Unilever Plc · LSE:ULVR
Unilever — H1 2003 Earnings Presentation
23 slides from Unilever's earnings presentation, 2003
Slide 1: Unilever Roadshow Q2 & First Half 2003: Path to Growth progress
Unilever Roadshow Q2 & First Half 2003 Path to Growth progress Driving the levers of value creation SAFE HARBOUR STATEMENT: This presentation may contain forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act 1995) based on our best current information an
Slide 2: Path to Growth: Levers of Value Creation; Highlights of first half 2003
Path to Growth: Levers of Value Creation Levers of Value Path to Growth Creation Portfolio improvement Top line 5-6% Focus on leading Free Top brands Operating margin Cash 16+% 1/3 Simplification Flow TSR Capital efficiency Growth World Class Supply 600 bps down Chain Cost of capital Enterprise Cult
Slide 3: Outlook for 2003
Outlook for 2003 ◆ Leading brands growth some 4% ◆ Leading brands to rise to 90%+ of total portfolio ◆ EPS (beia) growth - low double digits ◆ Planned restructuring exceptionals €500 million Drivers for second half growth leading brands ◆ Leading brands growth at 3% in H1 and 5% in H2 ◆ A number of
Slide 4: Personal Care Innovation 2003
Personal Care Innovation 2003 LATAM Europe Europe Axe Anti-Perspirant Rexona Crystal Sunsilk Japan Lux Spa North America Moist Soap Suave liquid & bar Personal Care Innovation 2003 - Dove LATAM NA Europe, NA, LATAM Dove Deodorant Facial care products Exfoliating Bar Europe NA ‘Supreme Silk’ liquids
Slide 5: Home Care Innovation 2003; Foods Innovation 2003
Home Care Innovation 2003 Aloe Vera Fragrance - liquid, tablets, liquid gel Snuggle new variants Cif & Domestos New variants & markets New variants Foods Innovation 2003 Brooke Bond Relaunch India “Dippin’ Sauces NA Frozen Steam Fresh Vegetables Europe Salad Dressing Mealkits - Europe Knorr cooking
Slide 6: Slim.Fast Innovation 2003; Drivers of second half EPS growth
Slim••fast Innovation 2003 Ready to Drink Soy Vanilla & Chocolate Deliciously Layered Nutritional Meal Bars SlimFast Succeed Zero-Sugar Carb Snack Bars Hot Meal Options Great Tasting and Nutritional 3 Soup & 3 Pasta Recipes Drivers of second half EPS growth Drivers of EPS growth in the second half
Slide 7: Path to Growth Scorecard Q2 2003 (MAT)
Path to Growth Scorecard Q2 2003 (MAT) Progress on all Levers of Value Creation Top Third TSR Top Line Growth Leading Brands from 75% to 90%+ HPC Foods Operating Capital Cost of Growth Growth Margin Efficiency Capital Target Improved +350 bps +840 bps Competitive range underlying for 3 years portfol
Slide 8: Progress of Leading Brands
Progress of Leading Brands Leading Brands Growth % 00 01 02 02 02 02 02 03 03 03 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 H1 HPC 5.3 6.5 3.5 6.5 6.5 9.8 6.7 6.8 3.0 4.8 Foods 1.9 4.1 2.6 2.8 4.6 7.3 4.4 0.0 3.3 1.7 TOTAL 3.8 5.3 3.0 4.4 5.4 8.5 5.4 3.0 3.2 3.1 Levers of Value Creation: Top Line: Home & Personal C
Slide 9: Levers of Value Creation: Personal Care
Foundations for Sustained, Profitable Growth: Levers of Value Creation: Personal Care USG FY 2002 First Half 03 Comment Personal Care 9% 7% 7% p.a. last 4 years Hair, Skin, Deo 11% 9% 9% p.a. last 4 years Strong brands - consistent investment - creating value Strong innovation plan supporting perfor
Slide 10: Levers of Value Creation: Laundry Progress; Foods
Levers of Value Creation: Laundry: Progress 2003 Target (Q2 MAT) End 2004 Increase Operating Margin >250bps 500bps Reduce Operating Assets >550bps 10% % of Sales ➣ Closed 16 factories ➣ Exited 4 countries ➣ Reduced raw material specifications from 115 to 23 Levers of Value Creation: Top Line: Foods
Slide 11: Top Line Summary; Executing the Restructuring and Integration
Levers of Value Creation: Top Line: Summary Bps Impact of 1st Half 2003 LB growth rate Laundry focus on profitability 40 Pause in Slim.Fast 70 Growth Spreads Family Brands 20 Frozen Foods 20 Restore Growth Household Care 20 Prestige 20 Executing the Restructuring and Integration Q2 MAT 1999 2003 Ope
Slide 12: Levers of Value Creation: Capital Efficiency
Levers of Value Creation: Capital Efficiency % Sales 1999 Q2 2003 MAT Fixed Assets 21.4 16.7 Working Capital 7.6 3.9 Total Operating Assets 29.0 20.6 Factory restructuring Global procurement More to go Continuous replenishment Outsourcing up from 15% to 25%+ Levers of Value Creation: Capital Efficie
Slide 13: Operating Margin to 2004; Optimising the Balance Sheet
Levers of Value Creation: Operating Margin to 2004 2004 Operating Margin 16+% Restructuring +100 bps Margin Improved Mix +50-60 bps Growth Drivers Recovery of D&E Cost +80-100 bps Step up A&P spend -40 bps Q2 ‘03 MAT Operating Margin 14.6% And…continued momentum in global procurement and Bestfoods i
Slide 14: Levers of Value Creation: Summary
Levers of Value Creation: Summary Top Line - Improved business & brand Portfolio Operating Margin Annual +350 bps Free Cash Flow Capital Efficiency raised by €1bn +840 bps since 1999 Balance Sheet: Tax down 2% Cost of capital down 1% Last 70 years EPS Last 10 years EPS growth 8% growth 9% Current sh
Slide 15: Backup Charts: The Key Drivers of Growth
Backup Charts The Key Drivers of Growth ◆ Powerful “reshaped” portfolio of brands in fragmented markets − Build strength in the core ◆ Innovate in fastest growing segments with Brands on trend with the consumer ◆ “Space for growth” - move from category to brand mindset Space for Growth − Extending b
Slide 16: Hitting Consumer Hotspots; Global Brands
Hitting Consumer Hotspots Growth % 2002 Meal Solutions Snacking Refreshment +13 % + 11% + 15 % Social Celebration +9% + 6% + 12 % Health & Indulgence Wellness + 12 % + 9% + 11 % + 9% Taking Charge of the Top Line Global Brands ◆ Portfolio of Global Brands & Local Jewels ◆ 400 brands - 200 brand posi
Slide 17: Savoury & Dressings
Foundations for Sustained, Profitable Growth: Savoury & Dressings % of Sales Q2 MAT Savoury & Dressings 5.2% Leading Brands 90% 6.1% Knorr, Hellmann’s, Bertolli 50% Growth underpinned by strong brands - Active innovation programme in place Social and proceeding to plan Celebration - Improved market
Slide 18: Frozen Foods; Ice Cream
Foundations for Sustained, Profitable Growth: Frozen Foods Earned the right to grow - now need to do it…and sustain it K Now purely a European business - number 1 K ROCE = 30% K 2001 growth:+3% but not sustained, first half sales down 1% K Continuing to build on success in quality convenience meals
Slide 19: Tea Based Beverages; Commodity Prices
Foundations for Sustained, Profitable Growth: Tea Based Beverages Lipton…average of 5% growth p.a. over the past 3 years 2002 First half 03 Category <2% 4%+ Leading 3% 5% Ready to Drink 9%+ 10%+ From hot tea K A pick up in momentum in first half 2003 K Good progress on tail exit to Ready to Drink €2
Slide 20: Leveraging our Strength in D&E
Leveraging our Strength in D&E ◆ 2006: D&E purchasing power will exceed the developed world ◆ 2010: c. 90% of world’s Refreshment population in D&E ◆ 2050: Europe’s share of the world population will halve ◆ 70+ years experience. Strong local understanding and Indulgence management ◆ Leverage strong
Slide 21: How we go to market: Route to consumer
How we go to market Route to consumer Retail Consolidation W. Europe: High Pan Europe: Low/Medium USA: Medium/High Global Customers D&E: Low Other modern Trade General Trade Foodservice, Out-of-Home How we go to market: Discounters Discount Strategy CG s FM and Discounter Br Hard Discounter own il s
Slide 22: Impact of Implementing FRS17; Accounting for Stock Options
Impact of Implementing FRS17 Pension & Other Benefits elements 2002 2003 (Estimate) Impact on: (€ mln) SSAP 24 FRS 17 FRS 17 Operating Profit (beia) (274) (381) (400) Charge to Interest 0 108 (190) Profit before Tax (274) (273) (590) Net Profit (beia) (184) (183) (395) Net Assets (after tax) €bn (2.
Slide 23: US Trade Destocking
US Trade Destocking ◆ Long term trend ½ to 1% of sales per year ● Included in planning ● Driven by - Retailers getting more efficient - Our business moving to larger more efficient retailers ◆ First half 2003 ‘sharper than expected destocking’ ● Impact largely on Home & Personal Care ● Held back sal