Unilever 2005 Annual Report Download - page 10

Report of the Directors
Unilever Annual Report and Accounts 2005 07
Group Chief Executive
(continued)
We are also increasing choice by extending our product portfolio
– ice cream value ranges, for example – and by moving into a
wider range of channels. And we are delivering innovation – new
heart health ranges and Sunsilk styling are just two examples,
which are being backed by increased marketing investment.
What are you doing to build capabilities across the
business?
This is another area we are investing in. Customer management is
a strategic priority and our team is implementing an improvement
programme market by market, with outstanding results.
An important element of this programme is combining our Foods
and HPC sales teams so that we can present a single, integrated
face to our customers and leverage our scale. The programme
developed in the USA has been rolled out in France, Germany and
the Netherlands and will be extended to other markets in 2006.
By working closely with our customers such as Carrefour, Tesco
and Wal-Mart we are increasing the value that we can gain by
doing business together.
We are also improving our marketing capabilities. For example,
we will craft more of our global brand mixes to the standards set
by the best of our brands. And we intend to get more out of the
investment in our brands whether it be in advertising or in R&D.
In 2004 you announced ‘One Unilever’ as a way of
simplifying the business and generating savings. Has it
achieved this?
Our ‘One Unilever’ programme is all about making us fit to
compete. It has achieved a great deal in simplifying our business
and leveraging our scale more effectively.
We have merged our operations in countries so that, at the end
of 2005, almost 80% of our turnover is managed through ‘One
Unilever’ organisations.
We will continue with its implementation in 2006 with our
priorities being to put in place a single management team in all
markets. Most of our top 20 markets report directly to UEx. There
will be a further reduction in the management headcount and
simplified, standardised business services up and running, with a
substantial proportion outsourced.
By the end of 2006, ‘One Unilever’ will deliver €700 million
savings and €1 billion by the end of 2007. But the biggest benefit
for us is that we now have ‘one face’ for our customers and
consumers, as well as being faster and more disciplined. In other
words we are fit to compete.
What is driving the decisions you are making relating to
the portfolio?
In 2005 we reviewed and sharpened our portfolio strategy. It is
an essential building block that gives us clarity – it identifies the
best opportunities for sustainable long-term growth, enables us
to make choices and to allocate resources according to those
choices. It then allows us to drive disciplined execution.
We had to take decisive action on parts of our portfolio where we
had reached a strategic cross-roads.
The sale of UCI (Unilever Cosmetics International) and the recent
announcement of our intention to sell the majority of our
European frozen foods business were tough decisions. We made
them because it was clear we would not be able to grow these
businesses in the long term which is fundamental to future value
creation. We felt we had better opportunities to invest in and that
these businesses would perform better in the hands of owners to
whom they were a top priority.
As we move forward we will continue to invest behind our best
growth opportunities, channelling more of our resources into
building leading positions in high growth areas.
Continuing to look forward, what are your priorities for
2006 and beyond?
Our priorities will not change. We will continue to build on the
stronger focus we now have. UEx believes that the portfolio is in
good shape; all parts of our business have an important role to
play in delivering growth, but it’s not always the same role.
Obviously I can’t disclose all our intentions in detail. But I would
like to give you some insight into our priorities for 2006.
You will not be surprised to hear that our plans include
capitalising on the high-growth potential of D&E markets such as
China, India and Russia. Or that in Personal Care, we will be
building on our leading market positions in deodorants and
personal wash. And that vitality will continue to be at the heart of
our innovation programme.
Unilever is now in better shape, with increased
competitiveness and growth. What’s your summary of 2005?
We have achieved a tremendous amount in 2005 – organisational
change, improved capabilities and restored growth. Our people
have much to make them proud.
The Unilever team has worked together to create a momentum
that will help us rise to the challenges of the year ahead. There is
still a great deal to do, but we know the categories, segments,
brands and countries that will drive growth. And we are now
rigorously deploying our funds and resources behind our best
opportunities.
We have the right structure to deliver and the processes in place
to make sure that we execute against our priorities. Our people
are clear about what they need to do.
We will build on what we achieved in 2005 and deliver the results
we have promised for 2006. This will unlock more of the unique
potential of Unilever. I passionately believe that we can now
compete to win.