Unilever PLC · LSE:ULVR
Unilever — Q3 2007 Earnings Presentation
44 slides from Unilever's earnings presentation, 2007
Slide 1: Unilever Q3 and Year to Date 2007 Roadshow
Unilever Q3and Year toDate 2007 Roads how Handout version 0
Slide 2: Unilever Q3 2007 Results contents
Unilever Q32007Results Highlights 4 Overhead reduc tion 28 Consistent growth 5 Supplyc hain ef fic ienc y 29 Strongorganicgrowth 6 Benef its 30 Growth byregion 7 Ac celerated restruc turing 31 Growth byc ategory 8 Growth and margin 32 YTD operatingmargin 9 Delivering long term obj ectives Q3 operati
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: 3
3
Slide 5: Highlights
Highlights •Sustained underlying sales growth •Underlying improvement in operating margin •Accelerated change programme •Organisational simplification •Supply chain rationalisation •Portfolio development 4
Slide 6: Consistent growth
Consistent growth Underlying sales growth 7% 6% 5% 4% 3% 2% 1% 0% * * 05 05 06 06 06 06 07 07 07 05 05 20 20 20 20 20 20 20 20 20 20 20 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q4 Annualised growth rate ( after adjusting for sales pull forward in US in 2007) * days adjusted 5
Slide 7: Strong organic growth
Strong organic growth Q3 YTD Turnover €10.2bn €30.3bn Change 1.2% 1.3% Acquisitions and disposals (0.9)% (0.8)% Currency effect (2.3)% (3.0)% Underlying sales growth 4.5%* 5.3% Volume 2.3% 3.9% Price 2.1% 1.4% *5.2% after adjusting for sales pull-forward in US 6
Slide 8: Underlying sales growth by region
Underlying sales growth by region Americas Q3 YTD Asia/Africa USG 2.8%* 4.2% Q3 YTD *4.9% after adjusting for sales USG 11.7% 11.4% pull-forward in US 29% 33% 38% Europe Q3 YTD USG 0.7% 1.9% 7
Slide 9: Underlying sales growth by category
Underlying sales growth by category Ice Cream Home Care and Beverages Q3 YTD Q3 YTD USG 7.1% 6.3% USG (0.1)% 3.8% 18% 20% 28% 34% Savoury,Dressings and Spreads Personal Care Q3 YTD Q3 YTD USG 3.8% 6.5% USG 6.6% 4.7% 8
Slide 10: Operating margin development: Year to date
Operating margin development: Year to date 2006 2007 Change Operating margin 14.5% 13.7% (0.8)% Including RDIs (0.3)% (1.4)% (1.1)% Change before these items 0.3% Key drivers: A&P 0.1% Savings 2.1% Cost/ price/ mix (1.9)% 9
Slide 11: Operating margin development: Q3
Operating margin development: Q3 2006 2007 Change Operating margin 14.8% 13.7% (1.1)% Including RDIs (0.8)% (2.1)% (1.3)% Change before these items 0.2% Key drivers: A&P 0.4% Savings 2.4% Cost/price/mix (2.6)% 10
Slide 12: Mitigating the impact of rising commodity costs
Mitigating the impact of rising commodity costs Commodity cost impact on margin 200 180 Actions taken 160 140 180 • Price increases 120 bps 100 80 150 160 • Reformulation 60 100 40 80 • Forward buying 20 0 • Buying savings 2003 2004 2005 2006 YTD 2007 2007 outlook c.200 bps 11
Slide 13: Savings and restructuring
Savings and restructuring 2007 quarterly total savings 2007 quarterly restructuring (buying and other) 300 300 250 250 200 200 €m €m 150 150 100 100 50 50 0 0 Q1 Q2 Q3 Q1 Q2 Q3 2007 restructuring guidance: €700m to €1bn 12
Slide 14: Accelerating change – Progress to date
Accelerating change – Progress to date • Organisational simplification • Announced three further MCOs - UK/Ireland - Germany/Austria/Switzerland - Central Africa • Integration of North America Ice Cream • Consolidated businesses in South Africa and Israel • Supply chain rationalisation • Affecting 1
Slide 15: Drivers of YTD EPS growth
Drivers of YTD EPS growth % Operating profit (5) Finance costs 4 JVs, associates and non- % current investments 3 Underlying sales growth 5 Preference share provision 8 Currency and disposals (3) Tax rate 8 Operating margin pre-RDIs 2 EPS from continuing 20 operations RDIs* (8) Discontinued operatio
Slide 16: Balance sheet and cash flow
Balance sheet and cash flow • Net debt €8.2bn • Share buy-back: €1.1bn repurchased to end September • Pension liability reduced to €0.8bn • Cashflow from operating activities €3.5bn 15
Slide 17: 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 • Tax rate around 23% 16
Slide 18: 17
17
Slide 19: Accelerating change
Accelerating change 18
Slide 20: 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 S
Slide 21: 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 20
Slide 22: Innovation
Innovation Applying global concepts to local markets • Increasingly global platforms • Simpler interface between categories and operations • Better technology 21
Slide 23: 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 24: 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 23
Slide 25: 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 24
Slide 26: Margin improvement
Margin improvement • Simplification - Multi-country organisations • Further overhead savings • Supply chain efficiency and responsiveness 25
Slide 27: 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 26
Slide 28: Streamlined structures
Streamlined structures Simplification of the country/category matrix From To 100 countries 25 MCOs x x 20 categories 10 categories Fewer interfaces between categories and operations Less regional management infrastructure 27
Slide 29: 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) 28
Slide 30: 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 31: Benefits
Benefits • Aggregate savings c. €1.5bn p.a. by exit 2010 • Savings invested behind brands and accelerated margin improvement 30
Slide 32: Accelerated restructuring
Accelerated restructuring Over Europe heads Cash % spend Supply ROW Chain Non Cash 31
Slide 33: 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 32
Slide 34: 33
33
Slide 35: Delivering long term objectives
Strategy Delivering long term objectives 34
Slide 36: 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 35
Slide 37: Our growth priorities
Our growth priorities Deodorants, Skin, Hair Savoury, Ice Cream, Tea Vitality within Foods D&E: Foods, Home care Russia and China 36
Slide 38: 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 39: 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 38
Slide 40: 39
39
Slide 41: Drivers of growth: Innovation
Drivers of growth Innovation 40
Slide 42: 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 41
Slide 43: 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 42
Slide 44: ERROR: rangecheck OFFENDING COMMAND: .image3 STACK:
ERROR: rangecheck OFFENDING COMMAND: .image3 STACK: -dictionary- -savelevel-