the journey so far - unilever.com...the journey so far 12th november 2008 englewood cliffs may 2005...

The Journey So Far

12th November 2008

Englewood CliffsMay 2005

Sao PauloDecember 2005

Warsaw August 2006

LondonMarch 2007

MumbaiNovember 2007

Port SunlightNovember 2008

Agenda

Raising our growth profile

The journey to a more efficient Unilever

Managing through financial turmoil

Agenda


• Resources focused on growth priorities

• Enhanced through M&A activity

• Increased momentum growth rate

• Strong leadership positions and brands

Resources focused on growth priorities

VitalityDeveloping & Emerging Markets Personal Care

The consumer pyramid…rapidly evolving into a diamond

Have lots

Haves

Not yets

2008 2018 Change

+ 0.4

+ 0.6

- 0.4

3.2

2.2

0.9

Source: Unilever estimates

2.6

2.6

0.5

Billions of people in D&E countries

Market development opportunity

Per Capita Consumption (US $ per year )

Source : Euromonitor

Detergents

1.4 2.2 1.9

12.116.6

22.9

India China Indonesia Brazil Germany USA

Shampoo

0.31.0 1.1

5.46.7

7.5

India China Indonesia Brazil USA Germany

Ice Cream

0.2 0.9 2.8 5.0

34.6

50.9

India Indonesia China Brazil Germany USA

Skin care

0.3 3.2 0.8

10.9

26.936.6

India China Indonesia Brazil USA Germany

Tiered portfolio - India

Laundry Hair

Growth at the top and bottom - India

+30%

Growth 2008 year to date

Laundry Hair

+19%

+250%+28%

Long-term strength in D&E

Since 1990…• Underlying sales growth 9% pa on average• Volume growth 5% pa on average• Volume growth in every year

-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

Volume growth Price growth*1990-2002 LATAM and Asia. From 2003 all countries excl NA, WE, Japan and Australia.

ytd

Long-term strength in D&E

Since 1990…

• Underlying sales growth 9% pa on average

• Volume growth 5% pa on average

• Volume growth in every year

• Hard currency growth of 7% on average


VitalityDeveloping & Emerging Markets

Personal Care

Personal Care – attractive markets

• Brands communicating emotional and functional benefits

• Low private label penetration

• High margin structure

People will use more…..

…..more people will use

Personal Care – Unilever strength

• World number 1 in deodorants and mass skin care

• World number 2 in daily hair care

• 5 Billion Euro brands


VitalityDeveloping & Emerging Markets Personal Care

HEA

LTH

IER

FO

OD

S Inherent Goodness

Segment ExampleMarket growthCAGR ’02–’07

Source: Euromonitor, Unilever estimates

Health & Wellness in Foods

Positive Choice

Functional Health

Market standard

+ 5%

+ 7%

+ 10%

Goodness ofsunflower, soy, tea

Lower salt, sugar, fat

Heart Health –pro.activ

No health claim+ 3%

Agenda






Shaping the portfolio - major disposals

2007-8 disposals:• €1.5 bn turnover• average 1.8x Sales Multiple

US Seasonings

Cheese

Olive Oil

North America Laundry

2005

2006

2008

Prestige fragrances

European Frozen Foods

Sale agreed

Turnover € bn0.5

1.2

0.1

0.1

0.7

0.4

Shaping the portfolio - JV’s & Acquisitions

Acquisitions Indonesia Fruit Drinks

Russia Ice Cream

RTD TeaJV Extended

2007

2008

2007

Turnover € m

150

20

120

Agenda






Improving portfolio shape

D&ED&E

2004 2008*

36% 48%

Personal Care

26% 29%

Foods portfolio addressing H&W opportunities

Impact on market weighted growth rate +100 bps

* excluding disposed businesses

Agenda






Leading positions

Over 70% of turnover in leading category positionsTop 20 countries by turnover

Big global brands

Top 25 brands = ¾ of Unilever’s sales

Increased investment behind brands

3

4

5

2004 2005 2006 2007

€ billions

+ € 1 billion since 2004

Advertising and promotions

0%1%2%3%4%5%6%7%8%9%

Q3 2

005

Q4 2

005*

Q1 2

006

Q2 2

006

Q3 2

006

Q4 2

006

Q1 2

007

Q2 2

007

Q3 2

007

Q4 2

007

Q1 2

008

Q2 2

008

Q3 2

008

Improving organic growth

* days adjusted

Underlying sales growth

Annualised growth rate

0%

2%

4%

6%

8%

10%

12%

Most improved growth performance

Organic growth rate

Source: company reports

2008ytd

2004 2006

Peer group

ColgateDanoneKraftL’OrealNestléP&GReckitt

Agenda




The Journey

To be…..

• Simpler

• Faster

• More cost efficient

….. than ever before

Streamlined management

Management headcount reduced by 40%

0

200

400

600

800

1000

1200

2005 2007

Top 3 levels of management

A simpler organisation

• From 100 countries x 20 categories

• To 25 MCOs x 10 categories

• Fewer interfaces between categories and operations

• Single category organisation

Managing a simpler business

• Fewer brands

• Harmonised packs and formulations

• Fewer SKUs

• Simplified regional supply chain

• Fewer, bigger innovation projects

Transformation programme on track

29From 100 units to 20-25 MCOs

Multi-country organisations

Actualto date

Plan 2007-2010


29From 100 units to 20-25 MCOs

Multi-country organisations

8Closures announced17Closures completed

50-60Factory closures / streamlining

Actualto date

Plan 2007-2010

Streamlining announced 30


47%€1.4 bn€ 3 bnRestructuring charges

33%€0.5 bn€1.5 bnRestructuring Savings

35%7,00020,000Headcount reduction

% to dateActualto date

Plan 2007-2010

Delivery of 2008 savings target

Restructuring savings

Local efficiency programmes

On track to exceed target of € 1 billion

€ 800 million

Buying savings

Number of Employees

Plantations

Total excluding plantations * excluding plantations

Increasing employee productivity

0

50

100

150

200

250

2004 20070

50

100

150

200

250

300

Turnover per employee* € 000’s

+15%

500340180

270

Turnover per employee* € 000’s

*excluding plantations

Unilever:

North AmericaW. EuropeRest of world*

Total

€ 000’s

Employee productivity benchmarking

0

50

100

150

200

250

300

350

400

450

Source: company reports 2007

Peer group


50

60

70

80

90

100

Improving manufacturing efficiency

Raise the floor

Move towards benchmark

Operational efficiency - internal benchmarking

• Total Productive Maintenance• Leveraging scale - Virtual Site management• Complexity reduction

%

Improvement programmes:

Fixed asset productivity improvement

14

15

16

17

18

2004 2007

Fixed Assets as % of sales

16.6%

15.7%

Reduced by 90 bps

Fixed asset productivity - benchmarking

0

5

10

15

20

25

30

Source: company reports 2007

Fixed Assets as % of sales

Peer group


Working capital efficiency

0

1

2

3

4

5

Working Capital as % of sales

2004 2007

3.0%2.1%

Average working capital %

Reduced by 90 bps

Working capital efficiency – benchmarking

-15

-10

-5

0

5

10

Working Capital as % of sales

Source: company reports – average of mid-year and year-end 2007.

Peer group


Working capital – internal benchmarking

-20

-10

0

10

20

30

Working capital as % of sales by country

> 10%15 countries

5 -10%24 countries

0 -5 %20 countries

< 0 %23 countries

Raising productivity in marketing spend

• Leveraging global scaleBetter quality but fewer advertising films


Knorr: leveraging global scale

Active innovation projects TV productions

* Estimate

*0

50

100

150

200

250

300

2005 2006 2007 2008 *0

20

40

60

80

100

120

140

2005 2006 2007 2008


• Leveraging global scaleBetter quality but fewer advertising Films

• Improved toolsMedia budgeting

Optimising promotional sell-out (OPSO)

Marketing mix modelling

Increased share of advertising spend

Share of advertising spend relative to competitors

Savoury & Dressings

Spreads

Ice Cream

Beverages

Home Care

Personal Care

Total

2008 year to date vs a year ago

Source: Mindshare

Return on invested capital

6

8

10

12

14

Invested capital includes all goodwill, including add back of goodwill written off

%

2004 2007

+ 200 bps

10.7%

12.7%

Agenda




Challenges and opportunities of financial turmoil

• Changing consumer needs

• Financial health of:

Customers

Distributors

Suppliers

• Balance sheet optimisation

Financial Strategy

Strong single A credit rating

• Competitive cost of capital

• Maintain financial flexibility through credit crunch

• Access to commercial paper markets at attractive rates

Use of cash

• Investment within the business

• Bolt-on acquisitions

• Returns to shareholders:

• Dividends

• Share buy-backs

Increasing dividend

+ 10% p.a.Dividend per share 1997-2007

0

0.1

0.2

0.3

0.4

0.5

0.6

19971998199920002001200220032004200520062007

PLC £

Note: Growth of weighted average of PLC, NV and NVNY also +10% p.a.

Cash returns to shareholdersC

ash

to s

hare

hold

ers

(€bn

)N

et Debt (€bn)

Dividends One-off dividend Share buy back Net debt

0

0,5

1

1,5

2

2,5

3

3,5

4

2001 2002 2003 2004 2005 2006 20070

5

10

15

20

25

30

2008YTD

Total Shareholder Return

Unilever’s TSR position relative to the peer group over a rolling 3 year period

Peer group

AvonBeiersdorfCadbury CloroxCoca-ColaColgateDanoneHeinzKaoKimberley ClarkKraftLionL’OréalNestléOrklaPepsicoProcter & GambleReckitt BenckiserSara LeeShiseido

1

7

14

212004 2005 2006

Ran

king

2007

Summary

• Improved portfolio shape

• Good progress on the journey …..

• Simpler

• Faster

• More cost efficient

…. than ever before

• Strong financial management for competitive advantage

………. The journey continues !

the journey so far - unilever.com...the journey so far 12th november 2008 englewood cliffs may 2005...

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