evolution conference james allison – head of … conference james allison – head of investor...
TRANSCRIPT
Evolution Conference
James Allison – Head of Investor Relations and M&A
Javier Tena – Investor Relations DirectorEdinburgh, Wednesday 9th March 2011
Safe Harbour Statement
This announcement 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’, ‘believes’ or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward‐looking statements. p p , g , y gThese 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, including, among others, competitive pricing and activities, economic slowdown, industry consolidation, access to credit markets, recruitment levels, reputational risks, commodity prices, continued availability of raw materials, prioritisation of projects, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, consumer demands, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, the ability to complete planned restructuring activities, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. 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 USuncertainties 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 Group’s Annual Report on Form 20‐F for the year ended 31 December 2010. These forward‐looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward‐looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Unilever Objectives
1. To drive volume growth ahead of the marketsg
2. Steady and sustainable underlying operating margin
improvement
3. Strong cash flowg
Doing what we said we would do
V l G th U d l i O ti M i F C h Fl Volume Growth accelerated
Underlying Operating Margin increased
Free Cash Flow delivered
€bn
5.8%
0 1%
0.2% 0.2%
2.4
4.1 3.4
0.1% 2.3%
FY08 FY09 FY10
0.1%
FY08 FY09 FY10 FY 08 FY 09 FY 10FY08 FY09 FY10
Free Cash flow: net cash flow from operating activities – net interest - net capex
Agenda
1 2010 highlights and 2011 challenges
Unilever in D&E2
3 A new Unilever emerging
2010: Broad Based Volume Growth
emerging markets developed markets
11% 11%
10%
5%
10%9%
8%
4%
10%
4%
-1%
3%4%
-3%
1%3% 1%
4%
1%1%
3% 1% 2%
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 2009 2010 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 2009 2010
all of our categories grew volume in 2010
Bigger, Better Innovation rolled out Faster
Magnum Gold?!Dove Men + CareRexona Deo g
29 markets30+ markets30+ markets
100+ White Spaces completed in 2010
100%
Key Countries
white space
50%
b d
0%
brand presence
We continue to Invest for Growth
A&P 2010 €5.6bn (*)
+ €330m during 2010g
€370 d i 2009+ €370m during 2009
Advertising quality has improved
(*) Constant currency
Underlying Margin Increased by 20bps
40bps-30bps p10bps
40bps-30bps
14.8%
15.0%
+20bps
2009 GM % A&P % Indirects % 2010
Strong Free Cash Flow
€bn€bn€bn
1 30.2 1.7
€bn2009 2010
1.7 1.3
1.0 0.4
6.3
1.30.1
5.04.1 3.4
Oper' profit b/ depn' amort
WC Change
Capex Tax Others FCF 2009 Oper' profit b/ depn' amort
WC Change
Capex Tax Others FCF 2010
€7.5bn of Free Cash Flow over two years
2010: Double Digit Diluted Earnings per Share Growth
4% 3%
€1.467%
5%
4% 3%
5%
10%One off Items 2010:
M&A one-off items -€0.02
Other one-off items -€0.04
€1.17
Fully Diluted EPS
Growth25%
7%Disposals €0.16
EPS 2009 Operational Performance
Restructuring Currency Pension/ Fin Costs
Disposals Tax /Others
One-off Items EPS 2010
Fully Diluted Adjusted Earnings per Share
EPS 2010 €1.46 EPS 2009 €1.17
One off Items 2010:
M&A one-off items -€0.02
One off Items 2009:
M&A one-off items
Other one-off items -€0.04 Other one-off items
Disposals (Italy Frozen) €0.16 Disposals (Johnson Diversey) €0.12
EPS 2010 (adjusted) €1.36 EPS 2009 (adjusted) €1.05
2011: Challenging Year in a Tough Environment
Unilever Commodity Index
%
Unilever Commodity Index
260
300
Commodities remain volatile
Currently we expect commodity cost increases
180
220
y p y
of around 400bps of turnover vs. last year
Offset by strong savings programmes and
i i
100
140
01/04 01/05 01/06 01/07 01/08 01/09 01/10 01/11
pricing
2 Unilever in D&E
Unilever: The Emerging Market Company
100%
80%
100%
developed
60%
53%
20%
40%
emerging
0%
1946 1956 1966 1976 1986 1998 2004 2008 2009 2010
emerging
Consistent track record – 9% CAGR over the last 20 years
Most 100M+ Population Countries will be in Emerging Markets (13 out of 15 by 2020)
Russia
US
Japan
Mexico VietnamIndiaPhilippines
ChinaPakistanEgypt
Indonesia
ppBangladesh
EthiopiaNigeria
Brazil
Source: Unilever Estimates from Globegro
More Consumers, More Benefits, More Trading Up
billions of people2010 2020
0 9 2 0Have lots 0.9 2.0 More benefits
Haves 2.0 2.7 More usage
Have nots 2.9 1.9 More users
Source: Unilever estimates Globegro, updated upon LSM 2.0 baseline studies.
Market Leadership in Emerging Markets
Fabric Cleaning
Hair CareHair Care
Face Care
Ski Cl iSkin Cleansing
Deos
Tea
Savoury
Ban’deshVietnamIndia Indonesia Thailand Philipp’sChina
Ice Cream
Brazil Russia ArgentinaNumber 1
Number 2
Huge Potential
bath and shower – US$ spend per capita
17
20
Developed markets
13 14 Emerging markets
35
5
1 1 2 2 3
Vietnam Indonesia China India Turkey Mexico Argentina Australasia Brazil USA United Vietnam Indonesia China India Turkey Mexico Argentina Australasia Brazil USA United Kingdom
Source: Euromonitor
Impact of Competition in Emerging Markets
Face Indonesia
50600
$US m Share$350m
30
35
40
45
400
500
15
20
25
200
300
0
5
10
0
100
2005 2006 2007 2008 2009
Market Size Unilever Key Competitor
Source: Euromonitor
3 A new Unilever emerging
Strategy Clear and Aligned
€80bn
€44bn
€40bn
environmental impact
Faster and More Competitive: Bias for Action
• Competitive consumer value proposition • 30 day plans embedded in the business
• Innovations now reaching 30+ markets during year 1 • Fast reaction to competitive attack
Pepsodent Philippines6 weeks from sign off to on-shelf availability
A new Unilever Emerging
Unilever now Fit to CompeteUnilever now Fit to Compete
Delivering what we said we would do
Leveraging our scale
Virtuous circle starting to work
QuestionsQuestions