Unilever 2009 Annual Report Download - page 41

Financial Review 2009 (continued)
38 Unilever Annual Report and Accounts 2009
Report of the Directors About Unilever
Asia, Africa and Central & Eastern Europe (AAC)
€ million € million
2009 2008
Turnover 14,897 14,471
Operating profit 1,927 1,701
Operating margin 12.9 % 11.8 %
Restructuring, business disposals and impairment
charges included in operating margin (1.0)% 0.1 %
Operating margin before RDIs 13.9 % 11.7 %
Underlying sales growth at constant rates 7.7 %
Effect of acquisitions 0.5 %
Effect of disposals (0.9)%
Effect of exchange rates (4.0)%
Turnover growth at current rates 2.9 %
Operating profit 2009 vs 2008
Change at current rates 13.3 %
Change at constant rates 16.1 %
Turnover at current rates of exchange grew by 2.9%, after the
impact of acquisitions, disposals and exchange rate changes as
set out in the table above. Operating profit at current rates of
exchange grew by 13.3%, after including an adverse currency
movement of 2.8%. The comments that follow reflect the
underlying performance of the business, removing the impact
of currency translation and all costs related to acquisitions and
disposals, restructuring and impairment.
Despite market conditions being both challenging and volatile in
most parts of the region, 2009 was a year of strong volume-led
growth and significant improvement in operating margin.
Underlying sales growth for the year was 7.7%, with a strong
volume component of 4.1%. Volume growth accelerated through
the year, reaching 9.4% in the fourth quarter. It was also broad-
based with strong performances in particular from Indonesia,
China, Turkey, Vietnam, Arabia and Australia.
Market shares also progressed positively through the year
in most parts of the region, with the exception of India where
competition intensified significantly, especially from lower-cost local
players. Here, robust actions have been taken across the portfolio to
strengthen market positions. We have continued to invest
aggressively behind key fast-growing emerging markets including
China and Russia. Business performance in China has been strong,
and in Russia, despite a particularly difficult economic background
encouraging progress was made over the year.
Underlying price growth was positive for the year as a whole but
turned negative towards the end of the year in most markets. This
downward trend reflects the passing back to consumers of the
benefits from commodity cost reductions and selective price
adjustments. Operating margin before RDIs grew by 2.2
percentage points reflecting the positive impact of operational
leverage and the combined impact of higher prices and lower
commodity costs.
Other key developments in the year included a significant and
broad-based improvement in customer service, the acquisition of
the Baltimor sauce business in Russia and the establishment of the
regional supply chain centre in Singapore. With this in place and
related IT systems development progressing well the region is
increasingly well-placed to exploit benefits of speed, scale and
simplification in many aspects of its operations.
The Americas
€ million € million
2009 2008
Turnover 12,850 13,199
Operating profit 1,843 2,945
Operating margin 14.3 % 22.3 %
Restructuring, business disposals, and impairment
charges included in operating margin (1.8)% 6.9 %
Operating margin before RDIs 16.1 % 15.4 %
Underlying sales growth at constant rates 4.2 %
Effect of acquisitions 0.7 %
Effect of disposals (6.0)%
Effect of exchange rates (1.2)%
Turnover growth at current rates (2.6)%
Operating profit 2009 vs 2008
Change at current rates (37.4)%
Change at constant rates (36.6)%
Turnover at current rates of exchange fell by 2.6%, after the
impact of acquisitions, disposals and exchange rate changes as set
out in the table above. Operating profit at current rates of
exchange fell by 37.4%, after including a small adverse currency
movement of 0.8%. This fall reflects the significant income
received from business disposals in 2008. The comments below
reflect the underlying performance of the business, removing the
impact of currency translation and all costs related to acquisitions
and disposals, restructuring and impairment.
Consumer confidence in the region was fragile throughout 2009,
particularly in the USA. Against this backdrop, underlying sales
growth for the year of 4.2% and volume growth of 2.5%
represent a highly competitive performance. The volume trend
showed improved momentum through the year with growth
reaching 5.5% in the fourth quarter.
All major units in the region contributed positive volume growth,
with strong performances in particular from Brazil, Chile and the
USA. Pricing was positive for the year as a whole, but turned
negative in the fourth quarter, particularly in the US and Brazilian
markets. Partly this reflected the lapping of increases taken late in
2008, but it was also driven by a more intensive competitive
pricing environment, especially in key home and personal care
categories.
Operating margin before RDIs grew by 0.7 percentage points
despite the impact of overhead dilution from the major business
disposals completed in 2008. This was driven by improvements in
gross margin from mix, lower commodity costs and pricing,
allowing an increase in advertising and promotional investment in
addition to the improvement in underlying margin.
Other key developments in the year included the leveraging of the
‘Customer Insight and Innovation Centre’ in New Jersey, enabling
us to provide a range of solutions to help our customers grow
faster, and the acquisition of TIGI hair care business. There were
also significant improvements in customer services and in-store
presence throughout the region.