Unilever Plc · LSE:ULVR
Unilever — Q2 2009 Earnings Presentation
36 slides from Unilever's earnings presentation, 2009
Slide 1: Q2 and First Half 2009 Results Roadshow
Q2 and First Half 2009 Results ROADSHOW Contents Page Highlights 5 Business Performance 6 – 34 Our Portfolio 35 – 42 Developing & Emerging Markets 43 – 50 Innovation 51 - 72 1
Slide 2: Safe Harbour Statement
Safe Harbour Statement This announcement 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', 'believes' or the negative of these te
Slide 3: Highlights
Highlights Quality of growth is good • Market share momentum in 60% of our business • Widespread growth across categories & countries • Underpinned by innovation and A&P support • Gross margin trend improving Business Environment will remain tough • Consumer confidence low and unemployment increasin
Slide 4: Q2 Highlights: Unilever Volume and Price Trends
Q2 Highlights • Underlying sales growth +4.1% • Restored volume growth +2.0% • Step up in A&P investments +50bps • Underlying operating margin down 60bps, in line with expectations • Cash flow improved €1.6bn in H1 Unilever Volume and Price Trends 5.0% Volume 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.
Slide 5: Asia Africa CEE and Americas
Asia Africa CEE UVG 3.3% 1.3% • Most economies resilient and growing (0.9)% • Broad based volume growth Q1 Q2 H1 9.5% USG • Central Europe remains weak 8.8% 8.2% • Q2 Underlying margin up +130 bps Q1 Q2 H1 Americas UVG 1.6% • Consumer confidence remains weak 0.4% (1.0)% • Positive volume growth cont
Slide 6: Western Europe; H1 Underlying Sales Growth by Category
Western Europe UVG 1.0% (1.2)% • Markets remain challenging (3.7)% Q1 Q2 H1 • Positive volume trend in key countries USG • Q2 Underlying margin down (340) bps (1.1)% (1.9)% (2.8)% Q1 Q2 H1 H1 Underlying Sales Growth by Category 12 9.9 10 8 6 4.5 4.6 4 2 1.4 0 Savoury Ice Cream Home Care Personal Car
Slide 7: Q2 Operating Margin and Drivers of Operating Profit
Q2 Operating Margin Q2 2008 Q2 2009 Change Operating margin 13.2% 12.6% (0.6)% Including RDIs* (2.0)% (2.0)% (0.0)% Operating margin before RDIs 15.2% 14.6% (0.6)% Key drivers: Gross margin (0.2)% Overheads 0.1% A&P (0.5)% Includes margin dilution from disposals of (0.3)% *Restructuring, disposals a
Slide 8: H1 Operating Margin and Drivers of Operating Profit
H1 Operating Margin H1 2008 H1 2009 Change Operating margin 16.0% 12.8% (3.2)% Including RDIs* 0.9% (1.8)% (2.7)% Operating margin before RDIs 15.1% 14.6% (0.5)% Key drivers: Gross margin (1.0)% Overheads 0.2% A&P 0.3% Includes margin dilution from disposals of (0.3)% *Restructuring, disposals and o
Slide 9: Commodity Cost Development; Strong Savings Delivery
Commodity Cost Development 900 Commodity Costs Currency* 800 700 600 500 bps 400 300 200 100 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 2009 • Commodity costs tailwinds in H2 • FY2009 commodity costs (including currency) up vs last year *Note: Before Q4 08 currency effects were insignificant Strong Savings
Slide 10: H1 Drivers of EPS Growth; Reducing Cash Conversion Cycle
H1 Drivers of EPS Growth H1 2008 H1 2009 Change EPS (€) 0.79 0.53 (33)% Includes RDIs*, after tax 0.07 (0.10) EPS before RDIs* 0.72 0.63 (13)% Key drivers (%) Dilution from disposals (3) Pensions finance charge (6) Tax rate (before RDIs*) (3) *Restructuring, disposals and one-off items Reducing Cash
Slide 11: Balance Sheet and Cash Flow; Returning Cash to Shareholders
Balance Sheet and Cash Flow • Strong cash flow delivery - up €1.6bn in H1 • Net debt €8.9bn • New bonds issued at attractive rates • Acquisitions: TiGi, Baltimor, Vietnam minorities Returning Cash to Shareholders > €7bn returned 07-08 4 Total cash amount (€bn) 3 2 1 0 2004 2005 2006 2007 2008 Divide
Slide 12: Key Drivers of Business Performance; Stronger Claims
Key Drivers of Business Performance Cash and Costs Brands & Categories In Market Organisation Amplification Brands and Categories Stronger Claims Examples: US Soft Spreads Asia Pond’s Anti US Dove Body Wash Ageing Creams ‘No hydrogenated ‘Clinically proven to oils’ ‘Younger skin in 7 reverse dryness
Slide 13: Faster Roll-Out to More Markets; Improving Product Quality
Brands and Categories Faster Roll-Out to More Markets Examples: 17 Markets 33 Markets 37 Markets 56 Markets Brands and Categories Improving Product Quality Examples: Brands Amora - France Klondike - US DiG - Asia 13
Slide 14: Playing the Full Price Piano
Brands and Categories Playing the Full Price Piano Example: Russia Tea Premium • Roll-out of fruit pyramid teas Brands • New advertising Mid-Tier campaign • Launch of herbal infusions Value Brands and Categories Focus on offering consumer value 14
Slide 15: In Market Amplification
In Market Amplification Positive Customer Service Trend 20 Number of Top 20 countries achieving service at the 2009 par target level 15 10 5 0 Jan-08 Jan-09 Aug Jun Feb Sep Feb Mar Apr Mar Apr May Nov May Jul Dec Oct In Market Amplification Customer Insight and Innovation Center The Customer Insight
Slide 16: Restructuring Well on Track; Change Programme Update
Cash and Costs Restructuring Well on Track Plan 2007-2010 Actual to date From 100 units Multi-country organisations 28 to 20-25 MCOs Factory closures / streamlining 50-60 Announced 70 Of which completed > 35 Headcount reduction 20,000 > 10,000 Restructuring savings €1.5bn €0.9bn Restructuring charge
Slide 17: Aligning the Organisation; Our Priorities
Organisation Aligning the Organisation Accountability & Responsibility Consistent Bias for Action Winning Organisation Consumer & Customer Focus Our Priorities • Reignite volume growth • Protect cash flow and margin 17
Slide 18: Our Portfolio: Scale and Geographic Reach
Our Portfolio Scale and geographic reach Western Europe | €12.9bn | 32% The Americas | €13.2bn | 33% Asia Africa CEE | €14.4bn | 35% 2008 Unilever Turnover €40.5bn | 100% 18
Slide 19: Balanced Category Portfolio; Strong Leadership Positions
Balanced category portfolio Savoury, Home Care Dressings & €7.2bn (18%) Spreads €14.2bn (35%) Ice Cream & Personal Care Beverages €11.4bn (28%) €7.7bn (19%) Strong Leadership Positions Savoury #1 Dressings #1 Tea #1 Ice Cream #1 Spreads #1 Deodorants #1 Mass Skin #1 Laundry #2 Daily Hair Care #2 Ora
Slide 20: Big Global Brands; Selective Bolt-On Acquisitions
Big Global Brands 13 billion euro + brands Top 25 brands = ¾ of Unilever’s sales Selective Bolt-On Acquisitions Buavita Indonesia Inmarko Russia TIGI Global Wonderlight Sri Lanka Napoca Romania Baltimor Russia 20
Slide 21: Partnerships; Disposals Completed in 2008
Partnerships Starbucks Ice Cream Pepsi Lipton International Disposals completed in 2008 Including: Turnover €bn 0.1 Boursin Cheese Lawry’s Seasonings 0.1 0.7 NA Laundry Bertolli Olive Oil 0.4 Disposals completed with €1.6 billon turnover Average 1.8x sales multiple 21
Slide 22: Developing & Emerging Markets: The D&E Opportunity
Developing & Emerging Markets The D&E Opportunity D&E Population in 2008 (billions) Affluent 0.5 Aspiring 2.6 Striving 2.6 22
Slide 23: Rapidly Evolving into a Diamond; Market Development Opportunity
… Rapidly Evolving into a Diamond Billions of people in D&E countries 2008 2018 Change Have lots 0.5 0.9 + 0.4 Haves 2.6 3.2 + 0.6 Not yets 2.6 2.2 - 0.4 Source: Unilever estimates Market Development Opportunity Per Capita Consumption (US $ per year ) Detergents 22.9 Shampoo 7.5 6.7 16.6 5.4 12.1 2.
Slide 24: Building Markets: Driving Penetration and Uptrading
Building Markets – Driving Penetration Shampoo sachets Re-closable multi-use Deo ministicks Mini cubes sachets Building Markets - Uptrading Functional Teas Pyramids Double Chamber Mid-market Teabags • Great potential for uptrading D&E Conversion Teabags • Tea has 20% share of volume vs. 12% value fo
Slide 25: Long-Term Strength in D&E; D&E Growth is Profitable
Long-Term Strength in D&E Since 1990… 16 • Underlying sales growth 9% pa on average • Hard currency growth of 7% pa on average 14 • Volume growth 5% pa on average 12 • Volume and value growth in every year 10 8 6 4 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2
Slide 26: Innovation: Building R&D for Competitive Advantage
Innovation Building R&D for Competitive Advantage • More focus on big wins • Leverage our unique science across our portfolio • Accelerate delivery of breakthroughs • Build world class capabilities in critical areas 26
Slide 27: Science and Technology Strengths; More Focused R&D Organisation
Science and Technology Strengths Spray Technology Skin Mildness Product Processing Deodorants and Moisturizing e.g. Ice Cream Hair Structured Science of Tea Technology Oils and Emulsions More focused R&D organisation • 6 Global R&D Centres Port Sunlight, UK Colworth, Vlaardingen, UK NL Trumbull, US
Slide 28: Technology Focus
Prioritising our big wins Science & Unilever Big Wins Technology Prioritised ec ts Portfolio oj s Pr n esi Ge Consumer Needs Trends Brand Categories Leverage Technology Across Portfolio Home Care Personal Care Foods Genesis Project 1 Genesis Project 2 Consumer Benefit Genesis Project 3 Genesis Proje
Slide 29: Improving R&D Capabilities; Fewer, Bigger Innovations
Improving R&D capabilities • Crossover technologies driving differentiated innovation • Boosting open innovation • Strengthening clinicals • Exploiting patents across categories Fewer, bigger innovations • From 5000+ projects to 700 Number of category innovation projects 6000 5000 4000 3000 2000 100
Slide 30: Knorr Stock Pots; Bertolli Frozen Meals
Knorr Stock Pots Stock Pots with new bouillon gel technology for natural tasty stock and soups Launched in China and across Europe Bertolli Frozen Meals New Bertolli Frozen Meals Restaurant Taste with your Homemade Touch 30
Slide 31: Heart Health; Hellmann's Light
Heart Health “Goodness of Margarine” Family Goodness brings better nutrition for family growth For better taste and with less fat Hellmann’s Light Delicious extra light mayonnaise with unique citrus fibre technology Now double-whisked to bring out the great taste! 31
Slide 32: Lipton; Magnum Temptation
Lipton New Lipton pyramid teas and infusions with chunky pieces of fruits, spices and large leaves for the great tea tasting experience A unique slimming tea twice as rich in catechins to help maintain your silhouette Magnum Temptation An unrivalled multi-sensorial experience using cold roller techn
Slide 33: Clear; Axe Hair
Clear Complete antidandruff and scalp care regime Centrally developed, identically presented Axe Hair New Axe Hair launched in the US designed to create hair that guys want and girls love A complete line of shampoos, a conditioner, and styling products 33
Slide 34: Axe Instinct; Dove Hair Minimising Deodorants
Axe Instinct New Axe Instinct with the ‘scent of leather’ Dove Hair Minimising Deodorants Dove Hair Minimising Deodorants Look and Feel Hair Free for Longer 34
Slide 35: Dove Go Fresh; Dove NUTRIUM Technology
Dove Go Fresh Dove Go Fresh A fragrance-driven collection of products aimed at women in their 20s Rolled out to 55 markets in 2008 alone Dove NUTRIUM Technology Dove Body Wash with new NUTRIUM technology - US The most effective natural nourishment ever delivered in a body wash 35
Slide 36: Surf; Domestos 24HR
Surf Surf – Cleaning & Fragrance at a Great Value Price Domestos 24HR The clinging power of new thicker formula makes it flush proof, protecting you and your family from germs 36