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29
Unilever Annual Report and Accounts 2012 Report of the Directors About Unilever
ABOUT UNILEVER GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Fnancal overvew 2012
Fnancal overvew 2012
onsoldated ncome statement
(highlights) for the year ended 31 December
2012 2011 % change
Turnover (€ million) 51,324 46,467 10.5%
Operating profit (€ million) 6,989 6,433 9%
Core operating profit* (€ million) 7,062 6,289 12%
Profit before tax (€ million) 6,683 6,245 7%
Net profit (€ million) 4,948 4,623 7%
Diluted earnings per share (€) 154 1.46 5%
Core earnings per share* (€) 157 1.41 11%
Turnover at €51.3 billion increased 10.5%, including a positive
impact from foreign exchange of 2.2% and acquisitions net of
disposals of 1.1%. Underlying sales growth increased to 6.9%,
well balanced between volume growth of 3.4% and price
contributions of 3.3%. As in the prior year, emerging markets
grew strongly, with underlying sales up 11.4% and now
representing 55% of total turnover.
Operating profit was €7.0 billion, compared with €6.4 billion in
2011, up 9%. The increase was driven by higher gross profit and
improved cost discipline. Core operating profit was €7.1 billion,
up 12% from €6.3 billion in 2011, reflecting the additional impact
of lower one-off credits within non-core items.
The cost of financing net borrowings was €390 million, €58 million
less than in 2011. The average level of net debt increased by
€0.7 billion to €8.9 billion, reflecting the full-year impact of
financing prior year acquisitions such as Alberto Culver. The
average interest rate was 3.5% on debt and 2.9% on cash deposits.
The pensions financing cost was a charge of €7 million, compared
to a €71 million credit in 2011.
The effective tax rate was 26.4% compared with 26.5% in 2011.
Net profit from joint ventures and associates, together with other
income from non-current investments, contributed €91 million in
2012, compared to €189 million in the prior year. Assets related to
businesses sold in previous years recorded positive adjustments
to fair value in 2011, whilst similar but unrelated assets were
impaired in 2012.
Fully diluted earnings per share were €1.54, up 5% from €1.46
in the prior year. Higher operating profit was the key driver with
lower profits from business disposals and one-off items, partially
offset by higher minority interests and pension costs and a lower
contribution from non-current investments. Core earnings per
share were €1.57, up 11% from €1.41 in 2011, reflecting the
additional impact of lower one-off credits within non-core items.
Key performance ndcators*
2012 2011 2010
Underlying sales growth (%) 69 6.5 4.1
Underlying volume growth (%) 34 1.6 5.8
Core operating margin (%) 138 13.5 13.6
Free cash flow (€ million) 4,333 3,075 3,365
We report our performance against four key financial indicators:
• underlying sales growth;
• underlying volume growth;
• core operating margin; and
• free cash flow.
The performance of the KPIs is described on page 28, on this page
and within the segmental commentaries on pages 30 to 31. The
KPIs are described on pages 34 to 35. The non-financial KPIs are
described on pages 6 and 27.
Acqustons and dsposals
On 30 July 2012 the Group announced a definitive agreement to
sell its North America frozen meals business to ConAgra Foods,
Inc. for a total cash consideration of US$265 million. The deal was
completed on 19 August 2012. All other acquisitions or disposals
during the year were not material.
Further details of acquisitions and disposals during 2011 and 2012
can be found in note 21 on pages 126 and 127.
We have presented some parts of the financial
review within other sections of this Annual Report
and Accounts, including the financial statements
section. We believe this integrated approach provides
a better flow of information and avoids duplication.
* Certain measures used in our reporting are not
defined under IFRS. For further information about
these measures, please refer to the commentary
on non-GAAP measures on pages 34 to 35.