Unilever 2003 Annual Report Download - page 32

Unilever Annual Report & Accounts and Form 20-F 2003 29
Operating review by region
Latin 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 5 706 (1 334) 4 372 5 433 (20)% 5%
Group operating profit 489 (131) 358 505 (29)% (3)%
Turnover 5 715 (1 335) 4 380 5 445 (20)% 5%
Operating profit BEIA 809 (191) 618 770 (20)% 5%
Exceptional items (114) 10 (104) (58)
Amortisation – goodwill and intangible assets (207) 51 (156) (207)
Operating profit 488 (130) 358 505 (29)% (3)%
Operating margin 8.5% 8.2% 9.3%
Operating margin BEIA 14.2% 14.1% 14.1%
Turnover and underlying sales growth 2003
(at constant 2002 rates) vs 2002
Underlying sales growth (%) 8.1
Effect of acquisitions (%) 0.1
Effect of disposals (%) (3.1)
Turnover growth (%) 5.0
Turnover
€ million
2003 4 380
At current exchange rates At current exchange rates
2002 5 445
2001
2003
2002
2001
6 605
618
770
882
Operating profit BEIA
€ million
At current exchange rates
2003
2002
2001
358
505
339
Operating profit
€ million
Turnover fell by 20% at current rates of exchange, with currency
movements contributing a 25% decline. Operating profit fell by
29% and operating profit BEIA fell by 20%, with currency
movements, notably in Brazil and Mexico, contributing 26% and
25% respectively. The underlying performance of the business
after eliminating exchange translation effects is discussed below
at constant exchange rates.
Underlying sales grew by 8.1%, entirely through pricing as we
recovered earlier devaluation-led cost increases. The speed of
economic recovery is, however, uneven and Brazil in particular
remains weak although we have seen a strong improvement in
Argentina. Home & Personal Care moved back into positive
volume growth in the second half of the year, but this was offset
by continuing market declines in Foods categories, resulting in a
2.2% overall volume decline for the year. Including the impact
of disposals, turnover increased 5.0%.
The key drivers of growth have been our personal care brands:
Lux, which has been relaunched with innovations in both
product and packaging; Sunsilk, including the test launch of hair
colorants in Argentina, Mexico and Brazil and the success of the
Lisage hair-straightening variant; Rexona, with the launch of a
deodorant spray in Colombia and Venezuela; and Axe, with the
launch of new variants and extension to new geographies.
In laundry we have continued to hold strong share positions
and have delivered good growth. A series of innovations were
introduced under the Omo, Radiant and Surf brands, and fabric
conditioners in Argentina performed particularly well.
In Foods, markets continue to be competitive and consumption
remains weak, especially in Brazil. Nonetheless we have continued
to improve the base of our business. Innovations have boosted
strong growth for the AdeS soy-based drink. Arisco has grown
well in Brazil, showing the value of alternative ‘smart choice’
brands in a difficult economy. The savoury portfolio has been
strengthened through the migration of the Cica brand to Knorr
in Brazil and the introduction of Knorr to Central America. Overall
growth in Foods is impacted by our actions to reduce the tail of
non-leading brands by managing some brands for value through
a harvest strategy or through disposal.
The regional operating margin BEIA at 14.2% was 0.1% ahead of
last year with an improvement in gross margin partly reinvested in
increased advertising and promotions. We are making good
progress with savings programmes and have been progressively
recovering the impact of devaluation-led cost increases.