Unilever PLC · LSE:ULVR
Unilever — Q2 2007 Earnings Presentation
45 slides from Unilever's earnings presentation, 2007
Slide 1: Q2 and First Half 2007 Roadshow
Unilever Q2 and First Half 2007 Roadshow Handout version 0
Slide 2: Unilever Q2 2007 Results
Unilever Q2 2007 Results Consistent growth 3 Supply chain efficiency 23 Growth by region 4 Benefits 24 Growth by category 5 Accelerated restructuring 25 First half operating margin 6 Growth and margin 26 Q2 operating margin 7 Delivering long term objectives Commodity costs 9 Our portfolio 28 First h
Slide 3: Safe harbour statement
Safe harbour statement 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. Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and other
Slide 4: Consistent growth
Consistent growth Underlying sales growth 7% 6% 5% 4% 3% 2% 1% 0% * * 05 05 06 06 06 06 07 07 05 05 20 20 20 20 20 20 20 20 20 20 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q4 Annualised growth rate * days adjusted 3
Slide 5: Good growth in all regions
Good growth in all regions Americas Asia/Africa H1 USG +4.9% H1 USG +11.3% 28% 34% 38% Europe H1 USG +2.6% 4
Slide 6: Innovation driving category growth
Innovation driving category growth Ice Cream and Home Care Beverages H1 USG +5.9% H1 USG +5.9% 18% 20% 34% 28% Savoury, Dressings Personal Care and Spreads H1 USG +7.9% H1 USG +3.8% 5
Slide 7: Underlying operating margin improvement in first half
Underlying operating margin improvement in first half 2006 2007 Change Operating margin 14.4% 13.7% (0.7)% Including RDIs - (1.0)% (1.0)% Change before these items 0.3% Key drivers: A&P 0.0% Savings 2.0% Cost/price/mix (1.7)% 6
Slide 8: Improvement sustained in Q2
Improvement sustained in Q2 2006 2007 Change Operating margin 14.0% 13.7% (0.3)% Including RDIs (0.6)% (1.1)% (0.5)% Change before these items 0.2% Key drivers: A&P (0.1)% Savings 2.1% Cost/price/mix (1.8)% 7
Slide 9: Mitigating the impact of rising commodity costs
Mitigating the impact of rising commodity costs Commodity cost impact on margin 180 160 140 Actions taken 120 100 160 140 • Price increases bps 80 150 • Reformulation 60 100 • Hedging 40 80 • Buying savings 20 0 2003 2004 2005 2006 H1 2007 2007 outlook ≥160 bps 8
Slide 10: Drivers of EPS growth - First half
Drivers of EPS growth - First half % Operating profit (3) Finance costs 3 % JVs 1 Associates and non- Underlying sales growth 6 3 current investments Currency and disposals (5) Tax rate 6 Operating margin pre-RDIs 2 EPS from continuing RDIs* (6) 10 operations (3) Discontinued operations (1) EPS 9 *r
Slide 11: Balance sheet and cash flow
Balance sheet and cash flow • Net debt €8.8bn • Share buy-back: €700m repurchased to end June • Pension liability reduced to €1.2bn • Cashflow from operating activities €1.7bn 10
Slide 12: 2007 outlook
2007 outlook • USG at upper end of 3-5% range • Underlying improvement in operating margin • Accelerated restructuring: €700m to €1bn • Possible disposal gains in H2 11
Slide 13: Accelerating change
Accelerating change 12
Slide 14: Building on existing programmes
Building on existing programmes • ‘One Unilever’ • c. €1bn p.a. savings during 2008 • Shared services/ outsourcing • Covering Finance, I.T., H.R : complete 2007-09 • Global buying • Savings averaging c. €400m p.a. 2005-07 • Strengthened Marketing & Customer Management • Programme roll-out 2006-08 Su
Slide 15: Building on our growth agenda
Building on our growth agenda • Growth remains our number one priority • Competitive • Profitable • Consistent • Reinforced by steps to accelerate performance • Raising the bar for innovation • More aggressive shaping of our portfolio • Cost and asset reduction to further enhance margin 14
Slide 16: Innovation
Innovation Applying global concepts to local markets • Increasingly global platforms • Simpler interface between categories and operations • Better technology 15
Slide 17: Shaping our portfolio
Shaping our portfolio Building leadership positions and high growth spaces • Organic portfolio development • Focusing resources in high potential areas • Acquisitions • In priority areas - Personal Care, D&E, Vitality • Disposals • In less attractive market positions • Brands that do not benefit fro
Slide 18: Realising value through disposals
Realising value through disposals • Over €2bn of turnover earmarked for disposal • Includes €0.8bn North America Laundry • Mostly outright disposals, but other routes to value release also possible • Impact on USG: +40bps • Impact on operating margin: broadly neutral 17
Slide 19: North America Laundry
North America Laundry • Unilever North America Laundry business - profitable but not growing • Recent developments in US Laundry market favour consolidation and make our business an attractive asset • Does not compromise our scale in North America or Unilever’s global ambitions in laundry 18
Slide 20: Margin improvement
Margin improvement • Simplification - Multi-country organisations • Further overhead savings • Supply chain efficiency and responsiveness 19
Slide 21: Multi-country organisations
Multi-country organisations Example - Unilever Benelux Savings c €50m Unilever Netherlands Unilever Belgium €1.1bn €500m Dedicated Management Dedicated Management Team Team Unilever Benelux €1.6bn Single Management Team 20
Slide 22: Streamlined structures
Streamlined structures Simplification of the country/category matrix • From c.100 countries x 20 categories • To c.25 MCOs x 10 categories • Fewer interfaces between categories and operations • Less regional management infrastructure 21
Slide 23: Overhead reduction – beyond One Unilever
Overhead reduction – beyond One Unilever • The UK • 50% reduction in top management (c. 40 roles) • c. 350 roles administrative roles in total • Up to €70m p.a. of overheads savings identified • Italy • Sales and Admin from 1500 FTE’s (‘06) to 900 (’08) 22
Slide 24: Supply chain efficiency and responsiveness
Supply chain efficiency and responsiveness • From 1999-2006 • 600bps reduction in fixed assets as % of turnover • 100+ sites closed or sold • Cap ex held between 2–2.5 %T/O • Future plans • 50-60 sites closed or streamlined • Significant rationalisation of distribution networks • Investment in a mor
Slide 25: Benefits
Benefits • Aggregate savings c. €1.5bn p.a. by exit 2010 • Savings invested behind brands and accelerated margin improvement 24
Slide 26: Accelerated restructuring
Accelerated restructuring Over Europe heads Cash % spend Supply ROW Chain Non Cash 25
Slide 27: Growth and margins
Growth and margins • 3-5% USG • Growth ahead of our markets • Portfolio growth potential improving over time • Accelerated improvement in operating margin • To exceed existing target of >15% by 2010 26
Slide 28: Delivering long term objectives
Strategy Delivering long term objectives 27
Slide 29: Our portfolio
Our portfolio Foods Home & Personal Care Savoury & Dressings Skin Spreads Deodorants World Number 1 Daily Hair Care - #1 in D&E Meal replacement World Number 2 Oral Care Local strength Tea Laundry - #1 in D&E Ice Cream Household Care Our 12 €1bn+ brands 28
Slide 30: Our growth priorities
Our growth priorities Deodorants, Skin, Hair Savoury, Ice Cream, Tea Vitality within Foods D&E: Foods, Home care Russia and China 29
Slide 31: Aligned organisation
Aligned organisation Unilever Executive Corporate strategy Portfolio priorities Performance management Regions Categories Functions Go to market Brand and category strategies Functional excellence Customer management Innovation Business support R&D Simplification Disciplined execution, speed, effect
Slide 32: Progress on One Unilever – Top 20 countries
Progress on One Unilever – Top 20 countries One top team Single head office One sales force Back office integration Regional shared services 0% 20% 40% 60% 80% 100% Completed Announced As at end 2006 31
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Slide 34: Drivers of growth: Innovation
Drivers of growth Innovation 33
Slide 35: Ponds Age Miracle
Ponds Age Miracle Skin that looks and feels younger A revolutionary range of anti- ageing products designed specifically for the needs of Asian skin 34
Slide 36: Dove Pro.Age
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 35
Slide 37: Clear
Clear Complete antidandruff and scalp care regime Centrally developed, identically presented simultaneously across China, Brazil, Russia, Arabia and Turkey 36
Slide 38: Small & Mighty in Europe
Small & Mighty in Europe A revolutionary 3-times-more concentrated laundry detergent A new breakthrough product with perceivably better cleaning, and better convenience, at the same price per wash Cleans a whole wash-load with just one small capful 37
Slide 39: Domestos Zero Limescale
Domestos Zero Limescale A powerful, superior performance limescale remover Completely destroys tough, germ-filled limescale Three times thicker than any other product on the market, it grips to limescale even on vertical surfaces and under the water line, so it keeps on working 38
Slide 40: Heart Health
Heart Health Omega 3 plus Packed with more omega 3 than any other spread or minidrink pro.activ (Promise activ) Spreads, milk, yoghurt and mini-drinks clinically proven to lower cholesterol 39
Slide 41: Hellmann's Light
Hellmann’s Light Delicious light mayonnaise with only 5% fat With unique citrus fibre technology 40
Slide 42: Moo and Milk Time
Moo and Milk Time Delicious ice cream for kids with as much calcium as two glasses of milk + + 41
Slide 43: Frusi
Frusi Great taste without the guilt A unique combination of frozen yogurt, real fruit pieces and wholegrain cereals, with less than 3g of fat per pot 42
Slide 44: Lipton Linea
Lipton Linea A unique slimming tea twice as rich in catechins to help maintain your silhouette 43
Slide 45: Amaze
Amaze A nutrient mix scientifically shown to improve learning and memory in school-aged children 44