1st Quarter Results
Unilever PLC
28 April 2004
Embargoed: Not for publication or broadcast before 0700hrs, Wednesday 28th April
2004
UNILEVER RESULTS
FIRST QUARTER 2004
(Unaudited, constant 2003 average exchange rates, unless stated)
Despite a disappointing sales performance in the first quarter, EPS (beia) grew
by 8%. The benefits of savings programmes and an improved product mix have
boosted operating margins and enabled a further increase in brand investment
designed to stimulate growth.
FINANCIAL HIGHLIGHTS
€ Millions
First Quarter 2004
Turnover 9,788 - 2 %
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Operating profit - beia* 1,455 - 1 %
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Pre-tax profit 931 - 8 %
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Net profit 530 - 15 %
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Net profit - beia* 851 + 7 %
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EPS NV - beia * (Euros) 0.87 + 8 %
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EPS PLC - beia * (Euro cents) 13.10 + 8 %
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* Before exceptional items and amortisation of goodwill and intangible assets
At current rates of exchange EPS (beia) was 2% higher than the previous year and
EPS was 19% lower due to a higher level of profits on disposals in the previous
year.
KEY FEATURES OF THE QUARTER
•Sales of the leading brands grew by 1.3%, with pricing flat.
•Gross margins again moved ahead strongly despite an increased level of
consumer related price promotions. This was partly offset by phasing of
overheads and increased advertising and promotional support for our brands.
•Operating margin (beia) moved ahead by 30 basis points to 14.9%.
•Net borrowing costs and the financing cost of pensions were reduced by
22% and 49% respectively. Net debt, at quarter end exchange rates, was €12.6
billion, with benefits of cash flow offset by currency movements.
•EPS (beia) grew by 8%.
CHAIRMEN'S COMMENT
Our strategy is designed to deliver robust long-term value growth. It is strong
brands that best take advantage of our category knowledge and the scale benefits
of Unilever; they have the margin structure to support a sustained programme of
innovation and competitive levels of support. However, we are not happy with the
short-term sales performance and action is being taken to address this.
In the first quarter we have seen a continuation of the tough business
environment that we saw for much of 2003 with lower than historical market
growth. Whilst there are clear signs of an improving economic outlook we are
also currently seeing an increased level of competitor activity in some key
markets. However, with the benefit of continuing Path to Growth savings, we are
taking the appropriate tactical actions while implementing our planned
innovation and brand building activities. All this is consistent with sustaining
long-term business health and the principles of value creation outlined in
'Unilever 2010'.
N W A FitzGerald A Burgmans
Chairman, Unilever PLC Chairman, Unilever N.V.
28 April 2004
FIRST QUARTER FINANCIAL RESULTS (at constant exchange rates)
Notes:
Unilever uses 'constant rate', 'underlying' and 'beia' measures primarily for
internal performance analysis and targeting purposes. Unilever believes that the
use of such measures provides additional information for shareholders on
underlying business performance trends. Such measures are not defined under UK,
Netherlands or US GAAP and are not intended to be a substitute for GAAP measures
of turnover and profit. Fuller definitions and reconciliations between such
measures and the equivalent GAAP measures are available on our website:
www.unilever.com.
Underlying sales grew by 0.4%. Within this, leading brands grew by 1.3% in
markets that have grown below their historical rate. The first quarter growth
was also influenced by one less trading day in the quarter and by lower market
shares in Slim•Fast and prestige as a result of the disappointing performance in
2003.
As part of the reshaping of our portfolio within Path to Growth we have
continued to pursue an active programme of business disposals. Including the
impact of these disposals, turnover declined by 2.2%.
Operating margin (beia) was 14.9%, an increase of 30 basis points. Gross margins
moved ahead strongly, by 110 basis points, through continuing benefits of
savings programmes and an improved mix and despite an increased level of
consumer related price promotions. This was partly offset by an increase of 20
basis points in advertising and promotions and an increase of 60 basis points in
overheads. The latter includes a different phasing of project related items this
year compared with last and the short-term under-recovery of shared costs
following disposals.
Operating profit (beia) was 1% lower than last year as the loss of contribution
from businesses sold more than offset the underlying improvement in operating
margin.
Net borrowing costs were 22% lower than last year through a lower level of net
debt and lower interest rates as we pay off older borrowings at higher fixed
rates. Pension financing costs were reduced to €22 million, from €43 million in
the first quarter of last year.
Net exceptional charges within operating profit were €67 million, including
restructuring charges of €95 million partly offset by profits on disposals of
€28 million. This compares with a positive €67 million of exceptional items in
the prior year which included profits on disposals of €135 million.
The effective tax rate was 37% and reflects the non-tax-deductibility of
Bestfoods goodwill amortisation. The beia tax rate was 29%, 0.3 percentage
points lower than last year with sustained benefits flowing from the Path to
Growth programme.
Net profit (beia) was up 7% to €851 million. Net profit was 15% lower mainly due
to the lower after tax profits on disposals.
Earnings per share (beia) rose by 8%, after absorbing over 3 percentage points
of dilution from disposals, while earnings per share were 15% lower.
When expressed at current rates of exchange, earnings per share (beia) increased
by 2% in Euros, by 4% in £ Sterling and by 19% in US$. Turnover, including the
impact of disposals and expressed at current rates of exchange, decreased by 8%
in Euros and by 6% in £ Sterling, but increased by 7% in US$.
FIRST QUARTER PERFORMANCE BY REGION (at constant exchange rates)
Note:
The following regional commentary is based on operating profit before
exceptional items and amortisation of goodwill and intangible assets. Sales
growth is stated on an underlying basis, excluding the effects of acquisitions
and disposals. Turnover includes the impact of acquisitions and disposals.
EUROPE
Continued difficult economic conditions in a number of countries were again
reflected in the consumer, retail and competitive environment with overall
market growth remaining very sluggish. Germany, France and the Netherlands have
been particularly difficult and we have lost some market share in spreads and
laundry. Against this background, underlying sales declined by 1.4%, including
0.8% from the decline in the tail of non-leading brands as we manage them for
value and with negative pricing of 0.4%. Turnover was 5% lower than last year
including the impact of planned disposals.
Our mass personal care brands gained further share with good volume growth. Key
innovations which we will be building on through the year include: 'Touch', the
new global variant of Axe and the roll-out of the Axe brand in Central and
Eastern Europe; the re-launch of Lux soap bars and bath and shower products; new
Dove firming lotion and Dove shampoo for coloured hair; and new variants of
Sunsilk.
Sales in Home and Personal Care overall were held back by an increased level of
consumer related price promotions and by the decline in prestige fragrances
through the course of last year.
In home care we have extended the successful 'fizzing' laundry product with
improved cleaning performance for powders, tablets and liquids, while the fast
drying product for fabric conditioners also performed well.
In Foods, Bertolli grew strongly, sustaining its leadership in olive oil and
successfully extending into pasta sauces, dressings and toppings. Lipton also
grew well, led by ready-to-drink tea and leaf tea in Russia.
Family spreads brands continued to be held back by competitive pricing, and
particularly the growth of discount retailers in Germany. We have taken
appropriate action and have a strong innovation programme this year in spreads
with the roll-out of the Cremefine range of dairy cream alternatives under the
family brand and launch of pro•activ milk and yoghurt line extensions.
As part of managing the frozen foods business to a more consistent growth
profile and to further improve its profitability, actions are being taken to
rationalise the product portfolio and focus on higher growth and profitable
segments, and sales are reduced as a result. The launch of Knorr frozen in a
number of countries and Slim•Fast frozen in the UK made good contributions in
the first quarter.
In dressings, there was good growth for Hellmann's in the UK and Calve in
Russia, but competitor activities in France affected growth. Knorr started
slowly in tough trading conditions in Germany and the Netherlands but improved
through the quarter including a good contribution from a new wet sauces range in
Poland.
The regional operating margin at 15.6% was 50 basis points lower than last year.
A substantial improvement in gross margin from savings programmes and a better
mix was fully re-invested in increased advertising and promotion support.
NORTH AMERICA
Underlying sales declined by 1.8% in weak markets, including a positive 0.6%
from price. Within this, Slim•Fast and prestige fragrances diluted growth by
2.1%. Turnover, including the impact of disposals, declined by 4%.
In mass personal care, Axe continues to contribute strongly, including the
addition of Axe sticks to the range at the end of last year. In hair care, sales
were down against a strong comparator last year with the launch of Dove which
has established a 5% share in shampoo; in a highly competitive market some of
our weaker hair care brands have lost share.
With a new leadership team in place in prestige fragrances we have continued to
make good progress with our restructuring programme. The first phase of this
year's more extensive innovation plan was introduced towards the end of the
quarter. While in the first quarter there is still a year on year decline, our
focus on a core portfolio of brands and more profitable channels and the tougher
comparator in the early part of the year is expected to lead to an improved
performance in the second half.
In laundry, we have stabilised market share after a loss of around 1 share point
in 2003 as we focused on the Surf/All brand, Wisk liquid and on fabric
conditioners.
Unilever Bestfoods started the year strongly with good growth from the launch of
the Carb Options range under the Wishbone, Lipton, Hellmann's and Skippy brands.
A second phase launch is under way with extensions to the range. Spreads growth
was also driven by Country Crock although market consumption remains weak.
The weight management category continues to redefine itself in response to the
consumer trend in low-carbohydrate products which now account for almost 50% of
the category. Slim•Fast launched its first five low-carbohydrate products at the
end of 2003. These already represent nearly 20% of Slim•Fast turnover and a
further 17 products are being launched. However this has not yet compensated for
the decline in share of the traditional products through the course of 2003
which is being addressed through their re-launch later in the year.
Ice cream performed well, with a further gain in market share. The Breyers,
Klondike and Ben & Jerry's brands all grew well. Particular strengths were in
grocery multipacks and the health range of products including low-carbohydrate
alternatives.
The regional operating margin, at 13.0%, was 10 basis points lower than last
year. Advertising and promotions were 150 basis points lower, reflecting the
timing of innovation in Home and Personal Care and lower expenditure in prestige
fragrances. However this was offset by the negative mix effect on gross margins
of lower sales in prestige fragrances and from higher overheads including the
short-term impact of unrecovered fixed costs following disposals.
AFRICA, MIDDLE EAST AND TURKEY
Underlying sales grew by 0.4% with positive volume growth of 1.5% against a
stretching comparator last year when sales grew by 9%. Supply disruption in both
West and East Africa and negative pricing in Turkey as we adjusted to a lower
inflation environment reduced regional growth by 4 percentage points. Turnover,
including the impact of disposals, declined 3.2%.
There was good growth in laundry in South Africa but a weaker performance in
Nigeria with a reduction in trade stocks ahead of the introduction of new
formula Omo and in South East Africa with economic difficulties across that
region. The launch of a new white variant of Domestos, together with price
repositioning of Cif boosted household cleaning in Turkey.
Growth in hair care was led by Dove and Sunsilk, while deodorants benefited from
an increased focus on Rexona. Dove face care was launched in Arabia.
Savoury, dressings and ice cream got off to a good start but spreads and cooking
oils were affected by lower priced imports.
The regional operating margin, at 12.1%, was 120 basis points ahead of last year
with a strong improvement in gross margins partly re-invested in increased
advertising and promotions.
ASIA AND PACIFIC
Underlying sales grew 1.8%, with volume growth of 3.1% but negative pricing of
1.3% in competitive markets. Turnover, including the net impact of disposals and
acquisitions, grew 1%.
In Japan, we have doubled our share in hair care over the last 4 years and this
success has produced an aggressive response through new product launches by
locally based competitors. The skin care category has also seen intense levels
of competition. This diluted overall regional growth by 1.5 percentage points.
In a market which is very sensitive to innovation we are stepping up our own
activity with launches of colorants and styling products under the mod's hair
brand to be followed by further initiatives later in the year.
India achieved good volume growth in Home and Personal Care partly offset by
negative pricing in competitive markets. Recent innovations introduced under the
Lifebuoy, Axe and Fair & Lovely brands are all doing well and Vim bar and Domex
were launched towards the end of the quarter.
Elsewhere there was good growth in Home and Personal Care in Thailand, China and
Vietnam.
In Foods there was a further step-up in the growth of leading brands,
particularly through Royco, Bango and Sariwangi in Indonesia, Brooke Bond tea in
India and through Knorr.
Overall growth was affected by our actions to reduce the tail of non-leading
brands by managing some brands for value through a harvest strategy or through
disposal.
The regional operating margin at 14.4% was 110 basis points lower than last year
with improved gross margins more than offset by an increase in advertising and
promotions and the impact of unrecovered fixed costs in overheads.
LATIN AMERICA
Underlying sales grew 10%, with a strong pick-up in volume, to 7%, and a lower
contribution from pricing than last year. After the impact of disposals,
turnover grew by 9%.
Our personal care brands grew especially well. Dove benefited from the launch of
a combing cream in Brazil and in Argentina where the exfoliating bar also made a
major contribution. Sunsilk was extended last year into colorants and a dyed
hair treatment has been launched in Mexico. Axe continues strongly through the
global 'Touch' variant and from the launch of the Axe brand last year in
Colombia and Venezuela. Lux is building further with a range of products that
appeal to all consumers no matter what their income level, with new product
forms and packaging.
In laundry the migrations of the local Campeiro brand into the Surf 'smart
shopper' position has produced excellent results in Brazil and has been followed
by similar activities in Chile and Ecuador.
In Foods, Knorr is growing well in Brazil and Mexico, and the successful low
unit price Knorr 'cubitos' have been extended from the Caribbean to North East
Brazil. Hellmann's cholesterol free mayonnaise was successfully launched in
Chile, while Slim•Fast is making good progress in Mexico following its launch
last year.
Overall growth in Foods is impacted by our actions to reduce the tail of
non-leading brands by managing some brands for value through a harvest strategy
or through disposal. Oils in Chile have declined particularly fast following the
devaluation in Argentina which has affected competitiveness.
Operating margin, at 18.6%, showed a marked step-up of 500 basis points over
last year. This mainly comes from improved gross margins reflecting the benefits
of volume growth, savings programmes, an improved mix and earlier action to
recover devaluation led cost increases in countries where currencies have since
stabilised.
CASH FLOW (at current exchange rates)
Cash flow from group operating activities in the quarter was €970 million, an
increase of €147 million over the corresponding period last year. Operating
profit (beia) at current exchange rates was €104 million lower, mainly through
the impact of currency movements. This was more than offset by lower seasonal
working capital outflows (€ 207 million) and lower cash restructuring costs (€45
million).
Capital expenditure and financial investments were €130 million higher than last
year due to earlier timing of the purchase of own shares to hedge our share
option programmes.
There was a net outflow from acquisitions and disposals of €89 million this
quarter, compared with €15 million last year. This reflects lower disposals
proceeds compared with last year, which included the sale of Frigedoc in France
and plantations in Malaysia. Both years included payments for the acquisition of
CPC/Ajinomoto.
Net debt at the quarter end was €12.6 billion, in line with the level at the end
of 2003, with the benefits of cash flow being offset by currency movements of
€0.4 billion, particularly the impact of a strengthening dollar during the
quarter.
BALANCE SHEET (at current exchange rates)
Goodwill and intangible assets increased by €119 million, with the effect of
amortisation more than offset by currency movements. Higher stocks, debtor and
creditor balances reflect seasonal movements, particularly as the ice cream
business prepares for the summer season.
Capital and reserves increased by €481 million in the quarter. Net profits added
€515 million with a further €96 million coming from movements in net pension
assets and liabilities and the credit in respect of share option costs. These
were offset by purchases of own shares to hedge share options.
EURO REPORTING
Information in sterling and US dollars is available as a supplement to this Euro
report.
SAFE HARBOUR STATEMENT: This announcement may contain 'forward-looking
statements' within the meaning of the US Private Securities Litigation Reform
Act of 1995. Words such as 'expects', 'anticipates', 'intends' and other similar
expressions of future performance or results 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. Because of the risks and uncertainties that
always exist in any operating environment or business, the Group cannot give any
assurance that the expectations expressed in these statements will prove
correct. Actual results may differ materially from those included in these
statements due to a variety of factors, 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, and political,
economic and social conditions in the geographic markets where the Group
operates. The Group undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future events
or otherwise, and you are cautioned not to place undue reliance on these
forward-looking statements. Further details of potential risks and uncertainties
affecting the Group are described in the Group's filings with the Securities and
Exchange Commission, including the Annual Report & Accounts on Form 20-F.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
Note: A description of the exchange rate conventions used is given on page 13.
€ Millions - constant rates First Quarter
----------------
2004 2003 % Incr./
(Decr.)
TURNOVER 9,788 10,004 (2)%
Less: Share of turnover of joint ventures (45) (72)
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Group turnover 9,743 9,932 (2)%
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Group operating profit 1,096 1,263 (13)%
Add: Share of operating profit of joint 10 12
ventures ------- -------
OPERATING PROFIT 1,106 1,275 (13)%
------------------------------------- ------- ------- ------
Operating profit beia * 1,455 1,465 (1)%
Exceptional items (67) 67
Amortisation of goodwill and intangible (282) (257)
assets
------------------------------------- ------- ------- ------
Share of operating profit of associates 10 (11)
Other income from fixed investments 2 3
Interest (165) (211)
Other finance income/(cost) - pensions and
similar obligations (22) (43)
------- -------
PROFIT BEFORE TAXATION 931 1,013 (8)%
Taxation (348) (320)
------- -------
PROFIT AFTER TAXATION 583 693 (16)%
Minority interests (53) (67)
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NET PROFIT 530 626 (15)%
------- -------
Net profit beia * 851 798 7%
------------------------------------- ------- ------- ------
COMBINED EARNINGS PER SHARE
(Constant rates)
- per €0.51 ordinary NV share (Euros) 0.54 0.64 (15)%
- per 1.4p ordinary PLC share (Euro cents) 8.12 9.53 (15)%
- per €0.51 ordinary NV share - beia* (Euros) 0.87 0.81 8%
- per 1.4p ordinary PLC share - beia * 13.10 12.17 8%
(Euro cents)
- per €0.51 ordinary NV share - diluted 0.53 0.62 (15)%
(Euros)
- per 1.4p ordinary PLC share - diluted 7.88 9.25 (15)%
(Euro cents)
* Before exceptional items and amortisation of goodwill and intangible assets
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
Net profit and earnings per share given below are stated at current exchange
rates i.e. the results in both years have been translated at the exchange rates
prevailing during the appropriate period.
For further details of the results at current exchange rates and impact of
exchange rate movements see notes on page 13.
€ Millions - current rates First Quarter
----------------
2004 2003 % Incr./
(Decr.)
NET PROFIT 515 637 (19)%
Net profit beia * 822 815 1%
COMBINED EARNINGS PER SHARE
(Current rates)
- per €0.51 ordinary NV share (Euros) 0.53 0.65 (19)%
- per 1.4p ordinary PLC share (Euro cents) 7.89 9.69 (19)%
- per €0.51 ordinary NV share - beia * 0.84 0.83 2%
(Euros)
- per 1.4p ordinary PLC share - beia * (Euro 12.65 12.44 2%
cents)
- per €0.51 ordinary NV share - diluted 0.51 0.63 (19)%
(Euros)
- per 1.4p ordinary PLC share - diluted (Euro 7.65 9.42 (19)%
cents) ------- ------- ------
* Before exceptional items and amortisation of goodwill and intangible assets
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
€ Millions - current rates First Quarter
----------------
2004 2003
Net profit 515 637
Pensions - actuarial gains / (losses) net of tax 40 (264)
Currency retranslation 39 112
--------- ---------
Total recognised gains since last annual accounts 594 485
--------- ---------
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
€ Millions - current rates First Quarter
---------------
2004 2003
Shareholders' equity as at 1 January 5,920 4,702
Net profit 515 637
Dividends (5) (6)
Goodwill written back on disposals - 10
Change in number of shares or certificates of shares (139) (4)
held in connection with share options
Actuarial gains / (losses) on pension schemes net of tax 40 (264)
Share option credit 56 29
Currency retranslation 14 124
-------- --------
Shareholders' equity as at the end of the period 6,401 5,228
-------- --------
SUMMARY BALANCE SHEET (unaudited)
€ Millions - current rates As at 27 As at 31 As at 29
March December March
2004 2003 2003
Restated
--------- -------- --------
Goodwill and intangible assets 17,832 17,713 20,268
Other fixed assets 6,961 6,854 7,694
Stocks 4,505 4,175 4,818
Debtors 6,456 5,881 7,249
Cash and current investments 3,577 3,345 2,930
Trade and other creditors (10,928) (10,304) (11,913)
--------- -------- --------
28,403 27,664 31,046
--------- -------- --------
Borrowings 16,144 15,900 19,211
Provisions for liabilities and
charges (excluding pensions and
similar obligations) 1,545 1,645 1,904
Net pension asset for funded
schemes in surplus (574) (490) (359)
Net pension liability for funded
schemes in deficit 1,709 1,629 2,596
Net pension liability for unfunded
schemes 2,698 2,620 1,816
Minority interests 480 440 650
Capital and reserves 6,401 5,920 5,228
--------- -------- --------
28,403 27,664 31,046
--------- -------- --------
Amounts for March 2003 have been restated following a number of
reclassifications, principally the presentation for securities held as
collateral in connection with derivative financial instruments as disclosed in
our 2003 Annual Report & Accounts and Form 20-F.
CASH FLOW STATEMENT (unaudited)
€ Millions - current rates First Quarter
---------------
2004 2003
Restated
Cash flow from group operating activities 970 823
Dividends from joint ventures 1 3
Returns on investments and servicing of finance (109) (99)
Taxation (241) (255)
Capital expenditure and financial investment (290) (160)
Acquisitions and disposals (89) (15)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID 242 297
RESOURCES AND FINANCING
Management of liquid resources (624) 225
Financing 233 (432)
-------- --------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (149) 90
-------- --------
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
€ Millions - current rates First Quarter
---------------
2004 2003
Restated
NET DEBT AT 1 JANUARY (12,555) (16,966)
-------- --------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (149) 90
Cash flow from (increase) / decrease in borrowings (89) 432
Cash flow from increase / (decrease) in liquid 624 (225)
resources -------- --------
Change in net debt resulting from cash flows 386 297
Borrowings within group companies acquired - (26)
Liquid resources within group companies sold - (3)
Non cash movements (328) (123)
Currency retranslation (70) 540
-------- --------
MOVEMENT IN NET DEBT IN THE PERIOD (12) 685
-------- --------
NET DEBT AT PERIOD END (12,567) (16,281)
-------- --------
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
€ Millions - constant rates First Quarter
----------------
2004 2003 % Incr./
(Decr.)
TURNOVER 9,788 10,004 (2)%
Europe 4,005 4,205 (5)%
North America 2,271 2,368 (4)%
Africa, Middle East and Turkey 727 750 (3)%
Asia and Pacific 1,678 1,661 1%
Latin America 1,107 1,020 9%
OPERATING PROFIT - beia * 1,455 1,465 (1)%
Europe 624 678 (8)%
North America 295 310 (5)%
Africa, Middle East and Turkey 88 82 7%
Asia and Pacific 242 257 (6)%
Latin America 206 138 49%
OPERATING MARGIN - beia * 14.9% 14.6%
Europe 15.6% 16.1%
North America 13.0% 13.1%
Africa, Middle East and Turkey 12.1% 10.9%
Asia and Pacific 14.4% 15.5%
Latin America 18.6% 13.6%
* Before exceptional items and amortisation of goodwill and intangible assets
OPERATIONAL ANALYSIS (at constant rates - unaudited)
€ Millions - constant rates First Quarter
----------------------------- -----------------
2004 2003 % Incr./
(Decr.)
TURNOVER 9,788 10,004 (2)%
Foods 5,354 5,537 (3)%
----------------------------------- ------- ------- -------
Savoury and dressings 2,025 2,000 1%
Spreads and cooking products 1,106 1,207 (8)%
Health & wellness and beverages 823 858 (4)%
Ice cream and frozen foods 1,400 1,472 (5)%
----------------------------------- ------- ------- -------
Home care 1,752 1,785 (2)%
Personal care 2,604 2,599 0%
Other operations 78 83 (5)%
----------------------------------- ------- ------- -------
OPERATING PROFIT - beia * 1,455 1,465 (1)%
Foods 767 738 4%
----------------------------------- ------- ------- -------
Savoury and dressings 354 347 2%
Spreads and cooking products 186 183 1%
Health & wellness and beverages 116 120 (3)%
Ice cream and frozen foods 111 88 27%
----------------------------------- ------- ------- -------
Home care 245 230 6%
Personal care 446 504 (11)%
Other operations (3) (7) 53%
----------------------------------- ------- ------- -------
OPERATING MARGIN - beia * 14.9% 14.6%
Foods 14.3% 13.3%
----------------------------------- ------- -------
Savoury and dressings 17.5% 17.3%
Spreads and cooking products 16.8% 15.2%
Health & wellness and beverages 14.1% 14.0%
Ice cream and frozen foods 7.9% 5.9%
----------------------------------- ------- -------
Home care 14.0% 12.9%
Personal care 17.1% 19.4%
Other operations (4.1)% (8.1)%
----------------------------------- ------- -------
* Before exceptional items and amortisation of goodwill and intangible assets
NOTES
Exchange rate conventions and impact of movements in exchange rates
The following exchange rate conventions have been applied:
In the profit and loss account information given on page 7 and the segmental
analysis on pages 11 and 12, the results for 2004 and the comparative figures
for 2003 have been translated at constant exchange rates, being the annual
average exchange rates for 2003. This reporting convention facilitates
comparisons since the impact of exchange rate fluctuations is eliminated, and is
the basis on which we measure our operational performance internally. It also
forms the basis for target setting and the annual outlook statement. For our
reporting currencies these rates were €1 = £0.69 = US $1.13.
The results and earnings per share on page 8 and the cash flow statement on page
10 are translated at rates current in each period. For our reporting currencies
these rates were €1 = £0.68 = US $1.25 for the first three months of 2004 and
€1 = £0.67 = US $1.07 for the first three months of 2003.
The lower Euro EPS and turnover at current rates of exchange reflects the
progressive strengthening of the Euro through 2003, particularly against the US
$. For illustrative purposes, if the first quarter 2004 exchange rates were to
remain in place through the remainder of the year, then growth for the year
would be around 4% lower at current rates than at constant rates.
The balance sheet figures have been translated at period-end rates of exchange.
For our reporting currencies these were €1 = £0.67 = US $1.22 at 27 March 2004,
€1 = £0.71 = US $1.26 at 31 December 2003 and €1 = £0.69 = US $1.07 at
29 March 2003.
Results at current rates of exchange
€ Millions - current rates First Quarter
----------------
2004 2003 % Incr.
/(Decr.)
Turnover 9,357 10,182 (8)%
Operating profit 1,057 1,302 (19)%
Operating profit beia * 1,392 1,496 (7)%
Share of operating profit of associates &
income from fixed investments 11 (9)
Interest (including net interest (cost)/
return on pension scheme assets and
liabilities) (171) (262)
Taxation (333) (325)
Minority interests (49) (69)
Net profit 515 637 (19)%
------- -------
Net profit beia * 822 815 1%
------------------------------------- ------- ------- ------
The impact of exchange rate movements on the three months results at current
exchange rates in Euros, £ Sterling and US $ is given below, along with the year
on year percentage change at constant rates.
First Quarter - Millions
Constant rates At current rates of exchange
% Incr. € % Incr. £ % Incr. US $ % Incr.
/(Decr.) 2004 /(Decr.) 2004 /(Decr.) 2004 /(Decr.)
Turnover (2)% 9,357 (8)% 6,382 (6)% 11,697 7%
Operating profit beia * (1)% 1,392 (7)% 949 (5)% 1,740 9%
Net profit (15)% 515 (19)% 352 (18)% 644 (6)%
--------------- -------- ------ ------- ------- ------- ------- -------
Net profit beia * 7% 822 1% 560 3% 1,027 18%
--------------- -------- ------ ------- ------- ------- ------- -------
% Change in EPS (15)% (19)% (17)% (5)%
--------------- -------- ------ ------- ------- ------- ------- -------
% Change in EPS - beia * 8% 2% 4% 19%
--------------- -------- ------ ------- ------- ------- ------- -------
* Before exceptional items and amortisation of goodwill and intangible assets
Acquisitions and Disposals
In the first quarter, we continued the disposal of tail brands, mainly home care
brands in North America. On 9 March 2004, we announced the sale of our edible
oils and white fats business in Mexico to a Mexican subsidiary of Associated
British Foods plc, for US $110 million cash. Subject to regulatory approval, the
transaction is expected to be completed in the second quarter.
Preference shares
On 24 March 2004, Unilever announced that it intends to exercise its option to
convert its €0.05* N.V. preference shares into ordinary Unilever N.V. shares
during the first quarter of 2005. The conversion will follow the terms
stipulated in the original information memorandum and in Unilever N.V.'s
Articles of Association.
The conversion will be met out of existing shares and will not involve the issue
of any new shares. The maximum number of ordinary Unilever N.V. shares involved
is 18.9 million.
The preference shares were offered to holders of ordinary Unilever N.V. shares
at the time of the special dividend payment in 1999. The decision to convert
reflects the current ordinary Unilever N.V. share price, respects the interests
of all Unilever shareholders, and is consistent with the conditions of the
original issue.
The conversion timing takes into account fiscal considerations reflecting
changes to Dutch taxation in recent years and allows for the purchase of
ordinary N.V. shares from the market to the extent that this is required for the
conversion.
Following conversion, the preference shares will retain a €0.05 residual
notional value, which Unilever intends to redeem for cash in 2005, subject to
approval at the 2005 AGM of Unilever N.V.
The normal preference dividend will accrue up to the date of conversion and
thereafter will accrue on the residual notional value until redemption of the
preference shares.
Unilever has agreed with Euronext that the listing of the preference shares will
be continued until, at the latest, the moment of redemption. The listing of the
preference shares originally ended on 31 December 2004.
* This amount is a representation in euros on the basis of Article 67c Book 2 of
the Dutch Civil Code, rounded to two decimal places, of underlying Dutch
guilders, as these have not been converted into euros in Unilever N.V.'s
Articles of Association.
Combined earnings per share
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 year, less the average number of shares held to meet options granted
under various employee share plans.
The number of combined share units is calculated from the underlying NV and PLC
shares using the exchange rate of £1 = €5.445, in accordance with the
Equalisation Agreement.
The diluted earnings per share are based on the average number of share units,
plus all shares under option, together with certain PLC shares which may be
issued in 2038 under the arrangements for the variation of the Leverhulme Trust.
The number of shares is reduced, in accordance with FRS 14, by the number of
shares that could be purchased at fair value with the expected proceeds from the
exercise of options by employees.
Earnings per share in Euro for the quarter
Constant rates Current rates
2004 2003 2004 2003
Thousands of units
Average number of
combined 966,182 973,339 966,182 973,339
share units of €0.51
Average number of
combined 6,441,217 6,488,927 6,441,217 6,488,927
share units of 1.4p
COMBINED EPS € Millions
Net profit 530 626 515 637
Less: Preference dividends (7) (8) (7) (8)
Net profit attributable to
ordinary capital 523 618 508 629
Combined EPS per €0.51
(Euros) 0.54 0.64 0.53 0.65
Combined EPS per 1.4p
(Euro cents) 8.12 9.53 7.89 9.69
COMBINED EPS - beia * € Millions
Net profit 530 626 515 637
Add back exceptional
items 54 (71) 54 (74)
net of tax
Add back amortisation of
goodwill / intangible
assets net of tax 267 243 253 252
Net profit beia * 851 798 822 815
Less: Preference (7) (8) (7) (8)
dividends
Net profit attributable to 844 790 815 807
ordinary capital - beia *
Combined EPS - beia* per
€0.51 (Euros) 0.87 0.81 0.84 0.83
Combined EPS - beia* per
1.4p (Euro cents) 13.10 12.17 12.65 12.44
COMBINED EPS - Diluted Thousands of units
Adjusted average
combined 996,324 1,002,138 996,324 1,002,138
share units of €0.51
Adjusted average
combined 6,642,158 6,680,920 6,642,158 6,680,920
share units of 1.4p
€ Millions
Net profit attributable
to ordinary capital 523 618 508 629
Combined diluted EPS per
€0.51 (Euros) 0.53 0.62 0.51 0.63
Combined diluted EPS per
1.4p (Euro cents) 7.88 9.25 7.65 9.42
* Before exceptional items and amortisation of goodwill and intangible assets
Dates
The results for the second quarter and for the first half-year 2004 will be
published on Wednesday 28 July 2004.
ENQUIRIES: UNILEVER PRESS OFFICE +44 (0) 20 7822 6010/6719
Internet: http://www.unilever.com
E-mail: press-office.london@unilever.com
28 April 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
Note: A description of the exchange rate conventions used is given on page 13.
£ Millions - constant rates First Quarter
2004 2003 % Incr./
(Decr.)
TURNOVER 6,766 6,915 (2)%
Less: Share of turnover of joint ventures (31) (50)
------- -------
Group turnover 6,735 6,865 (2)%
------- -------
Group operating profit 757 873 (13)%
Add: Share of operating profit of joint 7 8
ventures ------- -------
OPERATING PROFIT 764 881 (13)%
----------------------------------- ------- ------- ------
Operating profit beia * 1,006 1,013 (1)%
Exceptional items (47) 46
Amortisation of goodwill and intangible (195) (178)
assets
----------------------------------- ------- ------- ------
Share of operating profit of associates 7 (8)
Other income from fixed investments 1 2
Interest (114) (146)
Other finance income/(cost) - pensions and
similar (15) (29)
obligations ------- -------
PROFIT BEFORE TAXATION 643 700 (8)%
Taxation (240) (221)
------- -------
PROFIT AFTER TAXATION 403 479 (16)%
Minority interests (37) (46)
------- -------
NET PROFIT 366 433 (15)%
------- -------
Net profit beia * 588 551 7%
----------------------------------- ------- ------- ------
COMBINED EARNINGS PER SHARE
(Constant rates)
- per 1.4p ordinary PLC share (pence) 5.61 6.59 (15)%
- per 1.4p ordinary PLC share - beia * 9.05 8.41 8%
(pence)
- per 1.4p ordinary PLC share - diluted 5.44 6.40 (15)%
(pence)
----------------------------------- ------- ------- ------
* Before exceptional items and amortisation of goodwill and intangible assets
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
Net profit and earnings per share given below are stated at current exchange
rates i.e. the results in both years have been translated at the exchange rates
prevailing during the appropriate period.
For further details of the results at current exchange rates and impact of
exchange rate movements see notes on page 13.
£ Millions - current rates First Quarter
2004 2003 % Incr./
(Decr.)
NET PROFIT 352 426 (18)%
-------------------------------------- ------- ------- ------
Net profit beia * 560 545 3%
-------------------------------------- ------- ------- ------
COMBINED EARNINGS PER SHARE
(Current rates)
- per 1.4p ordinary PLC share (pence) 5.38 6.49 (17)%
- per 1.4p ordinary PLC share - beia * 8.63 8.32 4%
(pence)
- per 1.4p ordinary PLC share - diluted 5.22 6.30 (17)%
(pence) ------- ------- ------
* Before exceptional items and amortisation of goodwill and intangible assets
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
£ Millions - current rates First Quarter
----------------
2004 2003
Net profit 352 426
Pension - actuarial gains / (losses) net of tax 27 (147)
Currency retranslation (215) 251
--------- ---------
Total recognised gains since last annual accounts 164 530
--------- ---------
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
£ Millions - current rates First Quarter
---------------
2004 2003
Shareholders' equity as at 1 January 4,190 3,058
Net profit 352 426
Dividends (4) (4)
Goodwill written back on disposals - 7
Change in number of shares or certificates of shares (95) (3)
held in
connection with share options
Actuarial gains / (losses) on pension schemes net of 27 (177)
tax
Share option credit 38 20
Currency retranslation (220) 266
-------- --------
Shareholders' equity as at the end of the period 4,288 3,593
-------- --------
SUMMARY BALANCE SHEET (unaudited)
£ Millions - current rates As at 27 As at 31 As at 29
March December March
2004 2003 2003
Restated
--------- -------- --------
Goodwill and intangible
assets 11,946 12,535 13,928
Other fixed assets 4,663 4,850 5,287
Stocks 3,018 2,955 3,311
Debtors 4,325 4,162 4,981
Cash and current
investments 2,396 2,367 2,014
Trade and other
creditors (7,321) (7,292) (8,186)
--------- -------- --------
19,027 19,577 21,335
--------- -------- --------
Borrowings 10,815 11,252 13,202
Provisions for
liabilities and charges
(excluding pensions and
similar 1,035 1,164 1,309
obligations)
Net pension asset for
funded schemes in
surplus (385) (347) (247)
Net pension liability
for funded schemes in
deficit 1,145 1,153 1,784
Net pension liability
for unfunded schemes 1,807 1,854 1,248
Minority interests 322 311 446
Capital and reserves 4,288 4,190 3,593
--------- -------- --------
19,027 19,577 21,335
--------- -------- --------
Amounts for March 2003 have been restated following a number of
reclassifications, principally the presentation for securities held as
collateral in connection with derivative financial instruments as disclosed in
our 2003 Annual Report & Accounts and Form 20-F.
CASH FLOW STATEMENT (unaudited)
£ Millions - current rates First Quarter
---------------
2004 2003
Restated
Cash flow from group operating activities 661 551
Dividends from joint ventures - 2
Returns on investments and servicing of finance (75) (66)
Taxation (165) (171)
Capital expenditure and financial investment (198) (107)
Acquisitions and disposals (61) (10)
CASH INFLOW/(OUTFLOW) BEFORE MANAGEMENT OF LIQUID 162 199
RESOURCES AND FINANCING
Management of liquid resources (425) 150
Financing 159 (289)
-------- --------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (104) 60
-------- --------
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
£ Millions - current rates First Quarter
---------------
2004 2003
Restated
NET DEBT AT 1 JANUARY (8,885) (11,036)
-------- --------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (104) 60
Cash flow from (increase)/decrease in borrowings (61) 289
Cash flow from increase/(decrease) in liquid 425 (150)
resources -------- --------
Change in net debt resulting from cash flows 260 199
Borrowings within group companies acquired - (18)
Liquid resources within group companies sold - (2)
Non cash movements (223) (82)
Currency retranslation 429 (249)
-------- --------
MOVEMENT IN NET DEBT IN THE PERIOD 466 (152)
-------- --------
-------- --------
NET DEBT AT PERIOD END (8,419) (11,188)
-------- --------
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
£ Millions - constant rates First Quarter
----------------
2004 2003 % Incr./
(Decr.)
TURNOVER 6,766 6,915 (2)%
Europe 2,768 2,906 (5)%
North America 1,570 1,637 (4)%
Africa, Middle East and Turkey 502 519 (3)%
Asia and Pacific 1,160 1,148 1%
Latin America 766 705 9%
OPERATING PROFIT - beia * 1,006 1,013 (1)%
Europe 431 468 (8)%
North America 204 214 (5)%
Africa, Middle East and Turkey 61 57 7%
Asia and Pacific 167 178 (6)%
Latin America 143 96 49%
OPERATING MARGIN - beia * 14.9% 14.6%
Europe 15.6% 16.1%
North America 13.0% 13.1%
Africa, Middle East and Turkey 12.1% 10.9%
Asia and Pacific 14.4% 15.5%
Latin America 18.6% 13.6%
* Before exceptional items and amortisation of goodwill and intangible assets
OPERATIONAL ANALYSIS (at constant rates - unaudited)
£ Millions - constant rates First Quarter
-----------------
2004 2003 % Incr./
(Decr.)
TURNOVER 6,766 6,915 (2)%
Foods 3,701 3,827 (3)%
----------------------------------- ------- ------- -------
Savoury and dressings 1,400 1,382 1%
Spreads and cooking products 765 834 (8)%
Health & wellness and beverages 568 593 (4)%
Ice cream and frozen foods 968 1,018 (5)%
----------------------------------- ------- ------- -------
Home care 1,211 1,234 (2)%
Personal care 1,800 1,797 0%
Other operations 54 57 (5)%
----------------------------------- ------- ------- -------
OPERATING PROFIT - beia * 1,006 1,013 (1)%
Foods 531 510 4%
----------------------------------- ------- ------- -------
Savoury and dressings 245 240 2%
Spreads and cooking products 129 127 1%
Health & wellness and beverages 80 83 (3)%
Ice cream and frozen foods 77 60 27%
----------------------------------- ------- ------- -------
Home care 169 159 6%
Personal care 308 348 (11)%
Other operations (2) (4) 53%
----------------------------------- ------- ------- -------
OPERATING MARGIN - beia * 14.9% 14.6%
Foods 14.3% 13.3%
----------------------------------- ------- -------
Savoury and dressings 17.5% 17.3%
Spreads and cooking products 16.8% 15.2%
Health & wellness and beverages 14.1% 14.0%
Ice cream and frozen foods 7.9% 5.9%
----------------------------------- ------- -------
Home care 14.0% 12.9%
Personal care 17.1% 19.4%
Other operations (4.1)% (8.1)%
----------------------------------- ------- -------
* Before exceptional items and amortisation of goodwill and intangible assets
Earnings per share in Sterling for the quarter
Constant rates Current rates
2004 2003 2004 2003
Thousands of units
Average number of
combined 6,441,217 6,488,927 6,441,217 6,488,927
share units of 1.4p
COMBINED EPS £ Millions
Net profit 366 433 352 426
Less: Preference (5) (6) (5) (5)
dividends -------- -------- -------- -------
Net profit attributable
to 361 427 347 421
ordinary capital -------- -------- -------- -------
Combined EPS per 1.4p 5.61p 6.59p 5.38p 6.49p
-------- -------- -------- -------
COMBINED EPS - beia * £ Millions
-----------------------
Net profit 366 433 352 426
Add back exceptional
items net 37 (50) 35 (50)
of tax
Add back amortisation of
goodwill / intangible
assets 185 168 173 169
net of tax -------- -------- -------- -------
Net profit beia * 588 551 560 545
Less: Preference (5) (6) (5) (5)
dividends -------- -------- -------- -------
Net profit attributable
to 583 545 555 540
ordinary capital - beia * -------- -------- -------- -------
Combined EPS - beia * 9.05p 8.41p 8.63p 8.32p
per 1.4p -------- -------- -------- -------
COMBINED EPS - Diluted Thousands of units
------------------------
Adjusted average
combined 6,642,158 6,680,920 6,642,158 6,680,920
share units of 1.4p
£ Millions
Net profit attributable
to 361 427 347 421
ordinary capital -------- -------- -------- -------
Combined diluted EPS per 5.44p 6.40p 5.22p 6.30p
1.4p -------- -------- -------- -------
* Before exceptional items and amortisation of goodwill and intangible assets
This information is provided by RNS
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