2nd Quarter Results 2007
Unilever PLC
02 August 2007
SECOND QUARTER AND HALF YEAR RESULTS 2007
KEY FINANCIALS
(unaudited)
Second Quarter 2007 € million Half Year 2007
---------------------------- ----------------------------
Current Current Constant Current Current Constant
rates rates rates rates rates rates
Continuing operations:
-------- ------- -------- -------- ------- --------
10 526 3 % 5 % Turnover 20 054 1 % 5 %
-------- ------- -------- -------- ------- --------
1 443 1 % 3 % Operating profit 2 745 (4)% 0 %
-------- ------- -------- -------- ------- --------
1 412 4 % 6 % Pre-tax profit 2 744 3 % 6 %
-------- ------- -------- -------- ------- --------
1 153 14 % 17 % Net profit from continuing operations 2 205 10 % 13 %
-------- ------- -------- -------- ------- --------
1 207 16 % 18 % Net profit from total operations 2 281 8 % 11 %
-------- ------- -------- -------- ------- --------
-------- ------- -------- -------- ------- --------
0.38 15 % 17 % EPS from continuing operations (Euros) 0.72 10 % 13 %
-------- ------- -------- -------- ------- --------
0.40 16 % 18 % EPS from total operations (Euros) 0.75 9 % 12 %
-------- ------- -------- -------- ------- --------
Strong first half growth and underlying improvement in margins. Plans to
accelerate change.
HIGHLIGHTS
Financial Highlights of the Half Year
• Underlying sales growth of 5.8%.
• Operating margin of 13.7%, with an underlying improvement of 0.3
percentage points (before higher charges for restructuring and lower
disposal profits).
• Earnings per share from continuing operations up 10%, including good
contributions from joint ventures and associates, reduced finance costs
and a lower tax rate.
Operational Highlights
• Broad-based sales growth across all regions and categories. A step-up
in innovation driving strong growth in priority areas of personal care,
developing and emerging markets and Vitality. Sales ahead of a systems
change in the US contribute 0.4 percentage points to first half growth.
• Increased pricing to offset rising commodity costs. Sustained contribution
from 'One Unilever' and other savings.
Outlook for the year
• Underlying sales growth now expected to be at the upper end of the 3-5%
range, together with an underlying improvement in operating margin.
Accelerating change
• Plans to step up innovation, shaping the portfolio and margin improvement.
• Planned disposals of over €2 billion of turnover including North American
laundry.
• Accelerated programme to generate savings of €1.5 billion.
GROUP CHIEF EXECUTIVE COMMENT
'Our first half performance reflects the success of the strategy initiated in
2005 and keeps us on track towards achieving our objectives. We set out this
year to sustain our growth momentum and deliver an underlying improvement in
operating margin. Despite rising commodity costs, we have started to see the
benefits of growth coming through in the bottom line.
Our growth strategy, investment in core capabilities, new operating model and
'One Unilever' programme have all been integral to our improved performance.
We are now announcing plans to build on this platform and accelerate our
performance.
Growth remains our number one priority: growth ahead of our markets, with better
margin development, and greater resilience to internal and external changes.
The steps we are taking now support this agenda by enhancing innovation, more
aggressively shaping our portfolio and driving still harder towards a more
efficient cost and asset base.
I am pleased with the progress we have made to date, and the plans announced
today reassure me of further progress to 2010 and beyond.'
Patrick Cescau, Group Chief Executive 2 August 2007
ACCELERATING CHANGE
Building on the progress made since 2005, the programme announced today includes
the following key features:
Shaping the portfolio
- Planned disposals of more than €2 billion of turnover, including North
American laundry.
- Disposals increase Unilever's growth rate by around 0.4 percentage points
and are neutral to operating margin after removal of uncovered costs.
Accelerating margin improvement
- Simplifying the organisation by grouping countries in clusters and
streamlining regional structures.
- Reducing supply chain costs and assets, while improving on-shelf
availability.
- Reduction in annual cost base by around €1.5 billion by exit 2010
(compared with the 2006 base). This includes both new plans and the
completion of 'One Unilever' and other existing initiatives.
- Additional benefits in speed of decision making and innovation roll-out.
- Restructuring costs to average around 2.5% of sales over the period
2007-2009.
2007 OUTLOOK
- Underlying sales growth at the upper end of the 3-5% range.
- Underlying improvement in operating margin.
- Higher restructuring costs. Profits on disposals depend on timing and
outcome of the disposal programme. Reported operating margin will
reflect this.
LONGER TERM TARGETS
Current progress and existing plans keep Unilever on track to achieve growth and
margin objectives:
- Underlying sales growth of 3-5% p.a.
- Operating margin in excess of 15% by 2010 after charging 50-100 bps
of ongoing restructuring.
New plans announced today are expected to:
- Strengthen the portfolio growth potential over time.
- Enable operating margin target to be exceeded.
Ungeared free cash flow (UFCF):
- Against the base of €25-30 billion (2005-2010), disposals already
made reduce UFCF by €1.2 billion.
- Planned disposals would lead to a further reduction of €0.8 billion
(proceeds of disposals are not included in UFCF).
- Additional planned restructuring reduces UFCF by around €0.5 billion
in the period, while enhancing the ongoing cash generating capacity of
the business.
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations Team
UK +44 20 7822 6805 tim.johns@unilever.com UK +44 20 7822 6830 investor.relations@unilever.com
NL +31 10 217 4844 US +1 201 894 2615 investor.relations-NewYork@unilever.com
tanno.massar@unilever.com
There will be a web cast of the results presentation available at:
www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp
UNILEVER SECOND QUARTER AND HALF YEAR RESULTS 2007
In the following commentary we report underlying sales growth (USG) at constant
exchange rates, excluding the effects of acquisitions and disposals. Turnover
includes the impact of exchange rates and acquisitions and disposals. Unilever
uses 'constant rate' and 'underlying' measures primarily for internal
performance analysis and targeting purposes. We also use the movements in
Ungeared Free Cash Flow and Return On Invested Capital to measure progress
against our longer-term value creation goals. Unilever believes that such
measures provide additional information for shareholders on underlying business
performance trends. Such measures are not defined under IFRS or US GAAP and are
not intended to be a substitute for GAAP measures of turnover, profit and cash
flow. Further information about these measures is available on our website at
www.unilever.com/ourcompany/investorcentre.
1. SUMMARY OF BUSINESS PERFORMANCE FOR THE FIRST HALF YEAR
Underlying sales grew by 5.8% in both the second quarter and the first half
year, with volumes up by 4.6% in the six months and an increasing contribution
from price.
In the first half year, Europe grew by 2.6% with the UK, France and Germany
still subdued but improving, and good growth across much of the rest of the
region. The Americas were up by 4.9%, including growth of 4.7% in the US which
was boosted by additional sales ahead of the implementation of a unified IT
system at the end of the second quarter. This added about 0.4 percentage points
to the overall Unilever growth rate in the first half. Asia Africa grew by 11%
with continued broad-based growth across countries and categories.
All our categories grew well in the first half year. The strongest performances
have been in personal care, tea and household cleaning. Savoury, ice cream and
laundry also contributed strongly.
Investment in advertising and promotions has been increased at the same rate as
sales growth and continues to be focused behind our priority categories and
regions.
Price increases and savings programmes combined with the benefit of higher
volumes to more than compensate the impact of sharply higher commodity costs,
thus driving an underlying improvement in margin.
2. FINANCIAL COMMENTARY
2.1 Turnover
The underlying sales growth of 5.8% in both the second quarter and the first
half year was partly offset by the effects of disposals and exchange rates to
leave turnover ahead by 2.6% in the second quarter and by 1.3% in the first half
year.
2.2 Operating profit
Operating profit increased by 0.6% in the second quarter. The operating margin
at 13.7% was 0.3 percentage points lower than a year ago because of a higher
level of restructuring charges and less profits on disposals. Before these
items, the operating margin was 0.2 percentage points higher in the second
quarter.
For the first half year, operating profit was 3.5% lower than last year. The
operating margin at 13.7% again included higher restructuring and less profits
on disposals. Before these the operating margin was 0.3 percentage points
higher in the first half year.
2.3 Finance costs and tax
Costs of financing net borrowings were 19% lower in both the second quarter and
half year mainly thanks to a reduced level of net debt compared with the
equivalent periods in 2006.
The credit on pensions financing improved to €33 million for the second quarter
and €67 million for the first half year reflecting an improved funding position
of our schemes and higher expected equity returns.
The tax rates of 19% in the second quarter and 20% in the first half year were
lower than last year reflecting the favourable settlement of tax audits and a
better country mix. We continue to expect a rate of around 24% for the full
year 2007 and a longer-term rate of around 26%.
2.4 Joint Ventures, associates and other income from non-current investments
Our share in net profit from joint ventures has nearly doubled to €30 million
for the second quarter and €57 million for the first half year, mainly driven by
the continuing strong growth in the partnerships between Lipton and Pepsi for
ready-to-drink tea.
In the second quarter, the combined share of net profit in associates and other
income from non-current investments returned to a more normal level of €9
million. The first half net profit of €82 million for associates and
non-current investments mainly reflected a gain in the first quarter in one of
our venture capital funds.
2.5 Net profit and earnings per share
Net profit from continuing operations grew by 14% in the second quarter and by
10% in the first half year. EPS on the same basis grew by 15% and by 10%.
Discontinued operations for last year include frozen foods (sold in the fourth
quarter of 2006) and in 2007 include the one-off recognition in the second
quarter of profit from future performance-based contributions from the sale of
UCI in 2005.
2.6 Share buy-backs
By the end of June, we had bought back shares to a value of €0.7 billion as part
of this year's planned €1.5 billion programme.
2.7 Cash flow
Net cash flow from operating activities was €0.4 billion lower, mainly due to a
higher seasonal outflow of working capital and the timing of tax payments. The
higher working capital outflow reflected a low opening position and a number of
factors including the effect of sales ahead of the systems change in the US and
increased stocks of raw and packaging materials as physical covers against
commodity cost increases.
Financing activities showed an outflow of €0.5 billion. Dividends paid were up
€0.2 billion. The share buy-back programme resulted in an increase in treasury
stock of €0.4 billion, net of shares released for share incentive schemes.
Other financing activities include compensation paid to former holders of
preference shares of €0.2 billion.
2.8 Balance sheet
The total trading working capital was at a similar level to the same time last
year. Compared with the position at the start of the year, inventories are up
€0.4 billion and trade receivables by €1.2 billion, mainly reflecting their
normal seasonal increase. Trade payables and other current liabilities include
obligations to purchase shares in the current buy-back programme.
Provisions are down by €0.3 billion due to expenditure on restructuring schemes
and compensation paid to former holders of preference shares.
Deferred tax assets decreased by €0.5 billion due to the improvement in the
funding position of the group's pension schemes.
2.9 Pensions
The funding position of the group's main pension schemes has improved since the
start of the year with higher valuations of assets and reduced liabilities due
to higher discount rates, net of slightly increased inflation assumptions.
Since the start of 2007 the changes have been incorporated in the balance sheet
each quarter.
This left the net liability at the half year at €1.2 billion. The net surplus
on funded schemes has risen from €0.3 billion to €1.9 billion, including schemes
in deficit of €0.5 billion. Unfunded pensions liabilities have reduced by €0.3
billion to €3.1 billion.
3. OPERATIONAL REVIEW FOR THE FIRST HALF YEAR
3.1 Europe
Second Quarter 2007 Half Year 2007
------------------------------------------- ------------------------------------------
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
------------------------------------------- ------------------------------------------
4 041 4 009 0.8 1.7 Turnover (€ million) 7 585 7 480 1.4 2.6
------ ------ ------ ------ -------------------- ------ ------ ------ ------
13.8 13.4 Operating Margin (%) 14.1 15.0
Includes:
(1.7) (1.6) - RDIs* (1.5) (0.4)
------ ------ ------ ------ -------------------- ------ ------ ------ ------
* Restructuring, business disposals and impairments
Growth
Underlying sales growth increased to 2.6% for the first half, entirely driven by
volume. Consumer demand is now healthier across the region and our business is
better placed to take advantage of this through the 'One Unilever' programme and
improved innovation.
We saw strong contributions from the Netherlands, Italy, Russia and Poland, as
well as good performances in a number of smaller countries. The UK, Germany and
France produced mixed but overall improved performances.
In the UK there was good growth in deodorants, household care, tea and
dressings, but some share loss in fabric conditioners and hair care and lower
sales in ice cream. This led to sales in line with last year overall.
In Germany, we have gained share in most categories and sales were up in the
first half year, particularly in ice cream and personal care. As expected, a
strong first quarter, which included buy-in ahead of list price increases, was
followed by somewhat weaker sales in the second quarter.
France grew modestly with strong sales in ice cream, savoury, deodorants and
skin care but shares were soft overall.
Innovation
Most of our innovations are aimed at meeting consumers' needs for Vitality with
products that help people feel good, look good and get more out of life. A
strong ice cream programme includes Frusi, a frozen yoghurt with wholegrain
cereals and real fruit pieces, 'Milk-time' tubs, high in calcium - following a
similar concept succesful in Asia, and Solero 'smoothies', a refreshing and
light fruit ice cream snack. Blue Band/Rama Idea!, a spread containing
important nutrients for the brain, is in most countries across the region.
Hellmann's light with citrus fibre technology offers the same taste but in an
even lighter form.
Clear anti-dandruff shampoo has been launched in Russia at the same time as
launches in Asia and Latin America. Meanwhile Dove continues to broaden its
appeal. The Dove pro-age range of skin, deodorants and shampoos is
specifically designed for the over 50's and the Dove range of 'glow' lotions
with subtle self tanners has been extended and is now in most countries. Axe
was enhanced with new innovative packaging and a new global fragrance.
'Small and Mighty' concentrated liquid laundry detergents, which led the move to
the more efficient and environmentally friendly form in the US market have been
launched in six European countries.
Profitability
The operating margin, at 14.1% for the first half year, was 0.9 percentage
points lower than a year ago, entirely due to a higher level of restructuring,
disposal and impairment costs. Before these items, the operating margin was 0.2
percentage points higher than last year. Savings programmes fully offset the
impact of higher commodity costs.
3.2 The Americas
Second Quarter 2007 Half Year 2007
------------------------------------------ ------------------------------------------
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
------------------------------------------ ------------------------------------------
3 520 3 478 1.2 6.5 Turnover (€ million) 6 751 6 896 (2.1) 4.9
------ ------ ------ ------ ------ ------ ------ ------
14.9 16.0 Operating Margin (%) 14.6 15.3
Includes:
------ ------ ------ ------
(0.7) 0.4 - RDIs* (0.7) 0.0
------ ------ ------ ------
* Restructuring, business disposals and impairments
Growth
Underlying sales grew by 4.9% in the first half year, with a strong contribution
from the US at 4.7%, modest growth in Brazil and Mexico, and excellent
performances elsewhere in the region. Most of the increase is coming from
volume, while pricing was up by 1.0%.
Market growth in the US slowed a little during the half year. Our innovation
programme has driven an increase in market share in personal care while our
shares are broadly stable across the other categories. Sales were boosted at
the end of the period by stocking up by customers ahead of the implementation of
unified IT system as part of the 'One Unilever' programme. This added about 1
percentage point to growth in the Americas in the first half year and will
reverse in the third quarter. In addition to personal care, new products in
spreads, tea and frozen meals drove good growth in those categories. In ice
cream our sales were down, but we expect the actions that we have taken to lead
to an improved performance in the second half year.
Sales in Brazil grew only modestly. There has been increased competition in
tomato products and spreads. During the second quarter we announced the
creation of a joint venture with Perdigao to develop our heart health
margarine, Becel, and the disposal of our local Brazilian margarine brands. In
laundry, volumes are growing well and market shares are strong, following
reductions in pricing as we repositioned our brands against local competitors.
In Mexico, the return to growth has been sustained in the first half year. As
expected, second quarter growth was strong and compensated for a decline in the
first quarter. This phasing was a reflection of the comparators in the previous
year.
There were strong performances in much of the rest of the region, with Canada,
Argentina, Andina and Central America doing particularly well.
Innovation
Food innovations clearly demonstrate the focus on Vitality.
Cholesterol-lowering mini-drinks, already very successful in Europe, have now
been introduced to the US as Promise Activ SuperShots. In Latin America, Knorr
has been building its health credentials with new varieties of bouillons and
improved soups. Hellmann's 'real' campaign highlights its simple ingredients,
naturally rich in Omega 3, and a cholesterol-free mayonnaise has just been
launched in the US. In ice cream, we have extended Breyers 'double churn' in
the US to fat-free, light and no sugar added versions, while innovations in
Latin America address both Vitality and low income consumer opportunities.
Innovation in personal care reflects the new more global approach. The new
global mix of Clear anti-dandruff shampoo was launched in Brazil, while the Dove
pro-age range of skin, deodorants and shampoos has been launched in the
US at the same time as in Europe. Axe has been given the same new look in the
US as elsewhere in the world and the new variant 'Vice' is now available across
the region.
We have introduced concentrated liquid detergents in Argentina and Chile
following earlier moves in North America and Europe.
Profitability
The operating margin of 14.6% was 0.7 percentage points lower than a year ago
reflecting a higher level of restructuring costs and lower profits on business
disposals. Before these items the operating margin would have been in line with
last year. Price increases, cost savings and the benefit of volume leverage
have compensated for sharp increases in commodity costs.
3.3 Asia Africa
Second Quarter 2007 Half Year 2007
----------------------------------------- -----------------------------------------
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
----------------------------------------- -----------------------------------------
2 965 2 771 7.0 10.8 Turnover (€ million) 5 718 5 417 5.6 11.3
------ ------ ------ ------ ------ ------ ------ ------
12.2 12.3 Operating Margin (%) 12.1 12.3
Includes:
------ ------ ------ ------
(0.5) (0.5) - RDIs* (0.6) 0.5
------ ------ ------ ------
* Restructuring, business disposals and impairments
Growth
The strong start to the year has been sustained, with underlying sales growth of
11.3% for the first half year. The region now represents close to 30% of our
sales, delivering just over half of Unilever's total growth. Markets remain
buoyant in most countries. Our growth is broad-based by both geography and
category and reflects a step-up in innovation, particularly in personal care.
India grew well in all categories with a significant contribution from pricing
as we take action to recover commodity cost increases. Highlights included
market share gain in laundry and good performances in tea and ice cream.
China is a particular priority for growth and sales were up by 20% in the first
half year. Tea, savoury, ice cream and personal care categories were all well
ahead.
Indonesia and the Phillipines grew strongly, while Thailand has returned to
growth after a disappointing year in 2006. Japan and Australia both grew
modestly, with both countries benefiting from the innovation plan in personal
care and with tea and ice cream also growing well in Australia.
A big increase in sales of ice cream in Turkey, broad-based growth in South
Africa, and personal care innovation in Arabia also made notable contributions
to the performance of the region.
Innovation
The innovation programme in the region reflects many of the global initiatives.
Clear anti-dandruff shampoo has been launched for the first time in China,
Arabia, Egypt, Pakistan and the Phillipines and we have added new products to
the range in Turkey.
In Japan, we have launched Axe and brought out new products in the Dove
self-foaming facial wash and Lux hair styling ranges. In China, Zonghua
toothpaste now includes a new 'Complete Care' variant.
Pond's anti-ageing face care products have been introduced in several countries,
while in Indonesia we have launched two new hair care products: Dove
anti-dandruff and Clear scalp oil control.
In Turkey, we have launched a cholesterol-lowering margarine with plant sterols
under the Becel brand as well as Amaze snacks, which contain a range of
nutrients in a formulation designed to support the mental development of
school-aged children, and follow a similar approach to the European Blue Band/
Rama Idea! initative. Meanwhile, in Asia we have extended the 'Moo' range of
ice creams containing super absorbent calcium for children's development.
The rejuvenation of Knorr seasonings with premium ingredients, already
successful in Europe, has been launched in Arabia and will be taken elsewhere in
the region.
Profitability
The operating margin of 12.1% for the half year is 0.2 percentage points lower
than last year after higher restructuring costs and lower profits in disposals.
Before these items the margin was 0.9 percentage points higher than last year.
This showed the benefit of higher volumes and savings programmes, together with
strong pricing action which helped to offset higher commodity costs.
Investment in advertising and promotions has been raised in line with sales
growth.
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' 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 on Form 20-F. 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.
CONDENSED FINANCIAL STATEMENTS
INCOME STATEMENT
(unaudited)
Second Quarter € million Half Year
-------------------------------------- -----------------------------------------
2007 2006 Increase/ 2007 2006 Increase/
(Decrease) (Decrease)
Current Constant Current Constant
rates rates rates rates
Continuing operations:
10 526 10 258 3 % 5 % Turnover 20 054 19 793 1 % 5 %
1 443 1 435 1 % 3 % Operating profit 2 745 2 845 (4)% 0 %
-----------------------------------------------------------------------------------------------------------------------
After (charging)/crediting:
(120) (100) Restructuring (241) (161)
10 36 Business disposals and impairments 45 155
-----------------------------------------------------------------------------------------------------------------------
(70) (114) Net finance costs (140) (235)
-----------------------------------------------------------------------------------------------------------------------
44 (19) Finance income 71 68
(147) (108) Finance costs (278) (324)
33 13 Pensions and similar obligations 67 21
-----------------------------------------------------------------------------------------------------------------------
30 16 Share in net profit/(loss) of joint 57 34
ventures
3 6 Share in net profit/(loss) of 51 6
associates
6 8 Other income from non-current 31 11
investments
------ ------ ------ ------
1 412 1 351 4 % 6 % Profit before taxation 2 744 2 661 3 % 6 %
(259) (344) Taxation (539) (653)
------ ------ ------ ------
1 153 1 007 14 % 17 % Net profit from continuing operations 2 205 2 008 10 % 13 %
54 37 Net profit/(loss) from discontinued 76 95
operations
------ ------ ------ ------
1 207 1 044 16 % 18 % Net profit for the period 2 281 2 103 8 % 11 %
-----------------------------------------------------------------------------------------------------------------------
Attributable to:
63 58 Minority interests 124 127
1 144 986 16 % 18 % Shareholders' equity 2 157 1 976 9 % 12 %
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Combined earnings per share
0.38 0.33 15 % 17 % Continuing operations (Euros) 0.72 0.65 10 % 13 %
0.37 0.32 13 % 15 % Continuing operations - diluted 0.70 0.63 10 % 13 %
(Euros)
0.02 0.01 Discontinued operations (Euros) 0.03 0.04
0.01 0.02 Discontinued operations - diluted 0.02 0.04
(Euros)
0.40 0.34 16 % 18 % Total operations (Euros) 0.75 0.69 9 % 12 %
0.38 0.34 14 % 16 % Total operations - diluted (Euros) 0.72 0.67 9 % 11 %
----------------------------------------------------------------------------------------------------------------------
STATEMENT OF RECOGNISED INCOME AND EXPENSE
(unaudited)
€ million Half Year
-------------------------
2007 2006
Fair value gains/(losses) on financial instruments net of tax 14 5
Actuarial gains/(losses) on pension schemes net of tax 1 221 7
Currency retranslation gains/(losses) net of tax 194 (368)
------ ------
Net income/(expense) recognised directly in equity 1 429 (356)
Net profit for the period 2 281 2 103
------ ------
Total recognised income and expense for the period 3 710 1 747
---------------------------------------------------------------------------------------------------------
Attributable to:
Minority interests 131 103
Shareholders' equity 3 579 1 644
---------------------------------------------------------------------------------------------------------
MOVEMENTS IN EQUITY
(unaudited)
€ million Half Year
2007 2006
-------------------------
Equity at 1 January 11 672 8 765
Total recognised income and expense for the period 3 710 1 747
Dividends (1 363) (1 266)
Movement in treasury stock (1 283) (14)
Share-based payment credit 64 63
Dividends paid to minority shareholders (97) (97)
Currency retranslation gains/(losses) net of tax (1) (11)
Other movements in equity 92 6
------ ------
Equity at the end of the period 12 794 9 193
BALANCE SHEET
(unaudited)
€ million As at As at As at
30 June 31 December 1 July
2007 2006 2006
-----------------------------------
Non-current assets
Goodwill and intangible assets 17 180 17 206 17 428
Property, plant and equipment 6 249 6 276 6 139
Pension asset for funded schemes in surplus 2 451 1 697 1 099
Deferred tax assets 782 1 266 1 469
Other non-current assets 1 215 1 126 1 068
------ ------ ------
Total non-current assets 27 877 27 571 27 203
Current assets
Inventories 4 166 3 796 3 893
Trade and other current receivables 5 437 4 254 4 994
Current tax assets 254 125 98
Other financial assets 292 273 345
Cash and cash equivalents 1 518 1 039 1 590
Non-current assets held for sale 38 14 488
------ ------ ------
Total current assets 11 705 9 501 11 408
Current liabilities
Financial liabilities (5 367) (4 458) (6 060)
Trade payables and other current liabilities (8 833) (7 838) (7 486)
Current tax liabilities (614) (579) (479)
Provisions (658) (1 009) (497)
Liabilities associated with non-current assets held for sale - - (232)
------ ------ ------
Total current liabilities (15 472) (13 884) (14 754)
------ ------ ------
Net current assets/(liabilities) (3 767) (4 383) (3 346)
------ ------ ------
Total assets less current liabilities 24 110 23 188 23 857
Non-current liabilities
Financial liabilities due after one year 5 233 4 377 6 242
Pensions and post-retirement healthcare benefits liabilities:
Funded schemes in deficit 517 1 379 2 305
Unfunded schemes 3 097 3 398 3 931
Provisions 899 826 783
Deferred tax liabilities 1 088 1 003 951
Other non-current liabilities 482 533 452
------ ------ ------
Total non-current liabilities 11 316 11 516 14 664
Equity
Shareholders' equity 12 245 11 230 8 788
Minority interests 549 442 405
------ ------ ------
Total equity 12 794 11 672 9 193
------ ------ ------
Total capital employed 24 110 23 188 23 857
CASH FLOW STATEMENT
(unaudited)
€ million Half Year
---------------------
2007 2006
Operating activities
Cash flow from operating activities 1 661 1 894
Income tax paid (600) (435)
------ ------
Net cash flow from operating activities 1 061 1 459
Investing activities
Interest received 62 49
Net capital expenditure (444) (440)
Acquisitions and disposals 72 186
Other investing activities 161 45
------ ------
Net cash flow from/(used in) investing activities (149) (160)
Financing activities
Dividends paid on ordinary share capital (1 412) (1 194)
Interest and preference dividends paid (225) (278)
Change in financial liabilities 1 905 49
Movement on treasury stock (444) (14)
Other financing activities (309) (72)
------ ------
Net cash flow from/(used in) financing activities (485) (1 509)
------ ------
Net increase/(decrease) in cash and cash equivalents 427 (210)
Cash and cash equivalents at the beginning of the year 710 1 265
Effect of foreign exchange rate changes 23 269
------ ------
Cash and cash equivalents at the end of period 1 160 1 324
Reconciliation of net profit to cash flow from operating activities
(unaudited)
€ million Half Year
2007 2006
-------------------
Net profit 2 281 2 103
Taxation 546 692
Share of net profit of joint ventures/associates and other income from non-current (139) (51)
investments
Net finance costs 140 240
------ ------
Operating profit (continuing and discontinued operations) 2 828 2 984
Depreciation, amortisation and impairment 464 454
Changes in working capital (1 313) (1 162)
Pensions and similar provisions less payments (104) (172)
Restructuring and other provisions less payments (93) (91)
Elimination of (profits)/losses on disposals (182) (202)
Non-cash charge for share-based compensation 69 67
Other adjustments (8) 16
------ ------
Cash flow from operating activities 1 661 1 894
ANALYSIS OF NET DEBT
(unaudited)
€ million As at As at
30 June 31 December
2007 2006
---------------------
Total financial liabilities (10 600) (8 835)
----------------------
Financial liabilities due within one year (5 367) (4 458)
Financial liabilities due after one year (5 233) (4 377)
----------------------
Cash and cash equivalents as per balance sheet 1 518 1 039
----------------------
Cash and cash equivalents as per cash flow statement 1 160 710
Add bank overdrafts deducted therein 358 329
----------------------
Financial assets 292 273
----------------------
Net debt (8 790) (7 523)
GEOGRAPHICAL ANALYSIS
(unaudited)
Continuing operations - Second Quarter
€ million Europe Americas Asia Africa Total
-----------------------------------------------
Turnover
2006 4 009 3 478 2 771 10 258
2007 4 041 3 520 2 965 10 526
Change 0.8 % 1.2 % 7.0 % 2.6 %
Impact of:
Exchange rates 0.3 % (4.7)% (3.0)% (2.3)%
Acquisitions 0.0 % 0.1 % 0.0 % 0.0 %
Disposals (1.2)% (0.4)% (0.4)% (0.7)%
Underlying sales growth 1.7 % 6.5 % 10.8 % 5.8 %
------------------------------------------------------------------------------------------------
Price (0.3)% 1.3 % 3.3 % 1.3 %
Volume 2.0 % 5.2 % 7.2 % 4.5 %
------------------------------------------------------------------------------------------------
Operating profit
2006 539 556 340 1 435
2007 557 523 363 1 443
Change current rates 3.3 % (6.0)% 6.9 % 0.6 %
Change constant rates 3.3 % (0.9)% 10.7 % 3.4 %
Operating margin
2006 13.4 % 16.0 % 12.3 % 14.0 %
2007 13.8 % 14.9 % 12.2 % 13.7 %
Includes restructuring, business disposals and
impairments
2006 (1.6)% 0.4 % (0.5)% (0.6)%
2007 (1.7)% (0.7)% (0.5)% (1.1)%
Continuing operations - Half Year
€ million Europe Americas Asia Africa Total
----------------------------------------------
Turnover
2006 7 480 6 896 5 417 19 793
2007 7 585 6 751 5 718 20 054
Change 1.4 % (2.1)% 5.6 % 1.3 %
Impact of:
Exchange rates 0.4 % (6.3)% (4.7)% (3.4)%
Acquisitions 0.1 % 0.1 % 0.1 % 0.1 %
Disposals (1.6)% (0.5)% (0.5)% (0.9)%
Underlying sales growth 2.6 % 4.9 % 11.3 % 5.8 %
------------------------------------------------------------------------------------------------
Price (0.5)% 1.0 % 3.1 % 1.1 %
Volume 3.1 % 3.8 % 7.9 % 4.6 %
------------------------------------------------------------------------------------------------
Operating profit
2006 1 121 1 056 668 2 845
2007 1 067 988 690 2 745
Change current rates (4.9)% (6.4)% 3.3 % (3.5)%
Change constant rates (5.0)% 0.1 % 9.1 % 0.2 %
Operating margin
2006 15.0 % 15.3 % 12.3 % 14.4 %
2007 14.1 % 14.6 % 12.1 % 13.7 %
Includes restructuring, business disposals and
impairments
2006 (0.4)% 0.0 % 0.5 % 0.0 %
2007 (1.5)% (0.7)% (0.6)% (1.0)%
Operating profit of discontinued operations (excluding profit/loss on disposals)
- Second Quarter
€ million Europe Americas Asia Africa Total
-----------------------------------------------
2006 51 - - 51
2007 - - - -
Operating profit of discontinued operations (excluding profit/loss on disposals)
- Half Year
€ million Europe Americas Asia Africa Total
-------------------------------------------------
2006 119 - - 119
2007 - - - -
PRODUCT AREA ANALYSIS
(unaudited)
Continuing operations - Second Quarter
€ million Savoury, Ice cream Home care Home and
dressings and Personal and Personal
and spreads beverages Foods care other Care Total
---------------------------------------------------------------------------------
Turnover
2006 3 338 2 362 5 700 2 764 1 794 4 558 10 258
2007 3 377 2 441 5 818 2 861 1 847 4 708 10 526
Change 1.2 % 3.4 % 2.1 % 3.5 % 2.9 % 3.3 % 2.6 %
Impact of:
Exchange rates (2.1)% (2.2)% (2.2)% (2.9)% (2.3)% (2.6)% (2.3)%
Acquisitions 0.1 % 0.0 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 %
Disposals (0.5)% (0.8)% (0.6)% (0.9)% (0.7)% (0.8)% (0.7)%
Underlying sales growth 3.8 % 6.6 % 4.9 % 7.5 % 6.1 % 6.9 % 5.8 %
Operating profit
2006 463 383 846 451 138 589 1 435
2007 526 403 929 383 131 514 1 443
Change current rates 13.4 % 5.1 % 9.6 % (15.0)% (4.1)% (12.5)% 0.6 %
Change constant rates 16.5 % 7.6 % 12.4 % (12.4)% 0.0 % (9.5)% 3.4 %
Operating margin
2006 13.9 % 16.3 % 14.9 % 16.2 % 7.6 % 12.8 % 14.0 %
2007 15.5 % 16.5 % 16.0 % 13.4 % 7.1 % 10.9 % 13.7 %
Continuing operations - Half Year
€ million Savoury, Ice cream Home care Home and
dressings and Personal and Personal
and spreads beverages Foods care other Care Total
----------------------------------------------------------------------------------
Turnover
2006 6 737 3 992 10 729 5 466 3 598 9 064 19 793
2007 6 752 4 055 10 807 5 610 3 637 9 247 20 054
Change 0.2 % 1.6 % 0.7 % 2.6 % 1.1 % 2.0 % 1.3 %
Impact of:
Exchange rates (2.9)% (3.2)% (3.0)% (4.0)% (3.5)% (3.8)% (3.4)%
Acquisitions 0.1 % 0.1 % 0.1 % 0.1 % 0.0 % 0.1 % 0.1 %
Disposals (0.6)% (1.1)% (0.8)% (1.0)% (1.1)% (1.1)% (0.9)%
Underlying sales growth 3.8 % 5.9 % 4.6 % 7.9 % 5.9 % 7.1 % 5.8 %
Operating profit
2006 1 037 544 1 581 950 314 1 264 2 845
2007 983 517 1 500 925 320 1 245 2 745
Change current rates (5.2)% (5.1)% (5.2)% (2.6)% 2.2 % (1.4)% (3.5)%
Change constant rates (2.2)% (1.7)% (2.0)% 1.5 % 7.4 % 2.9 % 0.2 %
Operating margin
2006 15.4 % 13.6 % 14.7 % 17.4 % 8.7 % 13.9 % 14.4 %
2007 14.6 % 12.7 % 13.9 % 16.5 % 8.8 % 13.5 % 13.7 %
NOTES
(unaudited)
Basis of preparation
The condensed interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU. The
basis of preparation is consistent with the year ended 31 December 2006 except
that:
• Finance lease creditors and funding-related derivatives have been
reclassified in the balance sheet in order to facilitate the presentation
of net debt. Comparatives for 31 December 2006 and 1 July 2006 have been
restated accordingly; and
• Line items relating to borrowings in the balance sheet have been renamed to
financial liabilities to align with the requirements of IFRS 7 'Financial
Instruments - Disclosures' which Unilever has adopted as at 1 January 2007.
The condensed interim financial statements, which comply with IAS 34, are shown
at current exchange rates, while percentage year-on-year changes are shown at
both current and constant exchange rates to facilitate comparison.
Discontinued operations
The net cash flows attributable to the discontinued operations in respect of
operating, investing and financing
activities for the first half year were €(3) million, €85million and €0 million
respectively (2006: €63 million, €(2) million and €(2) million).
Taxation
The tax rate for the half year was 20% compared with 25% for the first half of
2006. The tax rate is calculated by dividing the tax charge by pre-tax profit
excluding the contribution of joint ventures and associates. The tax charge for
the half year includes €85 million (2006: €76 million) relating to United
Kingdom taxation.
Issuances and repayments of debt and purchase of own shares
On 29 May 2007, Unilever N.V. issued Floating Rate Notes with a value of €750
million and a maturity date of 29 May 2009. On 19 June 2007, Unilever Capital
Corporation issued Floating Rate Extendible Notes with a value of US
$500 million, having an initial maturity date of 11 July 2008 and a final
maturity date of 11 June 2012.
During the quarter we continued to purchase shares under the share buy-back
programme announced in March 2007. As at the end of June, shares to the value
of €663 million had been purchased under these arrangements.
Exchange rate conventions
The income statement on page 9, the statement of recognised income and expense
and the movements in equity on page 10 and the cash flow statement on page 12
are translated at rates current in each period.
The balance sheet on page 11 and the analysis of net debt on page 12 are
translated at period-end rates of exchange.
Supplementary information in US dollars and sterling is available on our website
at: www.unilever.com/ourcompany/investorcentre.
The financial statements attached do not constitute the full financial
statements within the meaning of Section 240 of the UK Companies Act 1985. Full
accounts for Unilever for the year ended 31 December 2006 have been delivered to
the Registrar of Companies. The auditors' report on these accounts was
unqualified and did not contain a statement under Section 237(2) or Section 237
(3) of the UK Companies Act 1985.
EARNINGS PER SHARE
(unaudited)
Combined earnings per share
The earnings per share information given below, including the comparative
amounts for 2006, is expressed in terms of the nominal share values which have
applied since 22 May 2006 following the split of NV shares and the consolidation
of PLC shares which were approved at the 2006 AGMs.
The combined earnings per share calculations are based on the average number of
share units representing the combined ordinary shares of NV and PLC in issue
during the period, less the average number of shares held as treasury stock.
In calculating diluted earnings per share, a number of adjustments are made to
the number of shares, principally the following: (i) conversion into PLC
ordinary shares in the year 2038 of shares in a group company under the
arrangements for the variation of the Leverhulme Trust and (ii) the exercise of
share options by employees.
At 30 June 2007 the number of shares in issue was 2,876.6 million, down by 13.3
million since the start of the year as a consequence of the share buy-back
programme, net of the exercise of options.
Earnings per share for total operations for the first half year
2007 2006
----------------------
Combined EPS Thousands of units
----------------------
Average number of combined share units 2 887 050 2 881 632
€ million
----------------------
Net profit attributable to shareholders' equity 2 157 1 976
----------------------
Combined EPS (Euros) 0.75 0.69
----------------------
Combined EPS - Diluted Thousands of units
Adjusted average number of combined share units 2 984 504 2 966 729
----------------------
Combined EPS - diluted (Euros) 0.72 0.67
----------------------
----------------------
Earnings per share in US Dollars and Sterling
Combined EPS (Dollars) 0.99 0.84
Combined EPS - diluted (Dollars) 0.96 0.82
----------------------
----------------------
Combined EPS (Pounds) 0.50 0.47
Combined EPS - diluted (Pounds) 0.49 0.46
----------------------
THIRD QUARTER RESULTS
The results for the third quarter 2007 and the announcement of interim dividends
will be published on 1 November 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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