Unilever PLC · LSE:ULVR
Unilever — Prudential Back to School Conference 2006
45 slides from Unilever's conference presentation, Sep 6, 2006
Slide 1: Driving performance to the next level
Driving performance to the next level Prudential Back to School Conference Boston 6th September 2006 John Rothenberg Vindi Banga SVP Investor Relations President, Foods 1
Slide 2: John Rothenberg, SVP Investor Relations
John Rothenberg SVP Investor Relations Good morning ladies and gentlemen. When we presented here a year ago, our theme was “increasing competitiveness”. I’m going to open this presentation with a brief appraisal of what we have done to restore competitiveness in our business, our priorities for this
Slide 3: 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. These forward-looking statements are based upon current expectations and assumptions regar
Slide 4: Need to restore competitiveness
Need to restore competitiveness 5 Underlying sales growth % 4 Typical growth rate for markets and categories in 3 which Unilever operates: 2-4% 2 1 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 In 2004 our growth had fallen well short of our markets – we were losing share. We had made very goo
Slide 5: Improved competitiveness
Improved competitiveness 5 Underlying sales growth % 4 Typical growth rate for markets and categories in 3 which Unilever operates: 2-4% 2 1 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 H1 2006 First and foremost, the imperative of restoring growth. We are certainly back in the game, and
Slide 6: Actions taken
Actions taken • Investment in competitiveness • Focus on priorities: Personal Care, D&E, Vitality • Restoring momentum in Europe • Tackling underperformers You can see them here. - Investment in competitiveness - A focus on our chosen priorities for growth - Restoring momentum in Europe - And tackli
Slide 7: Investment in competitiveness
Investment in competitiveness Advertising Pricing & Promotions 2005 + 110 bps Flat 2006 H1 + 50 bps + 70 bps + Improved innovation and ‘go to market’ execution Firstly, investment in competitiveness. Last year we stepped up advertising and promotions by 110 basis points and we raised it again by 50
Slide 8: Focus on priorities
Focus on priorities Personal Care D&E Vitality 2006 USG H1 06 USG H1 06 10 out of 15 priority +6% +8% Foods projects aimed Now 40% of global sales at Health & Wellness This has been rewarded by a return to historical growth levels in Personal Care, 6% last year, up with the best in class, and this h
Slide 9: Restoring momentum in Europe
Restoring momentum in Europe 1 (%) growth % 0 2003 2004 2005 H1 2006 USG sales -1 Underlying -2 -3 Well, the good news is that in the first half of this year we are back to growth. It’s still only modest, with 0.3% in the first half – but a more encouraging 1% in the second quarter. So this is clear
Slide 10: Tackling underperformers
Tackling underperformers Returned to growth Disposed Slim.Fast Prestige Fragrances H1 06 Sold for +6% $0.8bn Household Cleaning Frozen Foods H1 06 Sale agreed +6% for €1.7bn We have also taken decisive action in those parts of our business which we had singled out as being underperformers. First, Sl
Slide 11: 2006 H1 results
2006 H1 results Turnover € 19.8bn + 5.8% organic, Underlying sales growth + 3.4% constant exchange rates Operating margin 14.4% + 100 bps - 60 bps before restructuring, disposals & impairments Earnings per share € 0.69 + 20% continuing operations, before + 8% 2005 Slim.Fast impairment First half yea
Slide 12: Priorities for the rest of 2006
Priorities for the rest of 2006 • Sustained growth • Actions to improve margin in the face of input cost increases and continued competitiveness: ¾ innovation driving improved mix ¾ pricing ¾ accelerating cost savings, including ‘One Unilever’ First, sustain growth with a strong ongoing innovation p
Slide 13: Driving performance to the next level
Driving performance to the next level Build a winning portfolio Improvement in core capabilities Brilliant Win with consumer customers marketing Local roots and global scale So, we are back to growth and are taking the necessary actions for sustainable margin improvement. When Patrick presented the
Slide 14: Our long term ambition
Our long term ambition Overarching ambition remains top one-third TSR Long term targets: Ungeared Free Cash Flow €25-30bn during 2005-2010 Improved Return on Invested Capital Through: Underlying sales growth of 3-5% pa Operating margin in excess of 15% by 2010 after normal restructuring Improved cap
Slide 15: Vindi Banga, President, Foods
Vindi Banga President, Foods Good Morning to you all. My name is Vindi Banga. I am the President Foods for Unilever. I will touch briefly on our overall strategy to drive our performance to the next level of sustained and profitable growth. And then spend more time on how this will manifest itself i
Slide 16: Driving performance to the next level
Driving performance to the next level Build a winning portfolio Improvement in core capabilities Brilliant Win with consumer customers marketing Local roots and global scale John has already shown you very briefly this chart illustrating the strategic thrusts that will, together, drive our performan
Slide 17: Return to growth in Foods
Return to growth in Foods 4 Underlying sales growth % 3 2 1 0 2003 2004 2005 H1 2006 -1 The results thus far: Our new organisation was established in April 2005 and is 18 months old. Prior to this the global Foods business was flat and even declined in 2004. In 2005 our actions brought it back to gr
Slide 18: Driving performance to the next level
Driving performance to the next level Build a winning portfolio Improvement in core capabilities Brilliant Win with consumer customers marketing Local roots and global scale So what have we been doing to build a winning portfolio in Foods? We have just divested our Frozen Foods business outside Ital
Slide 19: Build a winning portfolio
Build a winning portfolio Sustained growth High growth segments Grow the core D&E markets Vitality How are we doing this? First, we are embracing vitality with our core brands. Consumers all over the world want vitality- our brands will play their part in creating this vital world. We are confident
Slide 20: Vitality – Foods market segmentation
Vitality – Foods market segmentation Segment Example HEALTHIER FOODS VITALITY FOODS EXAMPLE Segment Description Example Leading edge/clinically proven and Heart Health Functional Health claimable benefits. Fortified products with health claims e.g. pro.activ Releasing or boosting the goodness Goodne
Slide 21: We will deliver the goodness of these five key ingredients
We will deliver the goodness of these five key Ingredients Tea Fruit and Veg Milk Oils Soy We have chosen 5 key ingredients with cross-category application: We will deliver the goodness of Tea, Milk, Oils, Fruit & Veg and Soy across our brands as relevant. 21
Slide 22: We will deliver five key benefits
We will deliver five key benefits Weight Immunity & management strength Heart Health Brain Beauty We have chosen 5 key health benefit areas with multi-category potential where we will build expertise and competitive advantage: Enough said about the strategy. Let me now show you the strategy in actio
Slide 23: Our portfolio is becoming healthier
Our portfolio is becoming healthier ed Many US vegetable oil spreads ing reduc reformulated to 0 g trans fat per serving b e r a te d fats o 40% s 20-25 %r Satu t by up d ice cre am in sug eduction a art b r an In 2005 and 2006, reformulation in US r levels in He rope RTD in Eu comp teas changes wil
Slide 24: Healthy choices made easy
Healthy choices made easy • Products must meet benchmarks for- saturated fat, trans fat, sodium, sugar • A simple, consumer-friendly system that can work across companies and categories • Proven to drive growth • Global roll-out We are making it easier for consumers everywhere to make healthier and
Slide 25: Grow the core – Knorr bouillon relaunched
Grow the core – Knorr bouillon relaunched Better quality and a new Vitality range “Spend as much time choosing your bouillon as you spend choosing me” • More veg and herbs • Less complexity • Lower cost • European rollout A key element of our strategy is to grow the core by embracing vitality. We re
Slide 26: Grow the core - Wishbone salad spritzers
Grow the core - Wishbone salad spritzers Salad dressings with only one calorie per spray Another example of how we have brought excitement and vitality to a long established category- salad dressings An innovative new packaging - ultra simple to use – which also gives the consumer calorie control, s
Slide 27: Slim.Fast returns to growth
Slim.Fast returns to growth With advanced hunger control technology to delay cravings – now reaching new consumers through high protein and easy digest formats The new Slim•Fast® Optima diet. Every calorie works harder to keep you satisfied. We had a key challenge with a declining Slim.Fast. We rela
Slide 28: High growth segments - Heart Health
High growth segments - Heart Health pro.activ cholesterol lowering: now a €0.4bn business Functional Health Inherent Omega 3 spreads Goodness and minidrinks Positive Choice 1950s Becel heart health margarine Geographic expansion 30 countries Another element of our strategy is to get into high growth
Slide 29: High growth segments – Wet soups
High growth segments – Wet soups Growing the wet soup market with Knorr “fresh” soup in pouches • Delicious recipes • Premium, healthy ingredients • New packaging keeps soup tasting fresher for longer • High shelf-impact with great stopping-power USG H1 06 +11% Another good example is Knorr Soups in
Slide 30: D&E – A big growth opportunity
D&E – A big growth opportunity • €6bn annual sales • A third of our Foods business • Half of our growth • Leveraging global expertise The third leg to our strategy is to grow in D&E markets The D&E world is already important to us (a third of our business). It will provide more than half our growth.
Slide 31: Growth in D&E - Cubitos
Growth in D&E - Cubitos A tiny but mighty seasoning cube that adds a boost of flavour to complete your dish Concept pioneered in Haiti/Dominican Republic and West-Africa. Now in markets across Latin America, Africa, Asia and Europe CAGR 2001 –2005 : + 24% I will now give you some examples of how we
Slide 32: Growth in D&E – Philippines
Growth in D&E – Philippines From bouillon to soups and mealmakers Embracing local tastes through the global Knorr brand CAGR 2003– 2005 : +26% Another example is the Savoury category in the Philippines. Our strategy is to build bouillons, then soups, then complex mealmakers. We have deployed this mo
Slide 33: Driving performance to the next level
Driving performance to the next level Build a winning portfolio Improvement in core capabilities Brilliant Win with consumer customers marketing Local roots and global scale Two other key building blocks in our game plan are An improvement in core capabilities - Brilliant Marketing And combining loc
Slide 34: Improve core capabilities – Global innovation network
Improve core capabilities – Global innovation network The Foods Category has a network of fifteen innovation “hothouses” around the world giving scale and expertise to product and brand mix development. These are our Brand Development Centres where we have often co-located marketers and product deve
Slide 35: Improve core capabilities – Bigger, better innovation
Improve core capabilities – Bigger, better innovation • Network of innovation hothouses using global technology • Global concepts suiting local taste and habits • Focus on science-led health claims and benefits • Focused funnel - strategic resource allocation • Multi-country deployment In the old wa
Slide 36: Driving value
Driving value The Category owns the long term value creation of the business • Innovations that drive growth and margin • Strategic pricing • De-complexity programs • Strategic Supply Chain Management The Category owns the long term value creation of our business through our brands We will do this t
Slide 37: Getting the most from science and technology
Getting the most from science and technology FROM........ TO.......... Fragmented R&D Streamlined 1 Unilever R&D Over-loaded funnel & Fewer, bigger projects. disparate resources Short-term Three year rolling plan Adequate leadership Dynamic leadership We have recently reviewed the way we are using S
Slide 38: Leveraging global brand positions and technology in the US
Leveraging global brand positions and technology in the US Premium Frozen dinner Now a $150 million+ proposition brand after 2 years and technology Cold Extrusion $200 million p.a. technology sales Ice Structuring Protein Enhances product stability (ISP) technology Driving growth in USA and Asia I h
Slide 39: Leveraging global brand positions and technology in the US
Leveraging global brand positions and technology in the US Heart Health Tripled sales in margarine H1 ‘06 Multi-layered polymer $30 million product line packaging technology Pyramid tea bag Launched in Q2 in technology US following success in Europe Our European success in heart health is being roll
Slide 40: Leveraging global mixes - AdeS
Leveraging global mixes - AdeS AdeS – Leading soy beverage market growth in Latin America The goodness of soy - • High quality protein • Micro nutrients, vitamins and minerals • 100% vegetable • Cholesterol and lactose free CAGR 2002– 2005 : +32% We have a jewel in Latin America -AdeS –the leading S
Slide 41: AdeZ now launched in UK
AdeZ now launched in UK AdeZ - a Healthy Drink that combines the Goodness of Soya with the Refreshment , Taste & Health from Fruit Juice! We have now built on our understanding of the success of AdeS in Latin America and created a mix for the UK It has a higher soy content- to provide stronger claim
Slide 42: Lipton – US relaunch success
Lipton – US relaunch success Tea Can Do That! Single brand campaign across leaf tea and RTD Rolled out from US to Europe in 2006 15% growth for the global Lipton brand in H1 ‘06 Another example. We relaunched Lipton last year in the US with a strong AOX benefit claim- and a single campaign for leaf
Slide 43: Foods category - We will deliver growth
Foods category - We will deliver growth • A global network of “Innovation Hothouses” • Great brands, great technology • A “premier league” team • Multi-country deployment So as I stand here I am confident of our ability to deliver growth We have established a global organisation- our 15 innovation “
Slide 44: Sustain and accelerate growth in Foods
Sustain and accelerate growth in Foods 4 ita lity Underlying sales growth % 3 V 2 1 0 2003 2004 2005 H1 2006 -1 We have regained growth momentum as evident from the chart I showed earlier. We will of course sustain this; even more we will accelerate it as we go forward. But if there is one message I
Slide 45: Driving performance to the next level
Driving performance to the next level Prudential Back to School Conference Boston 6th September 2006 John Rothenberg Vindi Banga SVP Investor Relations President, Foods 45