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UnileverQ2 and First Half 2007 Roadshow
Handout version
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41Frusi21Streamlined structures
42Lipton Linea22Overhead reduction
36Small & Mighty16Shaping our portfolio
23Supply chain efficiency3Consistent growth
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Amaze
Moo
Hellmann’s Light
Heart Health
Domestos Zero Limescale
Clear
Dove Pro.Age
Ponds Age Miracle
Drivers of growth
Progress on One Unilever
Aligned organisation
Our growth priorities
Our portfolio
Delivering long term objectives
Growth and margin
Accelerated restructuring
Benefits
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40Multicountry organisations
39Margin improvement
38North America Laundry
37Realising value through disposals
35Innovation
34Building on our growth agenda
33Building on existing programmes
Accelerating change
2007 outlook
30Balance sheet and cash flow
29First half EPS growth
28Commodity costs
Q2 operating margin
First half operating margin
25Growth by category
24Growth by region
Unilever Q2 2007 Results
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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 similar expressions of future performance or results, including financial objectives to 2010, and
their negatives are intended to identify such forward-looking statements. 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, including, among others, competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, 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 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
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Consistent growth
* days adjusted
Underlying sales growth
Annualised growth rate
0%
1%
2%
3%
4%
5%
6%
7%
Q1 2
005*
Q2 2
005
Q3 2
005
Q4 2
005*
Q1 2
006
Q2 2
006
Q3 2
006
Q4 2
006
Q1 2
007
Q2 2
007
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Good growth in all regions
34%
38%
28%
AmericasH1 USG +4.9%
EuropeH1 USG +2.6%
Asia/AfricaH1 USG +11.3%
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Innovation driving category growth
34%
20%
28%
18%
Savoury, Dressings and Spreads
H1 USG +3.8%
Ice Cream and Beverages
H1 USG +5.9%
Home Care H1 USG +5.9%
Personal Care H1 USG +7.9%
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Underlying operating margin improvement in first half
(1.0)%(1.0)%-Including RDIs
0.0%A&PKey drivers:
0.3%Change before these items
2.0%Savings(1.7)%Cost/price/mix
(0.7)%13.7%14.4%Operating margin
Change20072006
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Improvement sustained in Q2
(0.5)%(1.1)%(0.6)%Including RDIs
(0.1)%A&PKey drivers:
0.2%Change before these items
2.1%Savings(1.8)%Cost/price/mix
(0.3)%13.7%14.0%Operating margin
Change20072006
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Mitigating the impact of rising commodity costs
140160150
10080
0
20
40
60
80
100
120
140
160
180
2003 2004 2005 2006 H1 2007
bps
Commodity cost impact on margin
Actions taken
• Price increases• Reformulation• Hedging• Buying savings
2007 outlook ≥160 bps
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Drivers of EPS growth - First half
%
Underlying sales growth 6
Currency and disposals (5)
Operating margin pre-RDIs 2
RDIs* (6)
(3)
(1)Discontinued operations
10EPS from continuing operations
3Associates and non-current investments
1JVs
6Tax rate
9EPS
3Finance costs
(3)Operating profit
%
*restructuring, disposals and impairments
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Balance sheet and cash flow
• Net debt €8.8bn
• Share buy-back: €700m repurchased to end June
• Pension liability reduced to €1.2bn
• Cashflow from operating activities €1.7bn
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2007 outlook
• USG at upper end of 3-5% range
• Underlying improvement in operating margin
• Accelerated restructuring: €700m to €1bn
• Possible disposal gains in H2
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Accelerating change
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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
Supported by ‘normal’ restructuring to deliver:• USG in 3-5% range• 2010 operating margin > 15%
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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
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Innovation
• Increasingly global platforms• Simpler interface between categories and operations• Better technology
Applying global concepts to local markets
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Shaping our portfolio
• 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 from global leverage and are no longer essential to ‘go to market’ operations
Building leadership positions and high growth spaces
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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
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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
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Margin improvement
• Simplification - Multi-country organisations
• Further overhead savings
• Supply chain efficiency and responsiveness
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Multi-country organisations
Unilever Netherlands€1.1bn
Dedicated ManagementTeam
Unilever Belgium€500m
Dedicated ManagementTeam
Unilever Benelux€1.6bn
Single Management Team
Example - Unilever Benelux Savings c €50m
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Streamlined structures
• From c.100 countries x 20 categories
• To c.25 MCOs x 10 categories
• Fewer interfaces between categories and operations
• Less regional management infrastructure
Simplification of the country/category matrix
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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)
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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 more flexible, customer responsive
supply chain
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Benefits
• Aggregate savings c. €1.5bn p.a. by exit 2010
• Savings invested behind brands and accelerated margin improvement
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Accelerated restructuring
% s
pend
Europe
ROW
Overheads
Supply Chain
Cash
NonCash
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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
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Strategy
Delivering long term objectives
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Our 12 €1bn+ brands
World Number 1
World Number 2
Local strength
Savoury & Dressings
Spreads
Meal replacement
Tea
Ice Cream
Laundry - #1 in D&E
Household Care
Daily Hair Care - #1 in D&E
Skin
Deodorants
Oral Care
Foods Home & Personal Care
Our portfolio
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Our growth priorities
Deodorants, Skin, Hair
Savoury, Ice Cream, Tea
Vitality within Foods
D&E: Foods, Home care
Russia and China
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Disciplined execution, speed, effectiveness
Unilever ExecutiveCorporate strategyPortfolio priorities
Performance management
Regions
Go to market
Customer management
Categories
Brand and category strategies
Innovation
R&D
Functions
Functional excellence
Business support
Simplification
Aligned organisation
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Progress on One Unilever – Top 20 countries
0% 20% 40% 60% 80% 100%
Regional sharedservices
Back officeintegration
One sales force
Single head office
One top team
Completed Announced As at end 2006
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Drivers of growth
Innovation
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Ponds Age Miracle
Skin that looks and feels younger
A revolutionary range of anti-ageing products designed
specifically for the needs of Asian skin
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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
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Clear
Complete antidandruff and scalp care regime
Centrally developed, identically presented simultaneously across China, Brazil, Russia, Arabia and Turkey
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Small & Mighty in Europe
A revolutionary 3-times-moreconcentrated laundry detergent
A new breakthrough product with perceivably better cleaning, and better convenience, at the same
price per washCleans a whole wash-load with just
one small capful
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Domestos Zero Limescale
A powerful, superior performance limescale remover
Completely destroys tough, germ-filled limescale
Three times thicker than any other product on the market, it grips to
limescale even on vertical surfaces and under the water line, so it keeps on
working
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Omega 3 plusPacked with more
omega 3 than any other spread or minidrink
pro.activ (Promise activ)Spreads, milk, yoghurt and
mini-drinks clinically proven to lower cholesterol
Heart Health
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Hellmann’s Light
With unique citrus fibre technology
Delicious light mayonnaise with only 5% fat
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Moo and Milk Time
+ +
Delicious ice cream for kids with as much calcium as two glasses of milk
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Frusi
Great taste without the guilt
A unique combination of frozen yogurt, real fruit pieces and wholegrain cereals, with less than 3g of fat per pot
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Lipton Linea
A unique slimming tea twice as rich in catechins to help maintain your
silhouette
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A nutrient mix scientifically shown to improve learning and memory in school-aged children
Amaze
