Unilever Plc · LSE:ULVR
Unilever — H1 2006 Earnings Presentation
55 slides from Unilever's earnings presentation, 2006
Slide 1: Q2 and First Half 2006 Roadshow
Q2 and First Half 2006 Roadshow From restoring competitiveness to Driving performance to the next level 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 for
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Slide 3: Underlying sales growth
Underlying sales growth 5 4 Typical growth rate for markets and categories USG (%) 3 in which Unilever operates: 2-4% 2 1 0 2003 2004 2005 H1 2006 • Strong growth in priority areas – Personal Care, D&E, Vitality • Growth is broad-based – all categories and regions • Increased price growth with conti
Slide 4: Broad-based growth
Broad-based growth Underlying sales growth % H1 Q2 H1 Q2 Foods Europe 0.3 1.0 Savoury, Dressings 2.5 3.2 and Spreads Americas 3.2 3.6 Beverages and Ice Asia/Africa 8.3 8.7 2.8 3.0 Cream Total 3.4 3.9 HPC Home Care 1.4 1.4 Personal Care 6.4 7.1 3
Slide 5: Restoring growth in Europe
Restoring growth in Europe 1 0 2003 2004 2005 H1 2006 USG (%) -1 -2 -3 4
Slide 6: Operating margin Q2 and H1
Operating margin Q2 and H1 Q2 H1 Operating Margin 14.0% 14.4% Year-on-year change Operating Margin 2.0% 1.0% Change before restructuring, (1.0)% (0.6)% disposals and impairments Key drivers A&P (0.6)% (0.5)% Savings 2.2% 2.0% Cost/price/mix (2.1)% (1.8)% Property sale in 2005 (0.5)% (0.3)% 5
Slide 7: H1 earnings and cash
H1 earnings and cash • EPS on continuing operations +23% +8% before Slim.Fast impairment – Top line growth – Investment in competitiveness – Improvements below operating profit › Higher profits from JVs › Lower financing costs › Sustained tax reduction • Net cash flow from operating activities €1.5b
Slide 8: 2006 outlook
2006 outlook • Sustained top line growth • Operating margin greater than 13.4% – After restructuring >100 bps – Including H1 profits on disposals €155m Drivers of operating margin: – Pricing momentum – Accelerated savings programmes – Softer operating margin comparator in Q4 7
Slide 9: Our long term ambition
Our long term ambition Overarching ambition remains top one-third TSR Long term targets: FCF €25-30bn during 2005-2010 Improved ROIC Through: Underlying sales growth of 3-5% pa Operating margin in excess of 15% by 2010 after normal restructuring Improved capital and tax efficiency 8
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Slide 11: 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 10
Slide 12: Build a winning portfolio
Build a winning portfolio Drive Build leadership strength in positions in high growth key markets spaces Focusing resources behind business priorities Vitality Personal Care D&E 11
Slide 13: Improvement in core capabilities: Brilliant consumer marketing
Improvement in core capabilities A focus for 2006 - crafting and leveraging global brand mixes Brilliant consumer marketing Applying the same methods and standards to all our brands 12
Slide 14: Win with customers
Improvement in core capabilities Win with Building Brands Through customers Customers Customer World Class Winning Service Customer at Point of Excellence Development Purchase Strategic Investing For Growth 13
Slide 15: Scale, agility, one face to customers
Scale, agility, one face to customers Customer Management in the USA - our unique store reach 14
Slide 16: The organisation to deliver
The organisation to deliver A single management team in all markets Local roots Simplified, standardised business processes and global Majority of top 20 businesses reporting directly scale to the Unilever Executive Further reduction in top management structure €700 million savings by end 2006 €1bn
Slide 17: The operating executive structure
The operating executive structure Group Chief Executive Patrick Cescau President President Finance Europe Foods Rudy Markham Kees van der Graaf Vindi Banga President President Human Resources Americas HPC Sandy Ogg John Rice Ralph Kugler President Distinct, complementary roles Asia / Africa Harish M
Slide 18: Organisation – categories and regions
Organisation – categories and regions Clear, distinct and complementary roles Categories Regions Responsible for: Responsible for: Brand development Managing the business Innovation Deploying brands and innovations effectively Brand and category strategies Winning with customers Accountable for: Acc
Slide 19: Regaining Momentum in Europe
Regaining Momentum in Europe 18
Slide 20: Our European change program
Our European change program CONSUMERS CUSTOMERS Rejuvenate and support the core Build Rebalance our excellence in price-value equation customer development Focus behind fewer, bigger innovations Simplify our European organization ONE UNILEVER 19
Slide 21: Rejuvenating the core - Magnum
Rejuvenating the core - Magnum 20
Slide 22: Rebalancing the price-value equation - Knorr bouillon
Rebalancing the price-value equation - Knorr bouillon A range of bouillons with carefully selected ingredients. Because good food deserves Knorr 21
Slide 23: Focus on fewer, bigger innovations – Cif Power Cream
Focus on fewer, bigger innovations – Cif Power Cream The universal power of Cif Cream in a range of convenient, high-performance sprays - for the kitchen, ideal for grease and sticky mess - for the bathroom, optimally engineered to remove limescale and soap scum - and now with bleach. 22
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Slide 25: Driving for Growth - Personal Care
Driving for Growth - Personal Care In H1 • Growth of 6% • Strong profitability • Growth across all categories and regions 24
Slide 26: Deodorant
Deodorant Click Global Launch Teens Latin America Fresh Touch Rexona Sport for Men World Cup activation Silk Dry 25
Slide 27: Dove Invisible
Dove Invisible A patented combination of translucent anti-perspirant ingredients that are unbeatable against white marks, while delivering protection and a light, fresh fragrance. 26
Slide 28: Hair
Hair Clear Ultimate anti-dandruff care Sunsilk Care and repair Dove Enriched with lipids Because lightened and darkened hair need different care 27
Slide 29: Sunsilk launch in North America
Sunsilk launch in North America $200m national launch of the brand to solve your hair dramas 28
Slide 30: Skin
Skin Dove Fresh Touch Axe With pure cucumber extract and A mind-altering range of soothing green tea - for skin that gels for guys’ different feels smooth, hydrated and shower needs refreshed 29
Slide 31: Dove Summer Glow
Dove Summer Glow A light moisturising body lotion, with a unique combination of special Dove moisturisers and a hint of self tan 30
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Slide 33: Driving for Growth - D&E Markets
Driving for Growth - D&E Markets In H1 • Delivered over 7% growth • Focus on innovation and distribution in high growth spaces generating growth ahead of the market • Major contribution to Unilever growth • Broad-based progress across countries and categories 32
Slide 34: Unilever in D&E - a sustainable growth story
Unilever in D&E - a sustainable growth story ¾ Organic growth c. 8% since 1990 ¾ Proportion of sales from D&E up from 20% to 38% in 15 years ¾ Profitable growth, without margin dilution ¾ Unbroken value creation since the early 70’s 33
Slide 35: Drivers of growth in D&E - availability
Drivers of growth in D&E - availability Reaching shoppers in rural areas…. …and through the traditional and modern trade in urban areas 34
Slide 36: Drivers of growth in D&E - affordability
Drivers of growth in D&E - affordability Blue Band Rin/Surf margarine sachets low price fabric cleaning Rama sachets affordable dairy cream alternatives Knorr Cubitos low unit-price seasoning cubes Sunsilk/Clinic individual wash and care Rexona Compact sachets low price roll-on deodorant 35
Slide 37: Drivers of growth in D&E - consumer intimacy
Drivers of growth in D&E - consumer intimacy Omo Baby Lipton Milk Tea hypoallergenic for babies’ sensitive Knorr Salad Seasoning (China) skin (Turkey) Arabia Sunsilk - tailored solutions to local hair dramas Anti-Dandruff Clean & Fresh For Hair That Anti Sponge solves dandruff nourishes and Breaks a
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Slide 39: Driving for Growth - Vitality in Foods
Driving for Growth - Vitality in Foods 38
Slide 40: Goodness of fruit and soya – AdeZ
Goodness of fruit and soya – AdeZ AdeZ - a Healthy Drink that combines the Goodness of Soya with the Refreshment , Taste & Health from Fruit Juice! 39
Slide 41: Wishbone Salad Spritzers
Wishbone Salad Spritzers Salad dressings in breakthrough easy-to-use spray bottles to control the amount of dressing added to salads, with one calorie per spray 40
Slide 42: Slim.Fast Vitacal
Slim.Fast Vitacal delays the absorption of fat in the gut resulting in stronger ‘satisfaction signals’ to the brain, making you feel fuller for longer 41
Slide 43: Ways to a healthy heart - Flora/Becel pro.activ
Ways to a healthy heart - Flora/Becel pro.activ We have expanded the heart health benefits of the brand from cholesterol- reducing in our core spreads category…. …to milk and yoghurt…. …and daily yoghurt drinks… ...and created a €300m-plus business in 3 years. And now we are first to market with one
Slide 44: “Tea Can Do That” – Lipton
“Tea Can Do That” – Lipton Lipton’s unique combination of health benefits, with antioxidants to fight free radicals 43
Slide 45: Driving for Growth - Vitality in HPC
Driving for Growth - Vitality in HPC 44
Slide 46: Dove Campaign for Real Beauty
Dove Campaign for Real Beauty Making women feel more beautiful every day by widening today’s narrow stereotypical view of beauty Singapore Brazil UK 45
Slide 47: Promoting hygiene in Asia - Lifebuoy
Promoting hygiene in Asia - Lifebuoy The Lifebuoy hand-washing programme helps save the lives of millions of children in India and Indonesia 46
Slide 48: Partnering the World Dental Federation - Signal
Partnering the World Dental Federation - Signal Encouraging oral health around the world through practical, sustainable programmes, activated locally. The 5c toothbrush also brings affordable quality to low income consumers 47
Slide 49: Freedom from cleaning - Dirt is Good
Freedom from cleaning - Dirt is Good The “Dirt is Good” campaign, rolled out across the world, brings home the message: getting dirty is an important part of growing up 48
Slide 50: Dirt Is Good – Actigel tablets
Dirt Is Good – Actigel tablets Laundry tablets with a unique gel layer containing pre-treating agents that tackle even the toughest stains 49
Slide 51: Making laundry life easier - Concentrated liquids
Making laundry life easier - Concentrated liquids First to the US market with a liquid that is three times concentrated for a powerful clean – easier to carry, pour and store 50
Slide 52: Domestos with C-TAC
Domestos with C-TAC Efficacy A dual action bleach with longer lasting protection (Bacterial Kill) from germs 80 70 Regular bleach 60 50 40 Bleach with CTAC 30 20 SUPERIOR 10 LONGER LASTING EFFICACY 0 number of flushes 1 flush 5 flushes 51
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Slide 54: Our portfolio
Our portfolio 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: Euromonitor, UL estimates 53
Slide 55: Underlying sales growth
Underlying sales growth Underlying sales growth averaged 3.5% p.a. between 1995 & 2002, was below expectation in 2003 & 2004 and improved in 2005 % Sales growth, excluding acquisitions, disposals, and exchange rate movements 5 4 Typical growth rate for markets and categories in which Unilever operat