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UNDERLYING
SALES GROWTH*
2011 2012 2013
6.5% 6.9%
4.3%
UNDERLYING
VOLUME GROWTH*
2011 2012 2013
1.6%
3.4%
2.5%
CORE OPERATING
MARGIN*
2011 2012 2013
13.5% 13.7% 14.1%
(Restated) (Restated)
Another year of good, consstent,
proftable and compettve top and
bottom lne underlyng growth
ONSOLIDATED INOME STATEMENT
Turnover at €49.8 billion decreased 3.0%, including a negative impact from both foreign exchange, of
5.9%, and acquisitions net of disposals of 1.1%. Underlying sales growth was 4.3% (2012: 6.9%), balanced
between volume growth of 2.5% (2012: 3.4%) and pricing of 1.8% (2012: 3.3%). Emerging markets, now
57% of total turnover, were flat at reported exchange rates, with underlying sales growth of 8.7% versus
11.4% in the prior year. The Group saw a weakening in the market growth of many emerging countries, in
particular during the third quarter, exacerbated by significant currency devaluation.
Core operating margin was up 0.4 percentage points to 14.1%. Gross margin improved by 1.1
percentage points to 41.2% at constant exchange rates. All categories and all regions improved
gross margin. This was a result of a higher margin business mix, driven in part by margin accretive
innovations, and active cost management. Commodity costs have been more stable than recent
years, increasing by around 4% in 2013.
Investment in advertising and promotions increased by 0.5 percentage points or €460 million, at
constant exchange rates. Overheads increased by 0.2 percentage points as a result of favourable
one-off items in 2012.
Operating profit was €7.5 billion, compared with €7.0 billion in 2012, up 8%. The increase was mainly
driven by non-core items which were a net credit of €0.5 billion (2012: net debit €0.1 billion); core
operating profit was flat at €7.0 billion. The total gain on business disposals, recognised in non-core
items, was €0.7 billion.
Highlights for the year ended 31 December 2013 2012
(Restated)(1)
%
change
Turnover (€ million) 49,797 51,324 (3.0%)
Operating profit (€ million) 7,517 6,977 8%
Core operating profit* (€ million) 7,016 7,050 –
Profit before tax (€ million) 7,114 6,533 9%
Net profit (€ million) 5,263 4,836 9%
Diluted earnings per share (€) 166 1.50 11%
Core earnings per share* (€) 158 1.53 3%
(1) Refer to page 31.
The cost of financing net borrowings was €397 million (2012: €390 million). The average level of net
debt increased following the acquisition of additional shares in Hindustan Unilever Limited while
interest rate movements were favourable. The average interest rate was 3.3% on debt and 2.9% on
cash deposits. The pensions financing cost was a charge of €133 million, compared to €145 million
in 2012, both restated for the impact of the revision to the accounting standard IAS 19.
The effective tax rate remained consistent with 2012 at 26%. Our longer term expectation for the tax
rate remains around 26%.
Net profit from joint ventures and associates, together with other income from non-current
investments, contributed €127 million in 2013, compared to €91 million in the prior year. The
movement is mainly due to the low prior year comparator which included an impairment of warrants
associated with the disposals of the US laundry business.
Fully diluted earnings per share were €1.66, up 11% from €1.50 in the prior year, driven by higher
operating profit. Core earnings per share were €1.58, up 3% from €1.53 in 2012 after a 7% headwind
from currency movements.
* 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 32 and 33.
26 Unlever Annual Report and Accounts 2013Strategc report
FINANCIAL
REVIEW 2013
FINANIAL OVERVIEW 2013