Unilever 2009 Annual Report Download - page 50

Group results and earnings per share
The following discussion summarises the results of the Group
during the years 2008 and 2007. The figures quoted are in euros,
at current rates of exchange, being the average or year-end rates
of each period as applicable, unless otherwise stated. Information
about exchange rates between the euro, pound sterling and
US dollar is given on page 130.
In 2008 and 2007, no disposals qualified to be disclosed as
discontinued operations for purposes of reporting. During 2006,
we successfully completed the sale of the majority of our
European frozen foods businesses. There was some impact on
2007 as a result of the outcome of agreements made in
connection with the sale.
€ million € million
2008 2007
Continuing operations:
Turnover 40,523 40,187
Operating profit 7,167 5,245
Operating profit before RDIs 5,898 5,814
Net profit 5,285 4,056
Net profit from discontinued operations – 80
Net profit – total 5,285 4,136
€€
2008 2007
EPS – continuing operations 1.79 1.32
EPS – total operations 1.79 1.35
EPS – total operations before RDIs 1.43 1.42
Underlying sales growth of 7.4% was broad-based across
categories and in line with our markets overall. Growth was
primarily driven by increased prices, with volumes essentially flat.
Underlying sales growth was offset by movements of (4.8)% in
exchange rates and a net impact of (1.4)% from disposals and
acquisitions. Including these effects, turnover was €40,523 million
for the full year, increasing by 0.8%.
During the year we continued to progress our One Unilever
transformation agenda, contributing to an underlying
improvement in operating margin. We integrated multiple
countries into single multi-country operations in many of our key
markets. We further shaped our portfolio through a number of
disposals, including our North American laundry business, Boursin,
Lawry’s and the Bertolli olive oil business, as well as through the
acquisition of Inmarko, the market leader in ice cream in Russia.
We also made further progress in the simplification of our supply
chain network in Europe with the establishment of a regional
European supply chain company in Switzerland, and we initiated
a move to a similar regional structure for Asia based in Singapore.
Operating profit increased by €1,922 million to €7,167 million,
including a higher level of profits on business disposals. These
generated a pre-tax profit of €2,190 million in 2008, compared
with €297 million in 2007. Before the impact of RDIs
(restructuring, disposals, impairments and other one-off items),
operating profit grew by 1% at current exchange rates, or 6% at
constant exchange rates, and there was an underlying
improvement in operating margin of 0.1 percentage points.
Financial Review 2008
Unilever Annual Report and Accounts 2009 47
Costs of financing net borrowings were 1% lower than in the
previous year. The average interest rate was lower at 4.5%,
offsetting the impact of a higher average level of net debt.
Share of net profit from joint ventures and associates and other
income from non-current investments contributed €219 million.
This included a gain of €61 million in non-current investments
resulting from the disposal of our interests in plantations in
Côte d’Ivoire.
The effective tax rate was 26.4% and the underlying tax rate
before RDIs was 26.6% for the full year. This compared with an
underlying rate of 24.5% in 2007, which included substantial
benefits from the favourable settlement of prior year tax audits.
Net profit was 28% higher than in 2007, boosted by the profits
on disposals. Earnings per share were €1.79, including a net gain
of €0.36 from RDIs. This compared with €1.35 in the prior year,
which included a net loss of €0.07 from RDIs.
Return on invested capital was 15.7%, boosted by profits on
business disposals. Excluding profits on disposals, ROIC was
11.2%, broadly in line with 2007 on a comparable basis.
Asia, Africa and Central & Eastern Europe (AAC)
€ million € million
2008 2007
Turnover 14,471 13,418
Operating profit 1,701 1,711
Operating margin 11.8 % 12.8 %
Restructuring, business disposals and impairment
charges included in operating margin 0.1 % 0.9 %
Operating margin before RDIs 11.7 % 11.9 %
Underlying sales growth at constant rates 14.2 %
Effect of acquisitions 1.1 %
Effect of disposals (0.4)%
Effect of exchange rates (6.2)%
Turnover growth at current rates 7.8 %
Operating profit 2008 vs 2007
Change at current rates (0.6)%
Change at constant rates 8.3 %
Turnover at current rates of exchange rose by 7.8%, 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 0.6%, after including an adverse currency
movement of 8.9%. 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.
Underlying sales growth of 14.2% in 2008 was broad-based
across countries and categories. Our top five Developing and
Emerging market countries in the region grew by around 20%,
from a combination of increased prices and higher volumes.
Towards the end of the year underlying sales growth remained
strong but volumes were flat with some countries seeing signs of
a slow-down in consumption and a reduction in inventories by
retailers.