Unilever 2005 Annual Report Download - page 29

26 Unilever Annual Report and Accounts 2005
2005 results compared with 2004 € million € million € million € million % %
(continuing operations) Exchange Change at Change at
2005 at rate 2005 at 2004 at actual constant
2005 rates effects 2004 rates 2004 rates current rates 2004 rates
Turnover 16 211 (56) 16 155 16 650 (2.6)% (3.0)%
Operating profit 2 304 (4) 2 300 2 303 (0.0)% (0.2)%
Operating margin 14.2% 14.2% 13.8%
Restructuring, business disposals and impairment
charges included in operating margin (0.8)% (0.8)% (2.3)%
Turnover and underlying sales growth 2005
(at constant 2004 rates) vs 2004
Underlying sales growth (%) (0.8)
Effect of acquisitions (%) 0.2
Effect of disposals (%) (2.3)
Turnover growth (%) (3.0)
Turnover at current rates of exchange fell by 2.6%, mainly due
to disposals, and including a positive impact from currency
movements of 0.4%. Operating profit at current rates of
exchange was at the same level as in 2004, after including a
favourable effect of currency movements of 0.2%. The underlying
performance of the business after eliminating these exchange
translation effects and the impact of acquisitions and disposals is
discussed below at constant exchange rates.
Our priority in Europe is to regain momentum and improve
competitiveness. The focus has been on enhancing the value to
consumers of our products through keener pricing, improved
quality and more and better innovation.
Marketing support has been raised to a more competitive level
with additional spend deployed against our best opportunities.
The organisation is being streamlined and we are building up
stronger capabilities in customer management.
We have made progress over the last year. Volume has been
slightly positive (compared with a 2% decline in 2004), but
investment in pricing meant that underlying sales declined by
0.8% in the year.
Central and Eastern Europe performed well in buoyant markets,
notably in Russia which was ahead by nearly 20%.
Western Europe was challenging, with continued weak consumer
demand. Our businesses grew in the Netherlands and Spain, but
declined by around 2% in France and Germany and by nearly 4%
in the UK.
In Foods, we have held overall market share through the course
of the year, with growth across all key categories apart from
frozen foods. On 9 February 2006 we announced that we were
putting up for sale the majority of our frozen foods business in
Europe.
In Home and Personal Care we had a disappointing year and we
have lost market share, particularly in the UK.
Overall, there was some pick-up in the fourth quarter, but we are
not yet where we want to be.
New product launches this year have included Knorr Vie mini
shots, extensions of the Becel/Flora pro•activ heart health range,
soups fortified with vitamins and low-fat soups.
We have introduced a Rexona Sport variant in deodorants, Axe
shower gel and Sunsilk hair styling products. We have further
improved our Home Care product range with launches that
address specific consumer needs, such as ‘no-need-to-pre-treat’
laundry detergents, Sun 4-in-1 dishwash and Domestos sink and
drain unblocker.
The operating margin, at 14.2%, was 0.4 percentage points
higher than last year. Increased advertising and promotions and
pricing investment together with higher input costs were partly
offset by productivity gains. Net restructuring, disposal and
impairment costs, at 0.8% were 1.5 percentage points lower than
in 2004.
Operating review by region
Europe