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26 Unilever Annual Report and Accounts 2010
Report of the Directors About Unilever
Financial review 2010 continued
Savoury, Dressings and Spreads
€ million € million %
Increase/
2010 2009 (Decrease)
Turnover 14,164
Operating profit 2,846
Underlying sales growth at constant rates (%) 1.4
Underlying volume growth (%) 2.5
Effect of price changes (%) (1.0)
13,256
1,840
6.8
54.7
Turnover at current rates of exchange grew by 6.8%. Operating
profit at current rates of exchange grew by 54.7%. Although
underlying margin improvement made an important contribution,
a significant factor behind this substantial increase was the profit
achieved on the disposal of the Italian frozen foods business in
the fourth quarter.
Underlying sales growth was 1.4% and volume growth was
2.5%. Growth was strongest in the savoury category, driven by
aseries of bigger and more impactful innovations. Knorr jelly
bouillon has proved a success across many markets in Europe and
Latin America, Knorr Season and Shake baking bags have been
successfully launched in more than 20 markets, and PF Chang’s
restaurant quality frozen meals have been a great success in the
USA. Volume shares were up in most areas of the savoury
business, with good progress in both bouillons and soups.
Dressings also saw positive volume growth, with volume share
gains in key markets in Western Europe and the Americas
including the UK, USA, Brazil and Mexico. Performance was
particularly strong in Latin America, where double digit volume
growth was achieved through a series of actions to broaden the
range of consumption occasions for mayonnaise. Spreads saw
modestly negative underlying sales growth, but volume was
positive and performance improved through the year. Pro.activ
spreads continued to drive growth with their emphasis on core
heart health benefits. Volume shares in spreads grew in the year,
especially in Western Europe.
Underlying price growth was negative 1.0%, mostly reflecting
actions taken in Western Europe to ensure market positions were
protected against high levels of price competition. Operating
margin for the year was substantially up, by 620 basis points.
Gross margins, at constant currency, were up in all three
categories, and advertising and promotions spend was broadly
unchanged from 2009 levels. Themajor change in margins came
in restructuring, disposals andimpairments, with significant
restructuring spend in 2009 replaced by the profit on disposal of
the Italian frozen foods business in 2010.
Ice Cream and Beverages
€ million € million %
Increase/
2010 2009 (Decrease)
Turnover 8,605
Operating profit 724
Underlying sales growth at constant rates (%) 6.1
Underlying volume growth(%) 5.9
Effect of price changes (%) 0.1
7,753
731
11.0
(1.0)
Turnover at current rates of exchange grew by 11.0%. The
relative weakness of the euro in the year meant that the impact
of exchange rates was significant, contributing 6.8% of the
overall turnover growth. Operating profit at current rates of
exchange fell by 1.0%.
Underlying sales growth was 6.1%, almost entirely due to volume
which grew by 5.9%. The fastest growth was in the soy-based
drinks business in Latin America, where impactful new packaging
and advertising drove another year of strong performance. Tea
also performed well, with volume share gains in a number of key
markets including the UK and positive price growth alongside
mid-single digit volume growth. As well as actions to strengthen
the brand equity of Lipton, the tea category also benefited from
up-trading to new formats such as green tea in pyramid bags, the
development of milk teas in China and ongoing conversion from
loose tea to tea bags across many emerging markets.
Ice cream also saw robust volume growth and share gains in
most markets. Volume share performance was particularly strong
in Western Europe, Mexico, Indonesia and Australia. Innovation
performance was consistently high, with major success driven
byMagnum Gold?! and Cornetto Enigma in multiple markets.
Product quality improvements helped Klondike achieve strong
results in the USA, and the successful Fruttare brand was
expanded from its Latin American base into South East Asia.
TheInmarko business in Russia also made good progress.
Underlying price growth was 0.1%, with higher price growth
intea and modestly negative growth in ice cream. Operating
margin for the year was down by 100 basis points. This largely
reflected slightly lower gross margins, at constant currency, with
commodity costs higher in bothtea and ice cream. An additional
factor driving the minor reduction in margins was a step-up in
restructuring costs, particularly in the tea category.