cagny 2009 - unilever presentation - handout version ... · pdf filevol/mix acq/disp price...
TRANSCRIPT
1
2009 CAGNY
Jim Lawrence, Chief Financial Officer
17 February 2009
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. These forward-looking
statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the
Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Further details of potential risks and
uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report &
Accounts on Form 20-F. These forward-looking statements speak only as of the date of this presentation.
Safe harbour statement
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Agenda
• Business Overview
• Financial Performance
• Growth Strategy
• Fit for Growth
• Priorities and Outlook
Business Overview
The essence of our vision in 1890
“To make cleanliness commonplace, to lessen the work for women; to foster health and contribute to personal attractiveness;
that life may be more enjoyable and rewarding for the people
who use our products”.
William Hesketh Lever, 1890
3
Business Overview
Our Vitality mission today
Unilever’s mission is to add
Vitality to life.
We meet everyday needs of nutrition, hygiene and personal care.
With brands that make people look good, feel good and
get more out of life.
Unilever
Business OverviewA leading global consumer company
Unilever’s 2008 sales: $ 59 billion
Sales (in US$)*
*Based on latest reported results; average 2008 exchange rates.
Business Overview
A leading consumer products company
4
Business Overview
Scale and geographic reach
The Americas | $19bn | 32%
2008 Unilever Turnover $59bn | 100%
Western Europe | $19bn | 32%
Asia Africa CEE | $21bn | 36%
Business OverviewA leading global consumer companyBusiness Overview
Unrivalled strength in D&E markets
Unilever
Sales in D&E markets (% of total)*
*Based on latest reported results; average 2007 exchange rates.
48% of Unilever’s global sales in D&E markets
5
Personal Care$17bn (28%)
Ice Cream & Beverages
$11bn (19%)
Savoury, Dressings & Spreads
$21bn (35%)
Business Overview
Balanced category portfolio
Home Care$10bn (18%)
Business Overview
Strong leadership positions
Savoury #1
Dressings #1
Tea #1
Ice Cream #1
Spreads #1
Deodorants #1
Mass Skin #1
Laundry #2
Daily Hair Care #2
Oral Care Local Strength
Household Cleaning Local Strength
6
Business Overview
Big global brands
Top 25 brands = ¾ of Unilever’s sales
Business Overview
Local roots with global scale
7
Agenda
• Business Overview
• Financial Performance
• Growth Strategy
• Fit for Growth
• Priorities and Outlook
Financial Performance
Key financials
* Restructuring, Disposals and one-off Items
€1.35€1.79Earnings per share
+5.5%+7.4%Underlying sales growth
(3.1)%(4.8)%Exchange rates
(0.8)%(1.4)%Acquisition / Disposal
(0.07)0.36Including RDIs
+20 bps+10 bpsUnderlying margin change
(1.4)%+3.1%Including RDI*
13.1%17.7%Operating Margin
+1.4%+0.8%Change
€40.2bn€40.5bnTurnover
20072008
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Financial Performance
4th year of accelerating growth
0%
1%
2%
3%
4%
5%
6%
7%
8%
2004 2005 2006 2007 2008
Underlying sales growth
+0.4%
+3.1%
+3.8%
+5.5%
+ 7.4%
Financial Performance
Additional €1.0b invested in A&P
0
0.2
0.4
0.6
0.8
1
2005 2006 2007 2008
Cumulative A&P investment €bn
A&P increased by € 1.0 billion since 2004
+0.5
+0.8+0.9
+1.0
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Financial Performance
Sharp rise in commodity costs
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008
2008 FY commodity cost increases: € 2.7 billion
Annual Commodity cost increases €bn
+ 0.6 + 0.6
+ 0.9
+ 2.7
Financial Performance
Step up in cost savings delivery
0.0
0.5
1.0
2005 2006 2007 2008
Annual Savings € bn
Buying Local initiatives Restructuring
2008 FY cost savings delivery: € 1.1 billion
+0.7
+0.9+1.0
+1.1
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Financial Performance
2008 Drivers of operating profit *
*Excl RDIs, constant currency
0
-0.7
-0.2
0.3
0.8
1.3
1.8
2.3
2.8
Vol/Mix
Acq/Disp
Price
Othercosts
Savings programme
Commoditycosts
A&P
UnderlyingProfit
€bn
+ 6% Operating
Profit Growth
Financial Performance
Strong balance sheet and cash flow
• Strong single A rated balance sheet
• Access to funding at attractive conditions
• Healthy and consistent cash flow generation
• Attractive, sustainable and growing dividend
• Move to quarterly dividend in 2010
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Financial Performance
Strong balance sheet and cash flow
• Strong single A rated balance sheet
• Access to funding at attractive conditions
• Healthy and consistent cash flow generation
• Attractive, sustainable and growing dividend
• Move to quarterly dividend in 2010
2 new US bond issues
$750m: 5 yr at 3.65% (+170bps)
$750m: 10 yr at 4.80% (+180bps)
Agenda
• Business Overview
• Financial Performance
• Growth Strategy
• Fit for Growth
• Priorities and Outlook
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Growth Strategy
Strategic growth priorities
PersonalCare
Developing & Emerging
Markets (D&E)
Vitality
Growth Strategy: PrioritiesVitality
Formulation & processing technology
Bouillon jelly proprietary technology
Making foods healthier
Catechin rich tea helps to take care of your body shape
Rainforest Alliance certified tea
Driving sustainability
Stronger functional claims
Authentic quality
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Growth Strategy: Priorities
Vitality
Bertolli Frozen
VIDEO
Lipton Linea
VIDEO
Growth Strategy: PrioritiesPersonal Care
Stronger functional claims
Superior technology
Sensorial experiences
New consumer segments
Compelling Sensorials:
“Wake Up. Go Fresh”
Superior skin whitening & anti-ageing technology
A unique formula which makes underarm hair feel finer, softer and visibly reduced
Axe hair care range targeted at
young guys
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Growth Strategy: Priorities
Personal Care
Dove Deo
VIDEO
Axe Hair
VIDEO
Growth Strategy: PrioritiesD&E Markets
Population growth
Trading consumers up
Consumer penetration
Conversion in foods
1 billion new consumers in the next 10
years
Loose Leaf Tea
Standard teabags
Pyramid teabags
Re-closable multi-use sachets
Deo ministicks Mini cubes
Packaged food opportunity
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Growth Strategy: Priorities
D&E Markets
Surf Excel Hiccups
VIDEO
Rama South Africa
VIDEO
-2
0
2
4
6
8
10
12
14
16
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
UVG UPG
Growth Strategy: Priorities
Long-term strength in D&E
Since 1990…
• Underlying sales growth 9% pa on average
• Hard currency growth of 7% pa on average
• Volume growth 5% pa on average
• Volume and value growth in every year
*1990-2002 LATAM and Asia. From 2003 all countries excl NA, WE, Japan and Australia.
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Number of category innovation projects
0
1000
2000
3000
4000
5000
6000
2005 2006 2007 2008 2009
Growth Strategy
Fewer, bigger innovations
• From 5000+ projects to 700
• Average project size increased 10x
Growth Strategy
Faster roll-out to more markets
30 markets
40 markets
52 markets
20 markets
55markets
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Growth Strategy
Science and Technology Strengths
Spray TechnologyDeodorants
StructuredOils and Emulsions
HairTechnology
Skin Mildness and Moisturizing
Product Processinge.g. Ice Cream
Science of Tea
Growth Strategy
Leverage technology across portfolio
Genesis Project 14
Genesis Project 15
Genesis Project 16
Genesis Project 17
Con
sum
er B
enef
it F
ocus
Sci
ence
&T
echn
olog
y F
ocus
Genesis Project 2
Genesis Project 7
Genesis Project 8
Genesis 9
Genesis Project 10
Genesis Project 3
Genesis Project 4
Genesis Project 5
Genesis Project 6
Genesis Project 11
Genesis Project 12
Genesis Project 13
Genesis Project 1
Home Care Personal Care Foods
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Build Super Premium
Renovate the
premiumcore
Re-enter mass/
economy
Growth Strategy
Playing the price piano
E.g. Ice Cream
Growth Strategy
Strengthen our value brands
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Growth Strategy
Strengthen our value brands
Suave In the Motherhood Communication
VIDEO
Agenda
• Business Overview
• Financial Performance
• Growth Strategy
• Fit for Growth
• Priorities and Outlook
20
Fit for Growth
Multi-country organisations
(2005)Pre-One Unilever
Fewer touch points
Quicker decisions
Improved
performance
Country/Category
matrix
(2007)One Unilever
(2008) Multi-Country
& Multi-Category Org
Fit for Growth
One Unilever in the UK
2006 2008
3 Separate Companies
3 Separate Boards
3 Head Offices
1 Board
1 Company
1 Head Office
1620 points of contact
72 points of contact
3 Transaction systems
19 Warehouses
1 Transaction system
7 Warehouses
21
Fit for Growth
Building regional supply chains
Past Future
OpcoOpco
Opco
Country A
OpcoOpco
Opco
Country B
OpcoOpco
Opco
Country C
One UCountry a
One UCountry b
One UCountry c
Region
= source, make, plan, deliver
Fit for Growth
Radical simplification in W Europe
• Past • Future
A complex, slow moving organisation
Country led factory and distribution networks
Multiple Finance and HR systems and processes
65 Companies
90 factories>600 depots
3 legacy systems+100 processes
Simpler, cost efficient, ustomerfacing operation
A single EuropeanSupply Chain Company
Single European system and standard processes
9 MCO’s
65 factories<300 depots
1 SAP
22
Fit for Growth
Number of managers almost halved
Management headcount reduced by 45%
0
200
400
600
800
1000
1200
2005 2008
Top 3 levels of management
29From 100 units to 20-25 MCOs
Multi-country organisations
50-60Factory closures / streamlining
Actual to datePlan 2007-2010
Fit for Growth
Restructuring is well on track
70
Headcount reduction 10,00020,000
Restructuring savings €0.7bn€1.5bn
Restructuring charges €1.7bn€3.0bn
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Bertolli Olive Oil
NA Laundry
Lawry’s Seasonings
Boursin Cheese
Including:
Fit for Growth
Disposals in 2008
Disposals completed with €1.6 billon turnoverAverage 1.8x sales multiple
Fit for Growth
Acquisitions in 2008
Buavita in Indonesia
TIGI Global
Inmarko in Russia
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Agenda
• Business Overview
• Financial Performance
• Growth Strategy
• Becoming Fit for Growth
• Priorities and Outlook
Chief Executive Officer
President
Asia Africa CEEPresident
Global Categories
President
AmericasChief HR
Officer
CFO
Priorities and Outlook
Unilever’s top management team
Chairman
M. Polk H. Manwani V. Banga S. Ogg J. Lawrence
P. Polman M. Treschow
President
Western Europe
D. Baillie
Chief R&D
Officer
G. Berger
25
Priorities and Outlook
A global management team
Chief Executive Officer
President
Asia Africa CEEPresident
Global Categories
President
AmericasChief HR
Officer
CFO
Priorities and Outlook
Strengthened with external top talent
Chairman
M. Polk H. Manwani V. Banga S. Ogg J. Lawrence
P. Polman M. Treschow
President
Western Europe
D. Baillie
Chief R&D
Officer
G. Berger
26
Priorities and Outlook
Priorities for 2009
1. Reignite volume growth
2. Protect cash flow and margin
Reignite volume growth
Strengthen brands and portfolio
• 30-day ‘fix-it’ plans
• Drive innovation harder and faster
• Strengthen offerings in value segment
• Invest in D&E, such as China and Russia
27
Reignite volume growth
Improve go-to-market capabilities
• Better customer service levels
• Focus on fast-growing customers
• New Customer Innovation Centers
• Excellence in shopper marketing
Reignite volume growth
Sharpen organisation and culture
• Strengthen leadership in key roles
• Elevate profile of category leadership roles
• New six-monthly variable pay scheme
28
Priorities and Outlook
Protect cash flow and margin
• Accelerate restructuring savings
• Management salary freeze
• Reduction in travel and consultancy costs
• Buying synergies and marketing efficiencies
Outlook
• Unpredictable economic environment
• Focus on short-term priorities
1. Reignite volume growth
2. Protect cash flow and margin
• Confident in longer term value creation
29
Questions