Unilever 2007 Annual Report Download - page 6

An endorsement of our strategy
These results are testimony to the fact that our strategy of
focusing resources on brands, categories and countries with the
highest growth and profit potential is working.
One key area is developing and emerging markets. Over the next
few years consumer spending in these markets will overtake
developed countries in terms of purchasing power parity. Unilever
has an unparalleled footprint in the developing world, as well as
an extensive knowledge of local consumers, and a proven ability
to deliver health, hygiene and nutrition products which meet the
needs of populations which are growing in size, wealth and
aspiration.
Personal care – another strategic priority – saw continued strong
growth, at nearly 7%. It continues to be our fastest-growing
business, with strong global brands like Dove, Pond’s, Lux and
Rexona.
Our Vitality mission – to help people feel good, look good and
get more out of life – remains central to our strategy, inspiring
products such as a very low-fat variant of Hellmann’s mayonnaise;
Amaze snacks, with nutrients to help support the mental
development of school-aged children; Lipton Linea slimming teas;
and the Dove pro•age range with benefits for mature women.
Of course, our brands must be constantly refreshed to retain their
edge. In 2007, across each of our major categories, growth was
driven by a combination of innovation – new products and new
mixes – and renovation – the strengthening of existing brands
through new variants, new packaging or new marketing.
In 2007 we focused on bigger innovations and rolled them out
faster around the world. Clear, a shampoo with superior anti-
dandruff active delivery technology, was launched simultaneously
in several countries, including three of the biggest hair care
markets in the world – China, Russia and Brazil. We also achieved
a better transfer of mixes across continents and cultures, in some
cases creating new markets. For example, we successfully
launched our male deodorant brand Axe in Japan. After just six
months it is the leader in its market.
A leaner, fitter business
During the year we made significant progress in reshaping the
organisation to create a leaner, more flexible business structure.
Our One Unilever operating model is being implemented in every
major country. We are now taking this a step further with the
creation of new multi-country organisations – clusters of
neighbouring countries with one central management structure,
leveraging regional scale through shared services for functions
such as HR, IT and Finance. These changes are all part of our
accelerated programme of restructuring announced last summer.
4Unilever Annual Report and Accounts 2007
Report of the Directors continued
Group Chief Executive
I am pleased to report on a good year for Unilever – one in which
we continued to grow competitively, consistently and profitably.
With a clear growth strategy and an organisational structure to
support it, there is growing evidence of improved momentum in
our business.
In 2007 underlying sales grew by 5.5% – the third consecutive
year of accelerating sales growth. At the same time, we achieved
an underlying improvement in our operating margin, despite
sharply rising commodity costs. Our growth was broad-based,
across all our major regions and categories.
In Europe we achieved growth of nearly 3% – up from 1% the
year before. The benefits of all the structural changes we have
made in this region over the past three years are now coming
through both in terms of growth and underlying margin.
Russia was the star performer – with growth in the high teens –
but all our major European businesses grew in 2007.
In the Americas full year growth was 4%. Brazil and Mexico
showed an improving performance during the year, while the US
grew solidly at 3%.
In Asia Africa we recorded 11% growth. The performance reflects
not just the vibrancy of these markets but also the high priority
which we place on building our business in this part of the world.
Once again, India and China were important contributors to our
success.
The picture was equally strong across our categories driven by
some great innovations.
Home care had a strong year, fuelled by an excellent performance
from our laundry business where the Dirt is Good brands
strengthened still further on the back of innovations like Persil
Small & Mighty. We also had great success in household care with
innovative new variants of brands like Cif and Domestos.
Our Foods category also did very well. Our largest brand Knorr
came close to €4 billion in sales. Lipton tea prospered from a
series of good innovations and so too did ice cream. Unilever
Foodsolutions, our global food service business, also turned in
another good performance, confirming the important opportunity
that out-of-home consumption offers us.