Unilever Plc · LSE:ULVR
Unilever — CAGNY February 2006
51 slides from Unilever's conference presentation, February 2006
Slide 1: Restoring competitiveness and growth
Restoring competitiveness and growth CAGNY February 2006 Patrick Cescau Group Chief Executive Officer Rudy Markham Chief Financial Officer Safe Harbour Statement This presentation may contain forward-looking statements, including ‘forward- looking statements’ within the meaning of the United States
Slide 2: Introducing Unilever
Introducing Unilever Patrick Cescau Brands people love 150 million times a day, in 150 countries, people use Unilever products to look good, feel good and get more out of life. 2
Slide 3: Global reach and scale
Powerful category positions and global brands 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 Source: Euromo
Slide 4: Re-introducing Unilever
But ………. % 5 Underlying sales growth 4 3 2 1 0 -1 2001 2002 2003 2004 -2 • Margin improvement: Structural gains >400 bps • Improved capital efficiency • Strong cash flow Re-introducing Unilever 4
Slide 5: Restoring competitiveness and growth
1. Restoring competitiveness and growth - 2005 2. Our ambition for Unilever 3. Strategy and priorities 2005 Restoring competitiveness and growth Rudy Markham 5
Slide 6: 2005 – the task
2005 – the task Sharpen choices and priorities Strengthen execution Create a simpler, more agile ‘One Unilever’ Restore competitiveness and growth More weight behind fewer priorities Build on strengths Regain momentum Personal Care D&E Vitality Europe Increased support Accelerated savings Port
Slide 7: Decisive action on the portfolio
Decisive action on the portfolio UCI European Frozen Foods Sold in 2005 Divesting the majority of the for $800m, delivering business strong value Profitable but requiring investment to grow and we have better opportunities elsewhere Italian Frozen Foods to be retained Investment in A&P - qua
Slide 8: Increased investment, focus on savings
Increased investment, focus on savings Step-up in A&P Focus on Higher savings commodity delivering over Price reductions in prices €700 million in key categories and 2005 markets Operating margin development A&P Input Savings (110) Costs 180 13.4% (150) 11.0% 320 Restructuring Disposals (80) Impairm
Slide 9: Like for like sales growth
Like for like sales growth 3.1% USG in 2005 Improvement through the year Positive pricing in Q4 5 4 like growth % Like for 3 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4* Q1* Q2 Q3 Q4* -1 2003 2004 2005 -2 * adjusted for calendar days 2005 – growth by region Underlying Sales Growth 2004 2005 Europe (2.8)% (0
Slide 10: 2006 outlook
“Entering into 2006 in much better shape, with increased competitiveness and growth” 2006 outlook Sustained growth Operating margin to increase from 13.4% in 2005 • Progressively more favourable pricing and commodity cost environment • competitive A&P investment behind growth priorities • contin
Slide 11: Unlocking the potential of our portfolio
Value Creation to 2010 Overarching ambition remains top one-third TSR Long term targets: FCF €25-30bn during 2005-2010 Improved ROIC Through: Top-line growth ahead of markets which are expected to grow 2-4% pa Improved operating margin, after 50-100 bps restructuring Improved capital effic
Slide 12: Not over-exposed in Europe
Unilever’s market-weighted growth is in line with our peer group Average relative to the key peer group 2001-04 HPC Foods 0.5 1.7 stronger market 0.4 0.7 growth 0.2 0.5 Unilever weaker (0.3) (1.6) market (1.3) (1.7) growth (1.6) Source: Euromonitor, Unilever Not over-exposed in Europe Europe, % sale
Slide 13: Strong exposure to high-growth D&E geographies
Strong exposure to high-growth D&E geographies Sales mix by region Rest of World Europe N America Unilever HPC 56 25 19 43 24 34 Unilever 38 41 21 30 40 30 Unilever Foods 24 53 23 23 66 11 22 26 52 21 48 31 20 51 29 14 63 23 13 62 25 Source: Company reports, UL estimates 12 16 72 Strong global and l
Slide 14: Our issue is not our portfolio but what we do with it
Strong global and local positions Global Local • Leading, competitive global • Strong local positions we can positions defend • With attractive profitability • e.g., Laundry & Hair in D&E • Across Developed and Developing & Emerging markets • In faster growing categories in which we have strong trac
Slide 15: Portfolio strategy
Portfolio strategy More value from the portfolio Strong market High growth positions spaces Building on our strengths Vitality Personal Care D&E Portfolio strategy How do we know this focus Strong market High growth will deliver the positions spaces results we want? Vitality Personal Care D&E 15
Slide 16: Vitality - Opportunity and Strengths
Vitality - Opportunity Growing, profitable markets On-trend with the consumer Across categories Developed and D&E Vitality - Strengths Unique portfolio Consumer intimacy Vitality brands Strong capabilities Unilever’s DNA 16
Slide 17: Heart Health – building a billion euro brand
Heart Health – building a € 1 billion brand 2005: One-a-day drinks to help Product innovation reduce blood pressure 2001: Cholesterol lowering: from spreads to milk, yoghurt and daily drinks … a €300m-plus business in 3 years 1950s Becel heart health margarine Geographic expansion 30 countries Heart
Slide 18: Lipton
Lipton Transforming the growth potential of a global brand in leaf tea through vitality innovation and communication. Lipton “Tea can do that” - Advertising 18
Slide 19: Tea can do that
Tea can do that Growth: 1999 to 2005 +7% p.a 2005 +11% 2500 € millions 2000 1500 1999 2000 2001 2002 2003 2004 2005 System Sales (all formats, all channels) Personal Care - Opportunity Growing markets: + 4-5% p.a. Profitable: margins above average Low private label penetration: < 5% Category
Slide 20: Personal Care - Strength
Personal Care - Strength Global leaders in Mass Skin /Personal Wash and Deodorants Leaders in Hair in D&E 2000-’05 +6.5% p.a., ahead of market From 15% to 26% of portfolio in 10 years Over 50% of PC sales in D&E Powerful, iconic brands Dove – building a €2.3 billion brand Face Product in
Slide 21: Dove brand development
Dove brand development Becoming a truly global, iconic brand An idea … … that connects with consumers everywhere Dove brand development Becoming a truly global, iconic brand An idea … … that connects with consumers everywhere The Campaign for Real Beauty 21
Slide 22: Dove growing turnover and profit
Dove brand development “Little Girls” - Advertising We love Dove’s curves Growing turnover … and profit +18% p.a. 2500 Brand contribution 700 2000 600 500 euros millions euros millions 1500 400 1000 300 200 500 100 0 0 '80 '85 '90 '95 '00 '05 '80 '85 '90 '95 '00 '05 22
Slide 23: Developing and emerging markets
Developing and emerging markets Opportunity • World population growth almost all in the developing world • By 2010 nearly 90% of world population will be in D&E • Consumer spending growing faster than in the developed world - already greater at PPP • Rising per capita income gives disproportionate g
Slide 24: D&E strengths
Meeting the needs of consumers at every economic level Leverage global Affluent mixes Aspiring Increase consumption & uptrade Striving Drive penetration D&E strengths • Global scale, local roots • Sustained performance • 8% pa organic sales growth over 15 years • Good profitability – margins close t
Slide 25: Unilever in D&E – Laundry
Unilever in D&E – Laundry Strong leadership Strong local positions franchises Other LATAM UL ASIA Other UL Other AMET UL Source: Fabiric cleaning data - Nielsen, IRI, Unilever estimates Driving local alignment 1997 2001 2003 2005 2007 Pack Idea Innovation 360º Suppliers Identity 25
Slide 26: A single cornerstone position
A single cornerstone position An idea … … that connects with consumers everywhere A single cornerstone position Dirt is Good in India and Brazil Advertising 26
Slide 27: This focus delivers the results we want
Delivering results 2005 Sales Growth Latin America Africa Asia 0% 5% 10% 15% 20% Brand Health Measures Thailand Indonesia Vietnam China India Stain Attributes Laundry is Simpler = = = Getting Dirty is a positive part of life = = = Portfolio strategy More value from the portfolio This focus Strong ma
Slide 28: Unilever's change agenda
Unilever’s change agenda More value from the portfolio World class capabilities Brilliant Consumer Win with Marketing Customers The organization to deliver Unilever’s change agenda More value from the portfolio World class capabilities Brilliant Consumer Win with Marketing Customers The organization
Slide 29: More value from the portfolio
More value from the portfolio Sharpening our choices Strong market High growth positions spaces Building on our strengths Vitality Personal Care D&E Channeling resources Fast-growing categories Invest to Fast-growing geographies win Strong local positions Winning brand mixes Invest to Strong positio
Slide 30: The right organization to drive more value
Unilever’s change agenda More value from the portfolio World class capabilities Brilliant Consumer Win with Marketing Customers The organization to deliver The right organization to drive more value from the portfolio • One CEO and Unilever Executive team CEO Americas Asia / Africa Europe Foods Fina
Slide 31: The right organization - categories and regions
The right organization - categories CEO Americas Asia / Africa Europe Foods Finance HPC HR • Brand development • Innovation • World class mixes • Category strategy The right organization - regions CEO Americas Asia / Africa Europe Foods Finance HPC HR • Brilliant Go-to-Market execution • Deploying b
Slide 32: The right organization to enable the change
The right organization to enable the change Progress on ‘One Unilever’ By end 2005, over 80% of turnover managed through ‘One Unilever’ organisations By end 2006 a single management team in all markets Simplified, standardised business processes Top management structure streamlined €700 mill
Slide 33: Brands with a distinctive personality
Brands with a distinctive personality AXE gives guys the edge in the mating game Brands with enduring ideas... 33
Slide 34: Brands driven by true insight
...ideas that may provoke debate and social change. Brands that are driven by true insight... Sunsilk for mulatto hair Sunsilk for afro hair 34
Slide 35: Brands that have proprietary design
...that may be universal or local. Lux Pearls in Brazil- the first soap bar designed for black and mulatto skin Brands that have proprietary design 35
Slide 36: Superior sensories and outstanding ergonomics
…superior sensories... …outstanding ergonomics... Anti-Hangover Re-load Snake Peel Boost Axe Shower 36
Slide 37: Compelling claims and breakthrough science
…compelling claims... Visibly whiter teeth in two weeks ...and breakthrough science. Pond’s anti-ageing - laser treatment in a bottle 37
Slide 38: Brands that open up new market segments
Brands that open up new market segments... Brands that talk to both the head… 38
Slide 39: …and the heart
…and the heart... …with ads one cannot miss whether in print... 39
Slide 40: Axe: Residue - Advertising
… or on TV. Axe: Residue - Advertising Brands that are rooted in a clear and consistent category strategy. 40
Slide 41: Big brand ideas brought to life
Big brand ideas brought to life in the marketplace... …activated in a way... 41
Slide 42: Brands that stand out on the street
... that cannot be missed. Dove - Piazza Venezia, Roma Brands that stand out on the street... Outdoor media 42
Slide 43: Brands that go where the people go
Brands that go where the people go... Brighton, UK Interior Morocco …that make one stop and look… 43
Slide 44: Brands promoted creatively
…and reach out into the community. The Fair & Lovely Foundation- India Brands that are promoted creatively... Win an exotic trip abroad with Lipton Ice in Portugal 44
Slide 45: Ignite the brands with drama
...ignite the brands with drama... Lux Super Rich : Bangkok - longest catwalk ever ...and mount events with mass participation. 45
Slide 46: Brands that go on line
Brands that go on line... Video Blog daily web journal of Evan & Gareth’s adventures reaches 800,000 boys in 8 weeks …and connect in novel ways. Axe Mojo Master Fantasy Seduction On Line Gaming. 100 girls, 500 moves.Target 3 million players. 46
Slide 47: Brands that inspire customer co-operation
Brands that inspire customer co-operation… The Axe Effect caught on US Wal*Mart security cameras ...dominate the shelf... 47
Slide 48: Enliven the aisle
...enliven the aisle... ...and bring powerful in-store events. 48
Slide 49: Winning with customers – our change programme
Unilever’s change agenda More value from the portfolio World class capabilities Win with Customers The organization to deliver Winning with customers – our change programme Bringing the breadth of our portfolio to life Category Thought Leadership Trade spend & promotion effectiveness One Unilever 1
Slide 50: Delivering results in the U.S. / Changing Unilever
Delivering results in the U.S. 2004 2005 Clearest strategy 9 4 Most important brands 6 5 Best combination of growth & profit 8 4 Most helpful consumer insight 6 5 Most innovative marketing 6 5 Changing Unilever • Sharper choices and resource allocation, disciplined execution More value from • High g
Slide 51: We're changing Unilever
We’re changing Unilever 51