Unilever 2003 Annual Report Download - page 24

Unilever Annual Report & Accounts and Form 20-F 2003 21
2003 results compared with 2002 € million € million € million € million % %
Exchange Change at Change at
2003 at rate 2003 at 2002 at actual constant
2002 rates effects 2003 rates 2002 rates current rates 2002 rates
Group turnover 18 720 (512) 18 208 19 573 (7)% (4)%
Group operating profit 2 617 (54) 2 563 1 598 60% 64%
Turnover 18 809 (512) 18 297 19 657 (7)% (4)%
Operating profit BEIA 3 101 (69) 3 032 2 746 10% 13%
Exceptional items 46 3 49 (615)
Amortisation – goodwill and intangible assets (516) 11 (505) (511)
Operating profit 2 631 (55) 2 576 1 620 59% 62%
Operating margin 14.0% 14.1% 8.2%
Operating margin BEIA 16.5% 16.6% 14.0%
Turnover and underlying sales growth 2003
(at constant 2002 rates) vs 2002
Underlying sales growth (%) 0.6
Effect of acquisitions (%) 0.4
Effect of disposals (%) (5.3)
Turnover growth (%) (4.3)
Turnover
€ million
2003 18 297
At current exchange rates At current exchange rates
2002 19 657
2001
2003
2002
2001
20 220
3 032
2 746
2 690
Operating profit BEIA
€ million
At current exchange rates
2003
2002
2001
2 576
1 620
2 433
Operating profit
€ million
Turnover fell by 7% at current rates of exchange, with currency
movements contributing a 3% decline. Operating profit grew by
59% and operating profit BEIA grew by 10%, with currency
movements contributing 3% declines in both cases. The
underlying performance of the business after eliminating
exchange translation effects is discussed below at constant
exchange rates.
Difficult economic conditions in a number of countries have been
reflected in the consumer, retail and competitive environment in
2003 and in general market growth rates have slowed
significantly. Against this background, underlying sales grew by
0.6%, with volume ahead by 0.4%. Turnover was 4% lower than
last year through the impact of planned disposals.
There has been continued strong growth in mass personal care,
partly offset by a sharp decline in prestige fragrances and the
impact of price-competitive markets in laundry. In foods, growth
by category in part reflects the exceptionally hot summer weather,
with strong gains in ready-to-drink tea and ice cream, but lower
consumption in savoury, frozen meals and cooking products.
Highlights of another good year in personal care were the launch
of Sunsilk across the region and the roll-out of Dove shampoo.
Other key innovations included the Dove Silk hand, body and
shower range, Dove exfoliating bar, new variants of Axe and the
Crystal variant of Rexona/Sure.
In laundry, good progress has been made in improving the
profitability of our business through cost reduction and a strategy
of focus on priority brands and markets. This has allowed us both
to increase margins and to generate the funds to respond to
increased levels of price competition which had led to the loss
of one market share point in the year, primarily to retailer
own brands.
There has been good growth in spreads and cooking products for
our Healthy Heart brands Becel/Flora. For our family brands such
as Rama and Blue Band we adopted a strategy of recovering
substantial increases in edible oil costs which some competitors
have not followed. However, overall we have held market share.
We have a strong innovation programme planned for both family
and heart health brands into 2004. This includes the roll-out of
the Rama/Blue Band Finesse range of cream alternatives and the
extension of the pro•activ brand to adjacent categories, for which
we now have regulatory clearance.
Knorr Mealkits and Good For You soups were successfully
launched, though overall growth for the year was held back by
low consumption in the very hot summer months. Hellmann’s
and Bertolli both grew strongly, with the latter benefiting from
extensions into pasta sauces, dressings and toppings. Growth in
UBF Foodsolutions accelerated through the year, returning to a
good level in the second half, particularly through soups in the
UK, the Bertolli range in Italy and the launch of Knorr dairy cream
alternatives in the fourth quarter.
Tea-based beverages have performed well with an excellent
contribution from Lipton ready-to-drink, including green tea and
fruit juice variants. Ice cream sales also grew strongly, helped by
the hot summer weather and innovations including Magnum 7
Sins, Magnum Moments, Magnum snacking bars and the roll-out
of the Fruit & Fresh mix of yoghurt and ice cream.
In frozen foods we have been reshaping around faster-growing
segments of the market and have been restructuring with further
gains in profitability. Our priority going forward will be to return
the business to a consistent level of sales growth through a more
rapid transfer of successful concepts across markets, including
Knorr frozen, which is now in seven markets, and through
planned innovations in the areas of kids’ nutrition, convenience
meals and concepts based on fresh and natural ingredients such
as the recently launched range of Steam Fresh vegetables.
The regional operating margin BEIA at 16.5% was 2.5% ahead
of last year. This reflects the contribution from our restructuring
and savings programmes, improved mix from portfolio change
and our strategy for improving profitability in home care.
Operating review by region
Europe