Unilever 2004 Annual Report Download - page 37

34 Unilever Annual Report and Accounts 2004
Operating review by category – Home and Personal Care
Financial overview
2004 results compared with 2003 € million € million € million € million % %
Exchange Change at Change at
2004 at rate 2004 at 2003 at actual constant
2003 rates effects 2004 rates 2003 rates current rates 2003 rates
Group turnover 18 271 (867) 17 404 18 368 (5)% (1)%
Group operating profit 2 270 (116) 2 154 2 766 (22)% (18)%
Turnover 18 285 (867) 17 418 18 383 (5)% (1)%
Operating profit BEIA 2 772 (135) 2 637 2 878 (8)% (4)%
Exceptional items (474) 17 (457) (86)
Amortisation – goodwill and intangible assets (24) 1 (23) (26)
Operating profit 2 274 (117) 2 157 2 766 (22)% (18)%
Operating margin 12.4% 12.4% 15.0%
Operating margin BEIA 15.2% 15.1% 15.7%
Turnover
€ million
2004 17 418
At current exchange rates At current exchange rates
2003
2002
2004
2003
2002
2 637
Operating profit BEIA
€ million
At current exchange rates
2004
2003
2002
2 157
18 383
20 824
2 878
3 127
2 766
2 884
Operating profit
€ million
Turnover fell by 5% at current rates of exchange, with currency
movements contributing a 4% decline. Operating profit fell by
22% and operating profit BEIA declined by 8% with currency
movements contributing a 4% decline in both cases. The
underlying performance of the business after eliminating these
exchange translation effects is discussed below at constant
exchange rates.
In 2004, Home and Personal Care turnover declined by 1%,
with underlying sales growth of 1.1%. Operating margin BEIA
reduced to 15.2% from 15.7% in 2003, primarily due to difficult
trading conditions.
In 2004 our Home and Personal Care business came under
pressure from the combination of a sharp slowdown in market
growth and a significant rise in the level and intensity of
competitive activity. The combination of lower prices, particularly
in the developed world, and increased material costs in the
second half of the year put pressure on margins.
In Western Europe we held market share but in contracting
categories. The influence of discounters on the retail sector
impacted price levels as the traditional chains responded with
their own value offerings. In North America market growth also
slowed and we lost some share particularly in the early part of the
year. In Asia, principally in India and Japan, competitive attack in
certain categories diluted both growth and profits.
Elsewhere, our businesses in Latin America, Africa and the Middle
East continued to make good progress. This growth is based on
globally aligned brands backed by deep local consumer
understanding, and our strong category positions have benefited
from improving economies in a number of countries. In these
territories, as in other parts of the world, our portfolio has shifted
towards the higher margin Personal Care sectors.
In these circumstances, our strategy remains focused on
developing brands with market-leading positions, which are best
placed to prosper over time, regardless of changing dynamics in
the extended supply chain.
We will continue to drive down cost through simplification and
harmonisation, building on the excellent work achieved as part
of Path to Growth. By deepening our knowledge of shopper
behaviour, we will ensure our brands continue to meet the needs
of increasingly value-driven consumers.
From the final quarter of 2004, we have boosted the investment
behind our brands to support market share recovery and drive
growth in targeted areas. This will continue into 2005, and is
necessary to preserve long-term value creation in the face of
heightened competitive pressure.
In a number of markets around the world, we finished 2004 with
improved momentum.