Unilever 2001 Annual Report Download - page 7

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It is our pleasure to report to you on a year of substantial
progress towards the goals set in our Path to Growth
strategy announced in February 2000. Leading brands
grew by 5.3% for the year and operating margin BEIA rose
to 13.9% compared to 12.0% in 2000. We are on track to
reach our 2004 goals of 5% to 6% overall growth and an
operating margin of at least 16% of sales.
The past year has shown the great strength of our business
and demonstrated our ability to execute substantial change.
We have made excellent progress with the integration of
Bestfoods, implemented our new divisional structure and
dealt effectively with a more challenging business
environment. Our performance is a testimony to the
strength of our brands and particularly to the excellence
of our people.
Our new divisional structure of Foods and Home & Personal
Care is already accelerating the execution of our business
plans. The integration of research into the divisions has
strengthened our capability to deliver more and bigger
innovations to fuel brand growth.
There was a strong focus on increased cash generation
throughout the business. Cash from operations increased
to 7.5 billion compared with 6.7 billion in 2000. The
divestment programme generated a further 3.6 billion
in the year. Net debt was reduced by 3.3 billion.
Earnings per share BEIA grew by 12.2%. On a one-year
basis, our Total Shareholder Return (TSR) put us into the top
third of our peer group of 21 companies. However, over a
three-year period we were positioned 15th in this group.
Our target remains a sustained top third TSR ranking.
Path to Growth progress
We can report good progress on all aspects of our Path
to Growth strategy. We are focused increasingly on driving
the growth of our leading brands and dealing with other
brands in ways which will create value for shareholders.
We are finding innovative ways of pleasing the consumer
and stretching our leading brands into new categories to
create space to grow them faster. Leading brands now
account for 84% of total turnover and are expected to
account for 95% by 2004.
In 2001, exceptional restructuring costs of 1.6 billion have
been charged. Further progress has been made in reshaping
the supply chain to support our brands and increase
margins. Since the inception of Path to Growth, 59 plants
have been sold or closed and our global buying programme
has produced incremental savings of 1.2 billion.
A number of important divestments were completed in
2001, notably Elizabeth Arden, Bestfoods Baking Company,
Unipath and the brands sold in connection with the
acquisition of Bestfoods. The proposed divestment of
DiverseyLever was announced in November 2001.
Unilever people
2000 and 2001 were years when we welcomed a large
number of talented people into the business but had to
part with many others. People across the business were
engaged in reawakening the spirit of enterprise, in which
trust and transparency form the foundation of team
building. Throughout Unilever those teams were challenged
to identify key areas where we must progress to successfully
meet our targets. Remuneration systems were redesigned
to reward exceptional achievement and delivery of
shareholder value.
This was a year which made enormous demands on our
people. They responded magnificently, remaining focused
on markets and customers, and growing the business.
Moreover, we integrated the businesses acquired in 2000
and coped with organisational change and restructuring
programmes. This was an exceptional challenge to which
our colleagues responded in an outstanding manner.
Without exceptional team work, this could not have been
achieved successfully and we thank everyone for showing
a real spirit of enterprise.
Brands and regions
In Foods we have seen a marked increase in both growth
and profitability through the year. This has been broad-
based across brands and geography, with notable
performances coming from Europe and our global
ice cream business. There were excellent contributions
from the businesses acquired in 2000 and the integration
of Bestfoods has proceeded well with the synergy benefits
being delivered ahead of plan.
In Home & Personal Care there was good progress in
our mass businesses with particularly strong contributions
from skin, hair and deodorants and a robust performance
from laundry. These were partly offset by a decline in
Prestige fragrances.
Unilever Annual Report & Accounts and Form 20-F 2001
CHAIRMEN’S STATEMENT
MAINTAINING THE MOMENTUM
>4
> Leading brands grow by 5.3%
> Operating margin BEIA of 13.9% is a
new record
> Cash flow from operations increases to
7.5 billion
> Bestfoods integration progressing on target
> Two-divisional structure allows sharper
business focus
> Earnings per share BEIA grows 12.2%