Unilever PLC · LSE:ULVR
Unilever — FY2006 Earnings Presentation
24 slides from Unilever's earnings presentation, Feb 8, 2007
Slide 1: 2006 Results
2006 Results Patrick Cescau Group Chief Executive Rudy Markham Chief Financial Officer 8th February 2007 Safe harbour statement This presentation may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Refor
Slide 2: 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 3: Consistent growth; Broad-based 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 Broad-based growth 2006 Underlying sales growth (%) Foods Europe 1.0 Savoury, Dressings 2.6 and Spreads Americas 3.
Slide 4: Growth in Europe; Growth in the Americas
Growth in Europe 2% Underlying sales growth 1% 0% 2003 2004 2005 2006 -1% -2% -3% Growth in the Americas 5% Underlying sales growth 4% 3% 2% 1% 0% 2003 2004 2005 2006 4
Slide 5: Growth in Asia/Africa; Sales in D&E markets
Growth in Asia/Africa 10% Underlying sales growth 8% 6% 4% 2% 0% 2003 2004 2005 2006 Sales in D&E markets As % of total turnover 2004 2006 26% 25% 36% 41% 34% 38% D&E Western Other Europe Developed 5
Slide 6: Personal Care; Home Care
Personal Care 2005 2006 USG 6.3% 6.3% Home Care 2005 2006 USG 2.4% 2.3% 6
Slide 7: Savoury, Dressings and Spreads; Ice Cream and Beverages
Savoury, Dressings and Spreads 2005 2006 USG 2.2% 2.6% Ice Cream and Beverages 2005 2006 USG 2.7% 3.7% 7
Slide 8: Operating margin; Commodity costs
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)% Commodity cos
Slide 9: Q4 Operating margin; Drivers of 2006 EPS growth
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% • Commodity cost inflation • A&P 0.5% lower – different phasing to last year • Investment in market research
Slide 10: Tax rate development; Drivers of 2006 EPS growth
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 Note:2001-2004 on pre-IFRS beia basis 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 g
Slide 11: Cash flow; Uses of cash
Cash flow Ungeared free cash flow 6 5 4 €bn 3 2 1 0 2002* 2003* 2004 2005 2006 * pre IFRS 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 1
Slide 12: Return on invested capital; Outlook 2007
Return on invested capital 15% 13% 11% 9% 2002* 2003* 2004 2005 2006 Reported Excluding disposal of discontinued operations * pre IFRS Outlook 2007 • Little change to the business environment • Underlying sales growth within 3-5% range • Commodity cost increases easing • Operating margin above 13.6%
Slide 13: Unilever's growth priorities
Strategy Change Performance Patrick Cescau Group Chief Executive 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 14: Priorities driving growth
Priorities driving growth Personal Care D&E Deodorants 6% 8% 11% Underlying sales growth 2006 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 14
Slide 15: Our €1bn+ brands; Reshaping the portfolio - disposals
Our €1bn+ brands c. 5% USG in total in 2006 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) (U
Slide 16: Unilever's organisation
Unilever’s organisation CEO Americas Asia/Africa Europe Foods Regions Finance HPC HR Categories Functions Clear, distinct, complementary roles Categories Regions Deliver global platforms Execute on the ground Responsible for: Responsible for: Brand development Managing the business Innovation Deploy
Slide 17: Better category strategies; Bigger, better innovation
Better category strategies, better mixes, faster delivery Portfolio development – US Hair Fragmented portfolio Powerful portfolio Weak brands, managed locally Big brands, global resources Bigger, better innovation Fewer, bigger innovation projects in the funnel 17
Slide 18: Dove Pro.Age; Idea! from Family Goodness
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 Idea! from Family Goodness The first margarine to contain nutrients that support mental development A low-fat spread that is a rich
Slide 19: Building capabilities; Winning with customers
Building capabilities Shopper Strategic and Investing customer For Growth solutions First Regions choice Customer World Class Customer for our Win With Customers Development Building Service Excellence Brands customers Every day Through great Customers execution Winning at Point of Purchase Unique a
Slide 20: Wal-Mart's 2006 International Supplier of the Year
Wal-Mart’s 2006 International Supplier of the Year Winner of the 2006 Wal-Mart Supplier of the Year award of all top 60 suppliers Trade terms Leadership in supply responsiveness chain and customer service standards 9 9 Excellence in category 9 management Consistent global 9 approach to joint 9 Close
Slide 21: Strategy into action; Simplification
Strategy into action Unilever growth priorities Category plans Regional plans Country plans Simplification Top management numbers 1200 1100 c. 30% headcount reduction 1000 900 800 700 600 2004 2005 2006 21
Slide 22: Delayered, simpler, more effective; Simplification saves money
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 23: Culture and behaviour
Culture and behaviour • Global mindset • Real accountability • External orientation • Action not debate • Team alignment • Build talent Strategy Change Performance 23
Slide 24: Agenda for 2007; Thank you
Agenda for 2007 Grow • Competitively – to gain market share • Profitably – better margin development, further simplification • Consistently Thank you 24