Unilever Plc · LSE:ULVR
Unilever — Q3 2009 Earnings Presentation
24 slides from Unilever's earnings presentation, Nov 5, 2009
Slide 1: Q3 and Year to Date 2009 Results
Q3 and Year to Date 2009 Results 5 November 2009 Paul Polman (CEO) - Jim Lawrence (CFO) - James Allison (Head of IR) Safe Harbour Statement This announcement may contain forward-looking statements, including 'forward- looking statements' within the meaning of the United States Private Securities Lit
Slide 2: Volume Improving
Paul Polman Chief Executive Officer Volume Improving Underlying volume growth % 3.6 2.0 0.6 -1.6 -1.8 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 2
Slide 3: Volume growth in each region and in each category
in each region 5.0% 5.0% 4.0% Total Unilever UVG 4.0% AAC UVG 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% -1.0% -1.0% -2.0% -2.0% -3.0% -3.0% -4.0% -4.0% -5.0% -5.0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 5.0% Americas UVG 5.0% Western Europe UVG 4.0% 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1
Slide 4: Strategic Priorities
Paul Polman Chief Executive Officer Strategic Priorities • Brands and Innovations • Winning with & Customers • Cash and Costs • People and Organisation 4
Slide 5: Bigger innovation rolled out faster
Bigger innovation rolled out faster Examples: 11 Markets 21 Markets 35 Markets 37 Markets With additional support behind our brands +130 bps +50 bps -100 bps -100 bps -130 bps Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Change in A&P% *Constant currency 5
Slide 6: Taking our brands into white spaces
Taking our brands into white spaces Entering into hygiene Driving penetration in TURKEY household cleaning INDIA Driving conversion from soap bars to liquids LATAM Extending usage of margarine AFRICA 30 day plans – India Skin Cleansing Avg Price per 100 gms* What’s new? 42 - New differentiated Commu
Slide 7: Positive Customer Service Trend
Strategic Priorities • Brands and Innovations • Winning with & Customers • Cash and Costs • People and Organisation Positive Customer Service Trend 20 Number of Top 20 countries achieving service at the 2009 par target level 15 10 5 0 Aug Aug Jun Jun Jul Jul Jan-09 May Nov May Feb Sep Feb Dec Mar Ap
Slide 8: Strong Cash Flow Delivery
Strategic Priorities • Brands and Innovations • Winning with & Customers • Cash and Costs • People and Organisation Strong Cash Flow Delivery Cash flow from operating activities €bn 4.8 3.2 2.5 0.9 0.3 0.1 Q1 08 Q1 09 H1 08 H1 09 Ytd 08 Ytd 09 • YTD €1.6bn ahead of last year driven by working capita
Slide 9: Cost Savings Ahead of Plan; Gross Margin Improving
Cost Savings Ahead of Plan 1.0 0.8 0.6 0.5 0.3 0.2 Q1 08 Q1 09 H1 08 H1 09 Ytd 08 Ytd 09 €bn • Savings programmes continuing to deliver strongly Gross Margin Improving +290 bps -25 bps -190 bps -240 bps -240 bps Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 • Q3 Gross Margin back to where it was before 2008 commodi
Slide 10: Underlying Operating Margins On Track
Underlying Operating Margins On Track +70 bps +30 bps -30 bps -60 bps -70 bps Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 • Priority to protect margins for the year as a whole Strategic Priorities • Brands and Innovations • Winning with & Customers • Cash and Costs • People and Organisation 10
Slide 11: People and Organisation
People and Organisation • More consumer and customer focussed • Greater bias for action • Strengthening competitive positions with Sara Lee acquisition • Divested non-strategic businesses Jim Lawrence Chief Financial Officer 11
Slide 12: Q3 Sales Growth
Q3 Performance Update • Sales Growth & • Cash and Costs • Mergers and Acquisitions Q3 Sales Growth €10.4bn +3.6% Vol/Mix (0.2)% Price €10.2bn (3.1)% Currency (2.4)% Acq/Disp USG +3.4% Q3 08 Sales Q3 09 Sales 12
Slide 13: Volume Growth and Pricing Development
Volume Growth 3.6% • Q3 reported volume growth 3.6% but… 3.1% • 1 extra trading day in WE and systems change in Canada c. 50bps • Q3 real underlying growth 3.1% • Q4 will be impacted by 2 less trading days in WE and reversal of systems change c. 100bps Q3 09 Pricing Development • UPG Q4 2008 +9%, ah
Slide 14: Q3 Innovation Highlights
Q3 Innovation Highlights Dove for Men Deodorants and Body Wash Vaseline Sheer Infusions EUROPE with GQ Technology US Surf Twilight Sensations EUROPE Catwalk Relaunch ‘Inspired by Fashion, Designed by Sunsilk Co-Creations Hairdressers’ ASIA GLOBAL Q3 Innovation Highlights Ben & Jerrys Family Goodness
Slide 15: Significant Step-Up in Brand Support
Significant Step-Up in Brand Support • Advertising up +14% • Media rates falling • Share of voice increased • Further strong support in Q4 Q3 Performance Update • Sales Growth • Cash and Costs • Mergers and Acquisitions 15
Slide 16: Commodity Cost Development; Strong Savings Delivery
Commodity Cost Development 900 700 500 bps 300 100 -100 -300 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 2009 H2 2009 • €0.5bn tailwind in H2 2009 • FY2009 commodity costs (including currency) up vs last year c. €0.5bn • Some further tailwinds H1 2010 but at lower levels Strong Savings Delivery Local • €1bn to
Slide 17: Q3 Operating Margin; Ytd Drivers of EPS Growth
Q3 Operating Margin Q3 2008 Q3 2009 Change Operating margin 24.2% 14.6% (9.6)% Including RDIs* 8.1% (2.2)% (10.3)% Operating margin before RDIs 16.1% 16.8% 0.7% Key drivers: Gross margin 2.9% Overheads (0.9)% A&P (1.3)% Includes margin dilution from disposals of (0.2)% *Restructuring, disposals and
Slide 18: Improved Working Capital Management; Balance Sheet
Improved Working Capital Management Q3 2008 Q3 2009 Improvement Stock Days 72 58 14 Debtor Days 46 37 10 Creditor Days (79) (78) (2) Total Days 39 17 22 Balance Sheet • Gross pension deficit reduced from €3.7bn (end Q2) to €3.3bn (end Q3) – Good asset returns – Partly offset by reduction in corporat
Slide 19: Mergers and Acquisitions
Q3 Performance Update • Sales Growth • Cash and Costs • Mergers and Acquisitions Mergers and Acquisitions Sara Lee Personal Care Baltimor PF Chang’s Bistro Frozen Meals 19
Slide 20: Conclusion
Paul Polman Chief Executive Officer Conclusion • Encouraging progress • More of the same in Q4 - Bigger, better innovation rolled out faster - Step-up in support levels - Improved execution - Tight control of cash and working capital • Q4 top line impacted by trading days and lower pricing 20
Slide 21: Questions
Priorities for 2009 1. Restore volume growth 2. Protect cash and margin for the full year Questions 21
Slide 22: Ytd Sales Growth
Appendices Ytd Sales Growth +2.7% Price €30.4bn (1.7)% Currency €30.2bn +1.4% Vol/Mix (3.0)% Acq/Disp USG +4.1% Q3 08 Ytd Q3 09 Ytd Sales Sales 22
Slide 23: Ytd Drivers of Operating Profit; Ytd Operating Margin
Ytd Drivers of Operating Profit* 1.0 Price Costs 0.8 0.6 0.4 Vol/Mix 0.2 0 €bn Acq/Disp 0.0 A&P Underlying -0.2 Profit -0.4 -0.6 -0.8 Savings -1.0 programme *Excl RDIs, constant currency Ytd Operating Margin Ytd 2008 Ytd 2009 Change Operating margin 18.8% 13.4% (5.4)% Including RDIs* 3.4% (1.9)% (5.
Slide 24: Q3 Drivers of EPS Growth
Q3 Drivers of EPS Growth Q3 2008 Q3 2009 Change EPS (€) 0.59 0.38 (36)% Includes RDIs*, after tax 0.18 (0.05) EPS before RDIs* 0.41 0.43 5% Key drivers (%) Operational performance 8 Acquisitions/Disposals (2) Currency (3) Pensions finance charge (5) Interest costs 1 Tax 5 2008 Share buy-back 1 *Rest