Unilever 2005 Annual Report Download - page 30

Report of the Directors
Unilever Annual Report and Accounts 2005 27
Operating review by region
The Americas
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 13 179 (464) 12 715 12 296 7.2% 3.4%
Operating profit 1 719 (75) 1 644 896 91.9% 83.6%
After charging:
Impairment of Slim•Fast (363) (12) (375) (791)
Provision for Brazilian sales tax ––(169)
Operating margin 13.0% 12.9% 7.3%
Restructuring, business disposals and impairment
charges included in operating margin (3.4)% (3.4)% (9.2)%
Turnover and underlying sales growth 2005
(at constant 2004 rates) vs 2004
Underlying sales growth (%) 4.1
Effect of acquisitions (%) 0.0
Effect of disposals (%) (0.7)
Turnover growth (%) 3.4
Turnover at current rates of exchange rose by 7.2%, including a
positive impact from currency movements of 3.8%. Operating
profit at current rates of exchange was 92% higher than in 2004,
including a favourable impact from currency movements of 8.3%.
The underlying performance of the business after eliminating
these exchange translation effects and the impact of disposals is
discussed below at constant exchange rates.
Underlying sales grew by 4%, all coming from volume gains,
broadly based across the region, underpinned by a successful
innovation programme.
Consumer demand in the US showed a sustained recovery. Our
sales in the US grew by 3.2%, accelerating through the year, and
we gained market share in aggregate.
In Brazil and Mexico, a strong first half was followed by relatively
weaker demand in the second half of the year. We grew in line
with our markets in Home and Personal Care, but saw some share
loss in Foods.
Growth in Personal Care across the region has been driven by
good consumer response to our initiatives, including vitality
innovation and consistent support. This has been particularly
evident in the deodorants and personal wash categories, with
strong double-digit growth for Axe, now the number one
deodorant in the US, and for the Dove and Rexona brands.
Another strong Foods performance in the US was driven by
further share gains in ice cream, continued good results from the
extension of the Country Crock and Bertolli brands into new
categories, and from Lipton ready-to-drink and speciality teas.
Slim·Fast continued to regain share, but in a much contracted
weight management market and sales were well below the
previous year.
New launches in the US included the well received Dove Cool
Moisture range and the extension of Axe into male shower gels.
In Latin America our brands have also been very successful in
connecting with younger consumers through Rexona ‘teens’ and
innovative communication for Axe.
In the US we introduced all Small & Mighty laundry detergent,
offering the convenience of the same cleaning power in a smaller
bottle. We have invested in communication of our Omo laundry
brands, under the ‘Dirt is Good’ campaign in southern Latin
America.
In Foods, we strengthened the vitality credentials of our brands in
the US with Promise heart health spread, Ragú organic and
support for the anti-oxidant properties of Lipton teas. AdeS
continued to build across Latin America with the distinctive
nutrition benefits of ‘soy with fruit’.
The operating margin at current rates of exchange was 13.0%,
5.7 percentage points higher than in 2004. Net charges for
restructuring, disposal and impairment were 3.4%, which was
5.8 percentage points lower than in the prior year. Cost savings
offset a higher level of advertising and promotions and increased
input costs. There were also gains from the sale of an office in
the US, in US healthcare plans and from currency effects on
capital reductions.