US Hair Fragmented portfolio Powerful portfolio Weak brands, managed locally Big brands, global resources 20
Slide 22: Bigger, better innovation
Bigger, better innovation Fewer, bigger innovation projects in the funnel 21
Slide 23: Building capabilities
Building capabilities Shopper Strategic and Investing customer For Growth solutions First Regions choice Customer World Class Customer for our Win With Customers Building Service Development Brands Excellence customers Every day Through great Customers execution Winning at Point of Purchase Unique a
Slide 24: Winning with customers - unique store reach
Winning with customers – unique store reach 23
Slide 25: Brilliant consumer marketing
Brilliant consumer marketing Winner of 37 Lions at the 2006 Cannes International Advertising Festival 24
Slide 26: Simplification
Simplification Top management numbers 1200 1100 c. 30% headcount reduction 1000 900 800 700 600 2004 2005 2006 25
Slide 27: Progress on One Unilever
Progress on One Unilever – Top 20 countries One top team Single head office One sales force Back office integration Regional shared services 0% 20% 40% 60% 80% 100% Completed Announced 26
Slide 28: Delayered, simpler, more effective
Delayered, simpler, more effective One Unilever in China 2004 2006 Foods HPC President Division Division Asia/Africa Foods Asia HPC Asia Business Business Group Group Foods Unilever HPC Category China Category Unilever Ice Unilever Unilever Cream China Foods China HPC China c.10% growth c. 30% growt
Slide 29: Simplification saves money
Simplification saves money 2006 Cumulative savings 1000 900 800 700 600 €m 500 400 300 200 100 0 Q1 Q2 Q3 Q4 Procurement One Unilever and other 28
Slide 30: Changing culture and behaviour
Changing culture and behaviour • Global mindset • Real accountability • External orientation • Action not debate • Team alignment • Build talent 29
Slide 31: Agenda for 2007
Agenda for 2007 Grow • Competitively – to gain market share • Profitably – better margin development, further simplification • Consistently 30
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Slide 33: Drivers of growth in 2006
Drivers of growth in 2006 32
Slide 34: Personal Care
Personal Care 2005 2006 USG 6.3% 6.3% 33
Slide 35: Dove Clear
Dove Clear A patented combination of translucent anti-perspirant ingredients that are unbeatable against white marks, while delivering protection and a light, fresh fragrance. 34
Slide 36: Sunsilk North America
Sunsilk North America $200m national launch of the brand to solve your hair dramas 35
Slide 37: Dove Summer Glow
Dove Summer Glow A light moisturising body lotion, with a unique combination of special Dove moisturisers and a hint of self tan 36
Slide 38: Home Care
Home Care 2005 2006 USG 2.4% 2.3% 37
Slide 39: Domestos with C-TAC
Domestos with C-TAC Efficacy A dual action bleach with longer lasting protection (Bacterial Kill) from germs 80 70 Regular bleach 60 50 40 Bleach with CTAC 30 20 SUPERIOR 10 LONGER LASTING EFFICACY 0 number of flushes 1 flush 5 flushes 38
Slide 40: Dirt Is Good Actigel tablets
Dirt Is Good Actigel tablets Laundry tablets with a unique gel layer containing pre-treating agents that tackle even the toughest stains 39
Slide 41: Savoury, Dressings and Spreads
Savoury, Dressings and Spreads 2005 2006 USG 2.2% 2.6% 40
Slide 42: Knorr bouillon
Knorr bouillon A range of bouillons with carefully selected ingredients. Because good food deserves Knorr 41
Slide 43: Wishbone salad spritzers
Wishbone salad spritzers Salad dressings in breakthrough easy-to-use spray bottles to control the amount of dressing added to salads, with one calorie per spray 42
Slide 44: Heart Health
Heart Health Omega 3 plus Packed with more omega 3 than any other spread or minidrink pro.activ Spreads, milk, yoghurt and mini-drinks clinically proven to lower cholesterol 43
Slide 45: Ice Cream and Beverages
Ice Cream and Beverages 2005 2006 USG 2.7% 3.7% 44
Slide 46: New improved Slim.Fast
New improved Slim.Fast: delays the absorption of fat in the gut resulting in stronger ‘satisfaction signals’ to the brain, making you feel fuller for longer 45
Slide 47: Lipton Tea Can Do That
Lipton Tea Can Do That Lipton’s unique combination of health benefits, with antioxidants to fight free radicals 46
Slide 48: AdeZ soya drinks
AdeZ soya drinks AdeZ - a Healthy Drink that combines the Goodness of Soya with the Refreshment , Taste & Health from Fruit Juice! 47
Slide 49: 2006 Financials
2006 Financials 48
Slide 50: Key financials
Key financials 2005 2006 Underlying sales growth 3.1% 3.8% Operating margin 13.2% 13.6% “Underlying” movement* (90)bps (30)bps EPS growth (continuing operations) 22% 11% EPS growth (total) 37% 27% Ungeared free cash flow €4.0bn €4.2bn ROIC 12.5% 14.6% *Before restructuring, disposals and impairments
Slide 51: Operating margin
Operating margin 2005 2006 Change Operating margin 13.2% 13.6% 0.4% Including: - RDIs (1.5)% (1.3)% 0.2% - Q4 2006: US health care, UK pensions - 0.7% 0.7% - Q2 2005: property sale 0.1% - (0.1)% Change before these items (0.3)% Key drivers: A&P (0.3)% Savings 2.3% Cost/price/mix (2.3)% 50
Slide 52: Q4 Operating margin
Q4 Operating margin 2005 2006 Change Operating margin 10.4% 10.9% 0.5% Including - RDIs (2.0)% (4.3)% (2.3)% - Q4 2006: US health care, UK pensions - 2.7% 2.7% Change before these items 0.1% Features: • Commodity cost inflation • A&P 0.5% lower – different phasing to last year • Investment in market
Slide 53: Commodity costs
Commodity costs Annual commodity cost impact 700 Outlook 2007 600 Further increase, but by less than 2006: 500 – HPC more favourable – Foods continue to rise 400 €m 300 200 100 0 2003 2004 2005 2006 52
Slide 54: Tax rate development
Tax rate development Outlook 35% Long term c. 26% 2007 c. 24% 30% 25% 20% 01 02 03 04 05 06 20 20 20 20 20 20 Reported tax rate except: 2001-2004 (pre-IFRS beia) 53
Slide 55: Cash flow
Cash flow Ungeared free cash flow 6 5 4 €bn 3 2 1 0 2002* 2003* 2004 2005 2006 * pre IFRS 54
Slide 56: Return on invested capital
Return on invested capital 15% 13% 11% 9% 2002* 2003* 2004 2005 2006 Reported Excluding disposal of discontinued operations * pre IFRS 55
Slide 57: New for 2007
New for 2007 56
Slide 58: Ponds Age Miracle
Ponds Age Miracle Skin that looks and feels younger A revolutionary range of anti- ageing products designed specifically for the needs of Asian skin 57
Slide 59: Dove Pro.Age
Dove Pro.Age Beauty has no age limit The first collection of hair, skin and deodorant beauty products designed to reflect the unique needs of women in their later years 58
Slide 60: Small & Mighty in Europe
Small & Mighty in Europe A revolutionary 3-times-more concentrated laundry detergent A new breakthrough product with perceivably better cleaning, and better convenience, at the same price per wash Cleans a whole wash-load with just one small capful 59
Slide 61: Idea! from Family Goodness
Idea! from Family Goodness The first margarine to contain nutrients that support mental development A low-fat spread that is a rich source of selected brain nutrients (DHA, ALA, B-vitamins) 60
Slide 62: Frusi
Frusi Great taste without the guilt A unique combination of frozen yogurt, real fruit pieces and wholegrain cereals, with less than 3g of fat per pot 61
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