Unilever 2004 Annual Report Download - page 44

Unilever Annual Report and Accounts 2004 41
Operating review by region
Europe (continued)
2003 results compared with 2002 € million € million € million € million % %
Exchange Change at Change at
2003 at rate 2003 at 2002 at actual constant
2002 rates effects 2003 rates 2002 rates current rates 2002 rates
Group turnover 18 720 (512) 18 208 19 573 (7)% (4)%
Group operating profit 2 617 (54) 2 563 1 598 60% 64%
Turnover 18 809 (512) 18 297 19 657 (7)% (4)%
Operating profit BEIA 3 101 (69) 3 032 2 746 10% 13%
Exceptional items 46 3 49 (615)
Amortisation – goodwill and intangible assets (516) 11 (505) (511)
Operating profit 2 631 (55) 2 576 1 620 59% 62%
Operating margin 14.0% 14.1% 8.2%
Operating margin BEIA 16.5% 16.6% 14.0%
Turnover and underlying sales growth 2003
(at constant 2002 rates) vs 2002
Underlying sales growth (%) 0.6
Effect of acquisitions (%) 0.4
Effect of disposals (%) (5.3)
Turnover growth (%) (4.3)
Turnover fell by 7% at current rates of exchange, with currency
movements contributing a 3% decline. Operating profit grew by
59% and operating profit BEIA grew by 10%, with currency
movements contributing 3% declines in both cases. The
underlying performance of the business after eliminating
exchange translation effects is discussed below at constant
exchange rates.
Difficult economic conditions in a number of countries were
reflected in the consumer, retail and competitive environment in
2003 and in general market growth rates slowed significantly.
Against this background, underlying sales grew by 0.6%, with
volume ahead by 0.4%. Turnover was 4% lower than last year
through the impact of planned disposals.
There was continued strong growth in mass personal care, partly
offset by a sharp decline in prestige fragrances and the impact
of price-competitive markets in laundry. In foods, growth by
category in part reflected the exceptionally hot summer weather,
with strong gains in ready-to-drink tea and ice cream, but lower
consumption in savoury, frozen meals and cooking products.
Highlights of another good year in personal care were the launch
of Sunsilk across the region and the roll-out of Dove shampoo.
Other key innovations included the Dove Silk hand, body and
shower range, Dove exfoliating bar, new variants of Axe and the
Crystal variant of Rexona/Sure.
In laundry, good progress was made in improving the profitability
of our business through cost reduction and a strategy of focus on
priority brands and markets. This allowed us both to increase
margins and to generate the funds to respond to increased levels
of price competition which had led to the loss of one market
share point in the year, primarily to retailer own brands.
There was good growth in spreads and cooking products for our
healthy heart brands Becel/Flora. For our family brands such as
Rama and Blue Band we adopted a strategy of recovering
substantial increases in edible oil costs which some competitors
did not follow. However, overall we held market share.
Knorr Mealkits and Good For You soups were successfully
launched, though overall growth for the year was held back by
low consumption in the very hot summer months. Hellmann’s
and Bertolli both grew strongly, with the latter benefiting from
extensions into pasta sauces, dressings and toppings. Growth in
UBF Foodsolutions accelerated through the year, returning to a
good level in the second half, particularly through soups in the
UK, the Bertolli range in Italy and the launch of Knorr dairy cream
alternatives in the fourth quarter.
Tea-based beverages performed well with an excellent
contribution from Lipton ready-to-drink, including green tea and
fruit juice variants. Ice cream sales also grew strongly, helped by
the hot summer weather and innovations including Magnum 7
Sins, Magnum Moments, Magnum snacking bars and the roll-out
of the Fruit & Fresh mix of yoghurt and ice cream.
In frozen foods we reshaped around faster-growing segments
of the market and undertook restructuring with further gains in
profitability.
Operating margin BEIA improved from 14.0% to 16.5%. This
reflected the contribution from our restructuring and savings
programmes, improved mix from portfolio change and our
strategy for improving profitability in home care.