Unilever 2006 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2006 Unilever annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 153

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153

Unilever Annual Report and Accounts 2006 15
Report of the Directors (continued)
2006 compared with 2005 (continued)
Product launches with clear functional or emotional benefits in
Home and Personal Care brands are being rolled out rapidly
across the region. A range of new Dove launches included the
moisturising self-tan Dove Summer Glow.Meanwhile in
household care, Domestos 5x continues to kill germs even after
several flushes and the cleaning power of Cif has been applied
to a series of power sprays.
The operating margin, at 12.7%, was 1.1 percentage points
lower than a year ago, with higher net costs for restructuring,
disposals and impairments, partially offset by a one-time gain of
€120 million from changes to the UK pensions plan. Before these
items, the operating margin would have been 0.6 percentage
points lower than in 2005. Margins in Foods were lower than in
2005 as we absorbed significant increases in commodity costs
which were only partly compensated by savings programmes.
2005 compared with 2004
Turnover at current rates of exchange fell by 2.0%, mainly due
to disposals, and including a positive impact from currency
movements of 0.4%. Operating profit at current rates of
exchange rose by 0.8%, 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 was to regain momentum and improve
competitiveness. The focus was on enhancing the value to
consumers of our products through keener pricing, improved
quality and moreand better innovation.
Marketing support was raised to a morecompetitive level with
additional spend deployed against our best opportunities, and the
organisation was streamlined.
We made progress during the year. Volume was slightly positive,
but investment in pricing meant that underlying sales declined by
0.4% 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 in France, Germany and 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.
In Home and Personal Care we had a disappointing year and we
have lost market share, particularly in the UK.
New product launches in 2005 included Knorr Vie mini shots,
extensions of the Becel/Flora pro•activ heart health range, soups
fortified with vitamins and low-fat soups.
Weintroduced a Rexona Sport variant in deodorants, Axe shower
gel and Sunsilk hair styling products. We 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 13.8%, was 0.4 percentage points
higher than in 2004. Increased advertising and promotions and
pricing investment together with higher input costs werepartly
offset by productivity gains. Net restructuring, disposal and
impairment costs, at 0.9% were 1.8percentage points lower
than in 2004.
Operating review by region Europe (continued)