Unilever 2003 Annual Report Download - page 26

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Unilever Annual Report & Accounts and Form 20-F 2003 23
Operating review by region
North America
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 11 596 (1 822) 9 774 12 446 (21)% (7)%
Group operating profit 1 263 (192) 1 071 1 541 (30)% (18)%
Turnover 11 710 (1 841) 9 869 12 568 (21)% (7)%
Operating profit BEIA 1 975 (315) 1 660 2 070 (20)% (5)%
Exceptional items (174) 35 (139) (3)
Amortisation – goodwill and intangible assets (503) 83 (420) (494)
Operating profit 1 298 (197) 1 101 1 573 (30)% (17)%
Operating margin 11.1% 11.2% 12.5%
Operating margin BEIA 16.9% 16.8% 16.5%
Turnover and underlying sales growth 2003
(at constant 2002 rates) vs 2002
Underlying sales growth (%) (3.1)
Effect of acquisitions (%) 0.1
Effect of disposals (%) (4.0)
Turnover growth (%) (6.8)
Turnover
€ million
2003 9 869
At current exchange rates At current exchange rates
2002 12 568
2001
2003
2002
2001
13 880
1 660
2 070
1 999
Operating profit BEIA
€ million
At current exchange rates
2003
2002
2001
1 101
1 573
1 159
Operating profit
€ million
Turnover fell by 21% at current rates of exchange, with currency
movements contributing a 14% decline. Operating profit fell by
30% and operating profit BEIA fell by 20%, with currency
movements principally the weakening of the US dollar
contributing 13% and 15% respectively. The underlying
performance of the business after eliminating exchange
translation effects is discussed below at constant exchange rates.
Underlying sales declined by 3.1%, including a positive 0.2%
from pricing. The performance of Slim•Fast and prestige
fragrances, in combination with the one-off impacts of trade
de-stocking and weak out-of-home channels in the first half of
the year, diluted underlying sales growth by 3.6%. Turnover,
including the impact of disposals, declined by 7%.
In mass personal care we improved our overall market position
through Axe deodorants, and have established the Dove brand in
daily hair care. In laundry we have further improved profitability,
notwithstanding negative pricing through bonus pack promotions
in a competitive market in which we have lost a little under one
percentage point of market share.
Our prestige fragrance business has declined in weak markets.
Our priority has been to restructure the business onto a more
robust footing. We have refocused the brand portfolio and we
are reducing costs to release funds for future investment behind
innovation in the leading brands.
Unilever Bestfoods sales grew in a competitive market and in a
year in which we successfully introduced a new ‘go to market’
approach. Particular strengths were Hellmann’s, Lipton and
Bertolli through pasta sauces and frozen foods, Becel margarine
in Canada and Lawry’s through the new Spice Blends steak sauce.
These good performances were partly offset by declines in
spreads consumption because of lower butter prices, and by
declines in Bertolli olive oil and in Ragú pasta sauces due to
changes in our approach to promotional plans and timing.
In ice cream we continue to grow well and gain market share,
notwithstanding weak out-of-home markets. Breyers and Good
Humor performed strongly in grocery channels, including the
extension of the health range and the introduction of Slim•Fast.
Our Foodsolutions business moved ahead despite weak market
conditions with a stronger performance in the second half of
the year.
Slim•Fast has been heavily affected by changing consumer tastes
and dieting choices. We have responded with the launch of a
range of new products in the second half of the year, and a
relaunch of the brand at the start of 2004. We remain confident
of the longer-term growth opportunity, based on our leadership
of this large growth market and the proven approach of Slim•Fast
to healthy weight management underpinned by clinical studies
and continued strong endorsement from the medical profession.
The regional operating margin BEIA at 16.9% was 0.4% ahead
of the prior year.