Unilever 2006 Annual Report Download - page 22

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Unilever Annual Report and Accounts 2006 19
Report of the Directors (continued)
Operating review by region Asia Africa (continued)
2006 compared with 2005 (continued)
The operating margin at 12.2% was 0.4 percentage points lower
than a year ago. Before the impact of restructuring, disposals and
impairments, the operating margin would have been in line with
last year. The benefits to margin of strong volume growth and
savings programmes were fully offset by higher commodity
costs and other cost inflation which could not be fully recovered
in pricing.
2005 compared with 2004
Turnover at current rates of exchange rose by 6.9%, with no net
impact from currency movements. Operating profit at current
rates of exchange was 24% higher than in 2004, after allowing
for an adverse impact from currency movements of 0.6%. The
underlying performance of the business after eliminating these
exchange translation effects and the impact of disposals is
discussed below at constant exchange rates.
We capitalised on our leading positions and buoyant consumer
demand across most of the region, growing underlying sales by
nearly 9%, in a competitive environment, and increasing market
share in key battlegrounds.
The growth was broad-based in terms of both categories and
geographies. There were notable performances in all major
developing and emerging countries, including a strong recovery in
India with market share gains, and significant contributions from
China, which was up by over 20%, and from South East Asia,
South Africa, Turkey and Arabia. Japan returned to growth.
After a weak first half, Australia improved in the second half of
the year.
Most of the increase came from volume, but price growth gained
momentum through the year, as we moved selectively to recover
increased commodity costs, especially in home care.
Growth was underpinned by a range of innovations. In skin care
in India, Lux was strengthened with new soap bars from the
global range and the introduction of limited editions. Innovations
in Pond’s included a new ‘mud’ range in China.
In haircare we launched Dove in Indonesia, a Sunsilk summer
range across South East Asia, a new variant for Lux Super Rich
in China and a strengthened Sunsilk range across several key
markets in Africa and the Middle East.
New formulations for our laundry products include improved
whiteness delivery for Surf in Indonesia and Omo for sensitive skin
in Turkey.
In tea, we substantially strengthened the Brooke Bond brand in
India, while Lipton benefited from strong regional innovations,
including Earl Grey and Green Tea variants in markets such as
Turkey and Arabia.
The operating margin was 12.6%, 1.8 percentage points higher
than in 2004. Increased investment in advertising and promotions
was partly offset by productivity gains. The remaining difference
was due to net restructuring, disposal and impairment charges
which wereinsignificant in 2005 compared with a net charge of
2.9% in 2004.