Unilever Plc · LSE:ULVR
Unilever — FY2003 Earnings Presentation
24 slides from Unilever's earnings presentation, 2004
Slide 1: Unilever Roadshow: 2003 Results & Unilever 2010
Unilever Roadshow 2003 Results & Unilever 2010 Certain of the comments and materials in this presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and assumptions regarding
Slide 2: Sales growth 2003 - behind the numbers
Sales growth 2003 - behind the numbers 3 main factors held back growth 2003: Current status 1.One off impacts H1: -60bps LB growth • Sharp increase in trade destocking Issues now behind us • Slow down in out of home markets (SARS & war) 2.Slim.Fast: -60bps LB growth Executing our plans • Slow reacti
Slide 3: 2003 Performance - concluding remarks
2003 Performance - concluding remarks A tough year . . . . . but: l tackled the causes of weakness in Slim.Fast l moving to a more agile business model for Prestige l refocused Household and Frozen towards growth We have also demonstrated our natural resilience: l increased investment behind our bra
Slide 4: Path to Growth: Levers of economic value
Path to Growth: Levers of economic value Levers of Path to Growth Economic Value Portfolio Accelerate top-line improvement growth Focus on leading Free Top brands Boost operating Cash margin 1/3 Simplification Flow TSR Raise operating Growth World class supply asset efficiency chain A competitive En
Slide 5: Driving up operating margin, investing in brands
Driving up operating margin, investing in brands 2004 1995 1999 2003 Target* Operating Margin % (beia) 8.7 11.1 15.7 16.0+ Path to Growth Target Procurement €1.6 billion 4 achieved ahead of time Bestfoods synergy €0.8 billion 4 achieved ahead of time Restructuring benefits €1.5 billion €0.3bn to go
Slide 6: Stepping up growth in cash flow
Stepping up growth in cash flow Net Total free cash flow 2000 to 2003 €16.4 billion Debt 2000* CFO Dividends A&D Capex & 4.7 5.9 Currency Fin Invest. Retranslation 4.1 22.1 Tax 4.4 Net Debt 26.5 2003* Interest 5.4 Other 4.3 12.6 Underlying Tax Rate Cost of Capital Down by 200 bps Down by 100bps *200
Slide 7: What have we learned from Path to Growth
What have we learned from Path to Growth u Reconciling shorter-term performance metrics and longer-term value creation is not easy! u We optimise economic returns by pulling the right combination of levers in any given situation - priorities can, and do, change u We set expectations and we did not g
Slide 8: Unilever's mission and consumer hotspots
Consumer Hotspots Multiple Desire to Better Small Personal shopping improve quality of incomes, responsibility for channels standard of living life big own welfare aspirations Information & Need to Health as a entertainment communicate birthright Increase in travel Protect the on demand with anyone,
Slide 9: Winning through consumer intimacy; Management Guidance
Winning through consumer intimacy Technology to Global scale, local Power in the local Invest in support touch shopping basket Corporate Reputation differentiation Winning Availability Strong brands Building Stay in touch with where the where consumers build trust Relationships the consumer people a
Slide 10: The framework based on Value Creation
The framework based on Value Creation Priority is sustained top-third TSR The drivers: l Growth of free cash flow over time l Growth in economic profit - the basis for the generation of future cash flows Linking growth in economic profit to growth in return on invested capital l Weighted average cos
Slide 11: Further improving capital efficiency
Further improving capital efficiency Capital expenditure to average around 2.5% of sales over the period Asset efficiency enhanced through: l intra-regional sourcing l moving outsourcing from 15 to 25% l selective cross-regional sourcing Working capital management further improved including more dir
Slide 12: Momentum growth rate; Drivers of operating margin
Momentum growth rate Market volume growth rate close to 3% Additional growth of 50-100bps from market share gain Partly offset by: normal retailer destocking Pricing around 1% Average underlying sales growth 2005 - 2010 3-5% Drivers of operating margin Operating margin improvement 4 years 2000 - 200
Slide 13: Uses of free cash flow
Uses of free cash flow u Strategy and plans based on organic growth u Net debt already reduced from €26.5 billion to €12.6 billion, well ahead of schedule u €4.4 billion of reduction from currency movement u Current optimal debt level consistent with financial strategy around €10 billion u Surplus c
Slide 14: Category Detail: Home & Personal Care leading brands
Category Detail Development of Leading Brands : Home & Personal Care Leading brands growth % 2000 2001 2002 2003 Personal Care 7.5 9.0 10.8 7.9 (excl. Prestige) Prestige 2.8 (7.2) 1.3 (18.1) Total Personal Care 7.0 7.6 10.1 6.1 Laundry 3.2 5.3 1.9 1.8 Household Care 2.0 7.1 2.6 (1.7) Total HPC 5.3 6
Slide 15: Personal Care
Personal Care Leading Brands Average 2003 last 4 years Personal Care 6% 8% Mass Personal Care 7% 9% Strong brands - consistent investment - creating value Strong innovation plan supporting performance double-digit gains in existing markets and rollout to new geographies double-digit growth driven by
Slide 16: Home Care strategy
Home Care strategy Disappointing sales 2003, sales growth -1.7% due to lack of innovation behind the core as Household Care we prioritised brand extensions 2001 & 2002 <3% of Improvement in second half of 2003 as leading brand innovations went to market and focused on portfolio leading positions His
Slide 17: Foods innovation 2003
Foods innovation 2003 Brooke Bond Relaunch India Range of Slim.Fast products USA Frozen Steam Fresh Vegetables Europe Salad Dressing Mealkits - Europe Knorr cooking aids innovation across the world Ice Tea eg Syria, Ecuador, Cool Peach flavour Magnum “Seven Sins” China Japan Europe Development of Le
Slide 18: Savoury & Dressings
Savoury & Dressings Leading Brands 2003 Savoury & Dressings 2.2% Our growth underpinned by strong brands - Active innovation programme in place and proceeding to plan - Improved market position in Asia Pacific through Ajinomoto transaction u A market growing at, on average, 4% p.a. last 3 years u Sl
Slide 19: Tea Based Beverages
Tea Based Beverages Lipton…average 6% leading brand growth p.a. over past 3 years Leading Brands 2002 2003 TBB 3% 6% Ready to Drink 9% 15%+ USG 2003: 8% u Return to historic growth rates From hot tea u Good progress on tail exit to Ready to Drink u Lipton/Pepsi JV to improve geographic expansion u S
Slide 20: Health & Wellness
Health & Wellness Leading Brands 2002 2003 Health & Wellness 9% -17% Slim.Fast 11% -21% Other H&W brands +8% Unilever has a long heritage as a Health & Wellness player H&W is key to brand development in all Foods leading brands u Slim.Fast leading position in growing H&W category u Actions undertake
Slide 21: Ice Cream and Frozen Foods
Ice Cream Global leader - growing organically - profitably Leading brands 2002 4% 2003 4.4% u Clear number 1, further gain in global market share u Continued strong performance in North America & D&E driven by LATAM u Revitalising European business: heart brand relaunch, innovations u Benefits from
Slide 22: Backup
Backup Others Commodity prices Breakdown of raw materials & packaging % turnover Raw Materials & Packaging % Turnover Oils and Fats Packaging 9% 4% turnover Raw Materials 24% Tea 1.3% turnover
Slide 23: Retail Own Brands; Leading in Developing & Emerging markets
Retail Own Brands u ROB share world-wide is around 15%, ROB share in Unilever categories is estimated to be around 7% u Retailers want leading brands that attract consumers in store u Brands set the innovation agenda and provide the margin for investment in the category u Often weaker branded player
Slide 24: Underlying price & volume in D&E markets
Underlying price & volume in D&E markets Average across D&E markets Leading brands: 2002 2003 Price change 7% 4% similar to Volume/mix 2% 4% historic L.B. growth 9% 8% average Illustration 2001 Devaluing Countries 20 15 10 5 0 nN=MN nO=MN nP=MN nQ=MN nN=MO nO=MO nP=MO -5 -10 Price Change % Underlyin