Unilever 2006 Annual Report Download - page 20

Unilever Annual Report and Accounts 2006 17
Report of the Directors (continued)
Operating review by region The Americas (continued)
2006 compared with 2005 (continued)
The operating margin, at 15.8%, was 2.8 percentage points
higher than a year ago. There were lower costs for restructuring,
disposals and impairments, and a one-time benefit in 2006 of
€146 million from changes to US healthcare plans. In 2005 there
was a gain on the sale of an office. Before these items the
operating margin would have been 0.3 percentage points lower
than last year. Innovation-driven marketing mix, pricing and
productivity offset high commodity costs. Advertising and
promotions were increased to support major brand launches.
2005 compared with 2004
Turnover at current rates of exchange rose by 7.2%, including a
positive impact from currency movements of 3.6%. Operating
profit at current rates of exchange was 92% higher than in 2004,
including a favourable impact from currency movements of 8.3%.
The underlying performance of the business after eliminating
these exchange translation effects and the impact of disposals
is discussed below at constant exchange rates.
Underlying sales grew by 4%, all coming from volume gains,
broadly based across the region, underpinned by a successful
innovation programme.
Consumer demand in the US showed a sustained recovery. Our
sales in the US grew by 3.2%, accelerating through the year, and
we gained market share in aggregate.
In Brazil and Mexico, a strong first half was followed by relatively
weaker demand in the second half of the year. We grew in line
with our markets in Home and Personal Care, but saw some share
loss in Foods.
Growth in Personal Careacross the region was driven by good
consumer response to our initiatives, including Vitality innovation
and consistent support. This was particularly evident in the
deodorants and personal wash categories, with strong double-
digit growth for Axe,now the number one deodorant in the US,
and for the Dove and Rexona brands.
Another strong Foods performance in the US was driven by
further share gains in ice cream, continued good results from the
extension of the Country Crock and Bertolli brands into new
categories, and from Lipton ready-to-drink and speciality teas.
Slim•Fast continued to regain share, but in a much contracted
weight management market and sales were well below the
previous year.
New launches in the US included the well received Dove Cool
Moisture range and the extension of Axe into male shower
gels. In Latin America our brands were also very successful in
connecting with younger consumers through Rexona ‘teens’
and innovative communication for Axe.
In the US we introduced all Small & Mighty laundry detergent,
offering the convenience of the same cleaning power in a smaller
bottle. We invested in communication of our Omo laundry
brands, under the ‘Dirt is Good’ campaign in southern Latin
America.
In Foods, we strengthened the Vitality credentials of our brands
in the US with Promise heart health spread, Ragú organic and
support for the anti-oxidant properties of Lipton teas. AdeS
continued to build across Latin America with the distinctive
nutrition benefits of ‘soy with fruit’.
The operating margin at current rates of exchange was 13.0%,
5.7 percentage points higher than in 2004. Net charges for
restructuring, disposal and impairment were 3.4%, which was
5.8 percentage points lower than in the prior year. Cost savings
offset a higher level of advertising and promotions and increased
input costs. Therewerealso gains from the sale of an office in
the US, in US healthcare plans and from currency effects on
capital reductions.