Unilever Plc · LSE:ULVR
Unilever — Q1 2003 Earnings Presentation
34 slides from Unilever's earnings presentation, 2003
Slide 1: Unilever Roadshow Q1 2003: Achieving our Path to Growth Targets
Unilever Roadshow Q1 2003 Achieving our Path to Growth Targets 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 and what we believe to be reasonable as
Slide 2: Path to Growth Scorecard Q1 2003 (MAT)
Path to Growth Scorecard Q1 2003 (MAT) Progress on all Levers of Value Creation Sustaining Outperformance Top Line Growth Leading Brands from 75% to 90% HPC Foods Operating Capital Cost of Growth Growth Margin Efficiency Capital from from 5.3% to 1.9% to +340 bps 800 bps Competitive 7.5% 3.8% EPS (b
Slide 3: Bestfoods Acquisition Meeting Targets
Bestfoods Acquisition Meeting Targets K Cash earnings accretive in first full year K Fast track approach to integration with 2003 synergy target of €0.8 bn already delivered in 2002, ahead of plan K Disposals done with speed and at good prices - Remedies - Campbell completed in Q2 2001 - Bestfoods b
Slide 4: Progress of Leading Brands
Progress of Leading Brands Underlying Sales Growth % UKM TKM Foods SKM ex IC HPC RKM Ice Cream QKM Total PKM OKM NKM MKM nQ=DMM nN=DMN nO=DMN nP=DMN nQ=DMN nN=DMO nO=DMO nP=DMO nQ=DMO Q1MAT Growth of leading brands 2000 2002 2003 2004 Home and Personal Care 5.3% 6.7% 7.5% Foods 1.9% 4.4% 3.8% Total
Slide 5: Scaling the growth ladder
Scaling the growth ladder Unilever growth rate 2002 4.2% Reduce tail of business to 5% +100 bps Step-up growth of leading brands +90 bps Target growth rate 2004 5 - 6% Capacity to deal with normal cut and thrust 5
Slide 6: Scaling our Growth Ladder
Scaling our Growth Ladder % 2002 Growth Impact on MAT Portfolio % 2002 growth rate Q1 2003 Sustain: Personal Care, Spreads, Savoury & Dressings, Ice Cream 59% 7.5% - 7.3% in D&E and North America, Health & Wellness Back to Historic Growth Levels: 21% 1.9% +60bps 2.9% Home Care and Tea Innovate: West
Slide 7: Scaling our Growth Ladder: Q1 2003 Status Report
Scaling our Growth Ladder : Q1 2003 Status Report Sustained : Personal Care, Spreads, Savoury & Dressings, Ice ✔ Cream in D&E and North America ✘ but Health & Wellness a stall Progress with Home Care and Tea with small pick-up in ✔ momentum = Innovation to European Ice Cream and Frozen Foods ✔ Reduc
Slide 8: Executing the Restructuring and Integration
Executing the Restructuring and Integration Q1 MAT 1999 2003 Operating Margin % (beia) 11.1 14.5 Procurement €1.6bn achieved ✔ Bestfoods synergy €0.8bn achieved ✔ Restructuring €0.9bn €0.6bn to go Restructuring charge €6.2bn 95% authorised €5.1bn charged 91 Businesses sold, €6.6 billion sale proceed
Slide 9: Capital Efficiency
Capital Efficiency % Sales 1999 Q1 2003 Fixed Assets 21.4 16.8 Working Capital 7.6 4.3 Total Operating Assets 29.0 21.1 Factory restructuring Global procurement Ongoing Continuous replenishment Outsourcing up from 15% to 25%+ 9
Slide 10: Margin and Capital Efficiency Progress
Margin and Capital Efficiency Progress Operating Margin F. Assets + W. Capital (beia) % as % of Sales NS QM PU Operating Margin (beia) % NQ PS PQ NO PO PM NM OU OS U OQ F. Assets + W. Capital as % of Sales OO S OM 5 6 7 8 9 0 1 * * '9 '9 '9 '0 '0 '0 '0 2 03 '0 4 4 4 4 4 4 4 MAT 1’ Q Q Q Q Q Q Q 4 Q
Slide 11: Operating Margin to 2004
Operating Margin to 2004 2004 Operating Margin 16+% Step up A%P spend -50 bps Recovery of D&E Cost Margin 80-100 bps Growth Drivers +200 bps Improved Mix 50-60 bps Restructuring +110 bps Q1 ‘03 MAT Operating Margin 14.5% And…continued momentum in global procurement and Bestfoods integration savings
Slide 12: Cash Flow
Cash Flow €bn 5 4.5 €4.3bn Net Debt 4 2000 €26bn 3.5 2003 Q1 €16.3bn 3 €2.8bn 2.5 2 1.5 Cost of capital 1 down by 0.5 100 bps 0 1999 2002 Cash Flow after net capex, financial investments and tax charge 12
Slide 13: Key Features for the Quarter
Key Features for the Quarter K Leading brand growth 5.5% MAT with 3% in quarter K Operating margin (beia) 14.6%, +30bps K Increased advertising and promotions : ahead 180bps K Savings programmes delivering on plan K Interest on net debt down by 13% at €257 million K Underlying tax rate 30% K EPS (be
Slide 14: Outlook for 2003
Outlook for 2003 K Leading brands growth 5-6% K Leading brands to rise to 90%+ of total portfolio K EPS (beia) growth - low double digits K Underlying tax rate reduced to around 32% K Planned restructuring exceptionals €500 million 14
Slide 15: Backup Charts
Backup Charts 15
Slide 16: The Key Drivers of Growth
The Key Drivers of Growth K Powerful “reshaped” portfolio of brands in fragmented markets - Build strength in the core - K Innovate in fastest growing segments with Brands on trend with the consumer K “Space for growth” - move from category to brand mindset - Extending brands across categories - Adj
Slide 17: Hitting Consumer Hotspots
Hitting Consumer Hotspots Growth % 2002 Meal Solutions Snacking Refreshment Meal Solutions Refreshment + 11% +13 % + 15 % Social Celebration +9% + 6% Social Celebration + 12 % Health & Indulgence Health & Wellness Indulgence + 9% Wellness + 12 % + 11 % + 9% 17
Slide 18: Taking Charge of the Top Line: Global Brands
Taking Charge of the Top Line Global Brands K Portfolio of Global Brands & Local Jewels Meal Solutions Refreshment K 400 brands - 200 brand positions K Leading Brands From 75% Social Celebration to 95% of sales Health & Indulgence K 40 Global Brands Wellness already 64% of sales K 14 brands > €1bn +
Slide 19: Foundations for Sustained, Profitable Growth: Personal Care
Foundations for Sustained, Profitable Growth: Personal Care USG FY 2002 MAT Q1’03 Comment Personal Care 9% 10% 7% p.a. last 4 years Hair, Skin, Deo 11% Meal Solutions 12% 9% p.a. last 4 years Refreshment Strong brands Strong brands- -consistent consistentinvestment investment -- creating value creat
Slide 20: Foundations for Sustained, Profitable Growth: Laundry
Foundations for Sustained, Profitable Growth: Laundry USG FY2002 Q1 2003 Q1 MAT Total Laundry 1.8% 2.3% 2.6% Meal Solutions A regionally differentiated strategy Refreshment Strategy starting to work: - Gross margins improving - Europe, N.America, Asia Pacific - Good pick up in D&E growth Social Cele
Slide 21: Foundations for Sustained, Profitable Growth: Savoury & Dressings
Foundations for Sustained, Profitable Growth: Savoury & Dressings % of Sales Q1 MAT Savoury & Dressings 4%+ Leading Brands 90% 5%+ Meal Solutions Knorr, Hellmann’s, Refreshment Bertolli 50% Growth underpinned by strong brands - Active innovation programme in place Social and proceeding to plan Celeb
Slide 22: Knorr - a Brand for All Seasons
Knorr - a Brand for All Seasons Reach out Reach up New consumers Nutrition / Fresh New occasions Ethnic New channels Gourmet Vie New channels Meal Solutions Refreshment Frozen snacks & Chilled / Frozen meal solutions Wet single serve Wet Cup-a-Soup Mealmakers Social Celebration Ramen Dry Sauces Nood
Slide 23: Foundations for Sustained, Profitable Growth: Spreads & Cooking Products
Foundations for Sustained, Profitable Growth: Spreads & Cooking Products USG % of sales FY 2002 Leading Brands 75% Meal Solutions >4% Refreshment Strong brands - world class technology ability to leverage across categories Social Celebration •Category particularly impacted by Easter Health & •Innova
Slide 24: Foundations for Sustained, Profitable Growth: Frozen Foods
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, Q1’03 sales down 1% K Continuing to build on success in quality convenience meals K Ne
Slide 25: Foundations for Sustained, Profitable Growth: Ice Cream
Foundations for Sustained, Profitable Growth: Ice Cream Global leader - growing organically - profitably USG Comment 2001 3% 2002 4% KUSA 8% Sustain superior performance KD&E markets 6% Returning to historical growth KEurope 1% Need to broaden consumer reach K Q1 Europe and N.America affected by lat
Slide 26: Foundations for Sustained, Profitable Growth: Tea Based Beverages
Foundations for Sustained, Profitable Growth: Tea Based Beverages Lipton…average of 5% growth p.a. over the past 3 years 2002 Q1 MAT Category <2% 3% Leading 3% 4%+ Ready to Drink 9%+ 10% KA pick up in momentum in Q1 2003 with leading From hot tea brands +5% to beverages KGood progress on tail exit €
Slide 27: Foundations for Sustained, Profitable Growth: Health & Wellness
Foundations for Sustained, Profitable Growth: Health & Wellness K Main brand within this €1.3bn category is Slim.Fast (sales €1.1bn) K A disappointing quarter for Slim.Fast K Reduced Unilever’s growth rate by 40 bps K Factor’s behind this: - Tough comparators - Promotional planning and timing - Comp
Slide 28: Commodity Prices
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 28
Slide 29: Leveraging our Strength in D&E
Leveraging our Strength in D&E K 2006: D&E purchasing power will exceed the developed world Meal Solutions K 2010: c. 90% of world’s Refreshment population in D&E 2050: Europe’s share of the K world population will halve Social Celebration K 70+ years experience. Strong Health & local understanding
Slide 30: Underlying Price & Volume
Underlying Price & Volume 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 % Underlying Volume % USG % • Before exceptional items and goodwill amortisation 30
Slide 31: Impact of Implementing FRS17
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 32: Accounting for Stock Options
Accounting for Stock Options K Options programme already fully hedged − shares bought in at time of grant − economic interests of shareholders protected K From 2003, operating profit to include a new charge − reflects value of option to employee − non-cash item : no change to UL cash flows K 2003 re
Slide 33: Sustained Performance 1985 - 1999
Sustained Performance 1985 - 1999 Fuelled by embedding Value Creation in our Business K Cash flow from Operations cumulative €50bn K Net cash flow per annum doubled to €1.3bn K Operating margin increased from <6% to 11% K Operating assets as % of sales fell by 6% K EPS growth average 9% through the
Slide 34: Path to Growth Strategy
Launched Feb 2000 Path to Growth Strategy ^ÅÅÉäÉê~íÉ=ê~íÉ=çÑ=íçé=äáåÉ=ÖêçïíÜ=íç=R=J=SB=é~=Äó=OMMQ= fåÅêÉ~ëÉ=çéÉê~íáåÖ=ã~êÖáå=íç=áå=ÉñÅÉëë=çÑ=NSBG=Äó=OMMQ bmp=ÄÉá~=äçï=ÇçìÄäÉ=ÇáÖáí=ÖêçïíÜ=OMMN=J=MQ oÉëíêìÅíìêáåÖ=p~îáåÖë=€OKPÄå=Äó=OMMQ éäìë==NKSÄå=éêçÅìêÉãÉåí=ë~îáåÖë ^Åèìáëáíáçåë råÇÉêJ _ê~åÇ= pìééäó