Unilever 2007 Annual Report Download - page 21

Unilever Annual Report and Accounts 2007 19
Report of the Directors continued
Asia Africa (continued)
2006 compared with 2005
€ million € million
2006 2005
Turnover 10 863 10 282
Operating profit 1 327 1 291
Operating margin 12.2% 12.6%
Restructuring, business disposals and impairment
charges included in operating margin (0.3)% 0.0%
%
Underlying sales growth at constant rates 7.7
Effect of acquisitions 0.0
Effect of disposals (0.8)
Effect of exchange rates (1.1)
Turnover growth at current rates 5.7
%
Operating profit 2006 vs 2005
Change at current rates 2.8
Change at constant rates 4.0
Turnover at current rates of exchange rose by 5.7%, after the
impact of acquisitions, disposals and exchange rate changes as
set out in the table above. Operating profit at current rates of
exchange rose by 2.8%, after including an adverse currency
movement of 1.2%. The underlying performance of the business
after eliminating these exchange translation effects and the
impact of acquisitions and disposals is discussed below at
constant exchange rates.
Markets remained buoyant in most of the key countries though
there was a slowdown in consumer spending in Thailand.
Underlying sales growth of 7.7% was broadly based and our
aggregate market shares remained stable.
India grew well across major sectors. A mix of global, regional
and local brands drove growth, notably Wheel and Surf Excel in
laundry, and Clinic in haircare. A second year of excellent growth
in China stemmed from a combination of market growth, better
distribution and innovations behind global brands such as Omo,
Lux and Pond’s, as well as the local toothpaste brand, Zhonghua.
Indonesia sustained good momentum, not only in the large
Home and Personal Care ranges but also in Foods as a result
of strong performances in ice cream and savoury. Thailand had
a disappointing year through weak demand and intense
competition. A major programme of activities was undertaken to
correct this.
Australia experienced a much improved performance with share
gains in a number of areas. In Japan, Lux Super Rich – the leading
brand – performed well despite a major brand launch by a
competitor. However, Dove and Mod’s lost share.
Savoury, ice cream, laundry and household care brands were the
main drivers of strong growth in Turkey, while sales in Arabia
were well ahead.
In South Africa, aggressive price promotions by a local competitor
have reduced laundry sales, but there were strong growth and
share gains in Foods.
Innovation was increasingly driven globally and regionally, rather
than locally. The new Sunsilk range was introduced in most major
markets, and in laundry the Dirt is Good positioning was
established across the region. Pond’s Age Miracle, incorporating
unique technology and designed specifically for Asian skin, was
launched in four countries. Meanwhile the latest global Axe/Lynx
fragrance, Click, was introduced in Australia and New Zealand.
As in the rest of the world, the Foods innovation programme
focused on Vitality. Moo, a wholesome children’s ice cream range
based on the goodness of milk, was very well received by mothers
and children alike and proved successful in South East Asia.
Healthy green tea innovations were rolled out extensively, while in
South Africa marketing for Rama margarine now communicates
the product’s healthy oils. Addressing the needs of lower income
consumers, low-priced Knorr stock cubes – already successful in
Latin America – were also introduced in the region.
The operating margin at 12.2% was 0.4 percentage points lower
than in 2005. Before the impact of restructuring, disposals and
impairments, the operating margin would have been in line with
the previous 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.
Operating Review – Regions continued