3rd Quarter Results
Unilever PLC
27 October 2004
THIRD QUARTER RESULTS 2004 AND INTERIM DIVIDENDS
(Unaudited, constant 2003 average exchange rates, unless stated)
Urgent action is being taken to restore top line growth, as stated in the
outlook given on 20 September. Low single digit EPS (beia*) growth is expected
for the year.
FINANCIAL HIGHLIGHTS - € millions
Third Quarter 2004 Nine Months 2004
10,641 -4 % Turnover 31,264 -3 %
1,848 -3 % Operating profit - beia* 4,916 -2 %
1,318 -2 % Pre-tax profit 3,419 +2 %
883 +6 % Net profit 2,183 +8 %
1,187 +3 % Net profit - beia* 3,074 +6 %
1.23 +3 % EPS NV - beia* (Euros) 3.17 +7 %
18.38 +3 % EPS PLC - beia* (Euro 47.50 +7 %
cents)
* Before exceptional items and amortisation of goodwill and intangible assets
At current rates of exchange EPS (beia) was flat in the quarter and higher by 4%
in the first nine months. Including exceptional items and amortisation of
goodwill and intangibles, current rate EPS grew by 4% in the quarter and by 6%
in the first nine months.
KEY FEATURES OF THE QUARTER
•Underlying sales declined by 1.3% with a particularly poor performance in
Western Europe including significant declines in ice cream and
ready-to-drink tea and lower sales in Home & Personal Care in weaker
markets. In Asia, competition remains intense in laundry and hair care in a
number of key countries.
•Operating margin (beia) increased by 20 basis points.
•Continued cash generation has enabled net debt to be reduced to €11.8
billion at the quarter end, down by €2.5 billion over the last twelve
months.
•EPS (beia) grew by 3%.
•Interim dividend of €0.63 per NV ordinary share and 6.33p per PLC
ordinary share.
CHAIRMEN'S COMMENT
In September we lowered our outlook for EPS beia growth for the year to low
single digits following poorer than expected sales in July and August and
pressure on some of our market positions. This revision includes an increase in
the investment behind our brands from the fourth quarter to re-ignite growth.
We remain fully committed to driving long-term total shareholder return through
increasing Free Cash Flow and Return on Invested Capital. A strong focus on the
top line is a pre-requisite for this and is our immediate priority. We are
dissatisfied with our performance and actions are being taken to improve the
market competitiveness of our products. We are making adjustments to price
points where necessary, stepping up support behind key innovations and
increasing media spend for a number of our leading brands. These actions will be
sustained into 2005 and we are accelerating the savings programmes already
announced.
We are reviewing our assumptions for the period to 2010 and will communicate the
outcome of this review together with the full year results.
Antony Burgmans Patrick Cescau
Chairmen of Unilever
27 October 2004
THIRD QUARTER AND NINE MONTHS FINANCIAL RESULTS (at constant exchange rates)
Notes:
Unilever uses 'constant rate', 'underlying' and 'beia' measures primarily for
internal performance analysis and targeting purposes. Unilever believes that the
use of such measures provides additional information for shareholders on
underlying business performance trends. Such measures are not defined under UK,
Netherlands or US GAAP and are not intended to be a substitute for GAAP measures
of turnover and profit. Fuller definitions and reconciliations between such
measures and the equivalent GAAP measures are available on our website:
www.unilever.com.
Underlying sales declined by 1.3% in the quarter and by 0.6% in the first nine
months. Within this, leading brands, now 95% of the portfolio, declined by 0.9%
in the quarter. After the impact of disposals, turnover was 4% lower than last
year in the quarter and 3% lower in the year to date.
Operating margin (beia) was 20 basis points higher than last year in the
quarter. Gross margin was lower through the impact of poorer mix from lower ice
cream sales in Europe and increased trade and consumer value promotions within
pricing. These effects were offset by ongoing cost saving programmes and lower
advertising and promotional support in the quarter. Brand support will be
stepped up in the fourth quarter. For the first nine months operating margin
(beia) is 10 basis points ahead of last year.
Operating profit (beia) was 3% lower in the quarter and 2% lower in the first
nine months mainly through the lost contribution from business disposals.
Net borrowing costs were reduced by 10% in the quarter and by 20% in the first
nine months, with both net debt and rates lower than last year. Pension
financing costs continue to run well below last year and include the benefit of
increased cash contributions from the company.
In the quarter, net exceptional costs within operating profit were €71million,
which includes restructuring charges of €106 million partly offset by
exceptional profits on disposals of €35 million. This compares with exceptional
charges of €57m in the prior year. For the year to date, exceptional charges are
€135 million compared with €77 million last year.
The beia tax rate was 27% for the quarter, one percentage point lower than last
year and in line with both the year to date and our expectation for the year as
a whole.
Earnings per share (beia) rose by 3% in the quarter and by 7% in the year to
date. Including the effect of the lower net exceptional items, earnings per
share were ahead by 7% in the quarter and by 8% in the first nine months.
When expressed at current rates of exchange, earnings per share (beia) in the
quarter were flat in Euros, declined by 3% in £ Sterling and increased by 9% in
US $. For the first nine months on this basis earnings per share (beia)
increased by 4% in Euros, by 1% in £ Sterling and by 14% in US $. Turnover,
including the impact of disposals and expressed in Euros at current rates of
exchange, decreased by 8% in the quarter and by 7% for the first nine months.
THIRD QUARTER SALES PERFORMANCE BY REGION (at constant exchange rates)
Note:
The following regional commentary is based on operating profit before
exceptional items and amortisation of goodwill and intangible assets. Sales
growth is stated on an underlying basis, excluding the effects of acquisitions
and disposals. Turnover includes the impact of acquisitions and disposals.
EUROPE
Market conditions remain difficult in a number of important countries. Weak
consumer confidence, the continued growth of 'discount' retail formats and the
response of traditional retailers puts increased emphasis on the need for brands
to offer good value. This has been reflected particularly in pressure on pricing
and an overall decline in Home & Personal Care markets. Foods markets were also
down on last year, through reduced consumption of ice cream and ready-to-drink
tea in very poor weather.
Against this background our own performance has been disappointing with an
underlying sales decline of 5%. Turnover, including the impact of disposals, was
lower by 7%.
Lower sales of ice cream and ready-to-drink tea were responsible for close to
two thirds of the underlying sales decline for the region as a whole. Elsewhere
in Foods, there was growth for Knorr and Hellmann's in savoury and dressings and
for spreads mainly through the pro•activ range extensions. Sales of frozen foods
and olive oil were down, the latter against a strong prior year comparator.
In Home & Personal Care, strong performances in hair care through Sunsilk and
Dove and by Lux in skin care were more than offset by declines elsewhere,
particularly in laundry and household cleaning, with both volume and pricing
negative.
Growth in Central and Eastern Europe was driven by a strong contribution from
Russia in most categories.
NORTH AMERICA
Underlying sales were flat, while turnover, including the impact of disposals,
was 2% lower. Consumption remains weak, with an overall decline in the Home &
Personal Care market.
Slim•Fast market shares have been stabilised since the start of the year, but
year on year sales were still significantly down in the quarter. In September we
launched the new Slim•Fast Optima range as part of the revitalisation of the
brand. Ice cream continued to make good progress through Good Humor, Breyers and
Ben & Jerry's. There was strong, broad-based growth across the rest of our Foods
portfolio with Skippy, Lipton, Bertolli, Country Crock and I Can't Believe It's
Not Butter! all growing well.
Axe continues to gain further share in deodorants taking us level with the
market leader for the category. After a high level of activity by ourselves and
competitors in the hair care market, our category position has stabilised with
Dove well established in the market. We are stepping up our market place
activities in skin care where recent performance has been disappointing. In
laundry, we now have a more focused portfolio and market shares have been steady
since the start of the year.
The launch of cK Eternity Moment drove growth in prestige fragrances where the
benefits of restructuring are showing through with margins well ahead.
AFRICA, MIDDLE EAST AND TURKEY
Underlying sales grew by 4%, with volumes ahead by 7% but with negative pricing
in Turkey and South Africa. Including the impact of disposals, turnover
increased by 1%.
Home & Personal Care has continued to grow strongly with good contributions from
Surf and Omo in laundry, Lux in skin care and Sunsilk in hair care.
Foods improved further in the quarter with the extension of Lipton tea in Turkey
and from Royco bouillon cubes in Nigeria. These were partly offset by lower
sales of leaf tea in Arabia.
ASIA AND PACIFIC
This year has seen a step-up in activity from several competitors in laundry and
hair care in a number of key countries and we continue to defend our positions
robustly. Underlying sales grew by only 0.2% while turnover, including the
impact of disposals, declined by 5%.
Aggressive price based competition has continued in laundry and hair care in
India. We are holding shares and gaining volume in both categories, particularly
through Surf and Clinic, however pricing is substantially down. In Japan, we
have lost share in hair care in a declining market and are responding strongly
in the fourth quarter through Lux Super Rich and the launch of mod's Colour
shampoo. In Indonesia there has been increased activity by a local low priced
competitor in both laundry and hair care, which we are addressing through an
innovation programme targeted at lower price points.
Growth in Foods has picked up during the year, with the benefits of a more
focused portfolio following disposals and continued strong sales in ice cream
and for Knorr, Hellmann's and Foodsolutions. The performance of tea has been
mixed with good growth for Brooke Bond and Lipton in India but lower sales in
Pakistan in the face of increased promotional activity by local competition.
LATIN AMERICA
Underlying sales grew by 6%. After the impact of disposals, turnover increased
by 3%.
In Home & Personal Care, growth across all categories is being driven by a
strong innovation and promotional programme. Omo was the main contributor to
growth in laundry. Dove grew well across a range of categories, as did Rexona
and Axe in deodorants, Sunsilk in hair care and Lux in skin care. Our strong
category positions in Argentina continue to benefit from the economic recovery.
In Foods, innovations under the Knorr and Hellmann's brands were the engines of
growth. The AdeS and Maizena nutritional brands continue to do well and
Slim•Fast has made further good progress in Mexico. Ice cream also moved ahead
with share gains in Mexico and Brazil. However sales of Arisco in Brazil were
down and market activities are underway to improve competitiveness.
INTERIM DIVIDEND
In accordance with the interim dividend policy, the interim dividend has been
set at 35% of last year's total dividend, based on the stronger of the two
reporting currencies of our parent companies, Euro and Sterling, over the first
nine months, which for this period was Sterling. The interim dividend, to be
paid on 26 November 2004, is therefore fixed at 6.33p per 1.4p ordinary share of
Unilever PLC, an increase of 3% from last year. The interim dividend is set at
€0.63 per €0.51* ordinary share of Unilever N.V., an increase of 7% from last
year. The Unilever PLC shares will go ex-dividend on 3 November 2004 and the
Unilever N.V. shares will go ex-dividend on 28 October 2004.
* This amount is a representation in euros on the basis of Article 67c Book 2 of
the Dutch Civil Code, rounded to two decimal places, of underlying Dutch
guilders, as these have not been converted into euros in Unilever N.V.'s
Articles of Association.
CASH FLOW (at current exchange rates)
Cash flow from group operating activities in the first nine months was €4.5
billion, a decrease of €0.2 billion on the corresponding period last year.
Operating profit (beia) was lower, including the effect of business disposals
and adverse currency movements. There was also a net increase of €0.3 billion in
pension cash outflows. These effects were partially offset by lower
restructuring payments and lower working capital outflows.
Returns on investment and servicing of finance cash outflows were €0.3 billion
lower as a result of reduced interest costs this period and dividends paid to
minority shareholders in the comparative period. Net capital expenditure and
financial investment cash outflows were €0.1 billion higher, with 2003 including
€0.2 billion from the sale of a fixed rate investment.
Net debt at the end of the period was €11.8 billion, down by €0.7 billion since
the start of the year and by €2.5 billion over the last 12 months.
BALANCE SHEET (at current exchange rates)
Capital and reserves have increased by €1.3 billion in the first nine months of
this year. Net profits added €2.1 billion and the credit in respect of share
options added €0.2 billion. These were offset by the 2004 interim dividend (€0.6
billion), movements in pension assets and liabilities (€0.1 billion) and
purchases of own shares to hedge share options (€0.3 billion).
Goodwill and intangibles decreased by €0.6 billion in the first nine months,
with the effect of amortisation and disposals (€0.9 billion) partially offset by
positive currency movements of €0.3 billion. Higher stocks, trade debtors and
trade creditors reflect seasonal movements with an offsetting reduction in
creditors arising through payment of the final 2003 dividend. Provisions are
€0.2 billion lower due to Path to Growth restructuring payments and deferred tax
movements.
EURO REPORTING
Information in sterling and US dollars is available as a supplement to this Euro
report.
SAFE HARBOUR STATEMENT: This announcement may contain forward-looking
statements, including 'forward-looking statements' within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Words such as
'expects', 'anticipates', 'intends' or the negative of these terms and other
similar expressions of future performance or results and their negatives are
intended to identify such forward-looking statements. These forward-looking
statements are based upon current expectations and assumptions regarding
anticipated developments and other factors affecting the Group. They are not
historical facts, nor are they guarantees of future performance. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including, among
others, competitive pricing and activities, consumption levels, costs, the
ability to maintain and manage key customer relationships and supply chain
sources, currency values, interest rates, the ability to integrate acquisitions
and complete planned divestitures, physical risks, environmental risks, the
ability to manage regulatory, tax and legal matters and resolve pending matters
within current estimates, legislative, fiscal and regulatory developments,
political, economic and social conditions in the geographic markets where the
Group operates and new or changed priorities of the Boards. Further details of
potential risks and uncertainties affecting the Group are described in the
Group's filings with the London Stock Exchange, Euronext Amsterdam and the US
Securities and Exchange Commission, including the Annual Report & Accounts on
Form 20-F. These forward-looking statements speak only as of the date of this
document. Except as required by any applicable law or regulation, the Group
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement is based.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
Note: A description of the exchange rate conventions used is given on page 12.
Third Quarter € Millions - constant Nine Months
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
10,641 11,081 (4)% TURNOVER 31,264 32,248 (3)%
(52) (62) Less: Share of turnover (152) (192)
of joint ventures
10,589 11,019 (4)% Group turnover 31,112 32,056 (3)%
1,472 1,550 (5)% Group operating profit 3,890 4,055 (4)%
15 12 Add: Share of operating 37 37
profit of joint
ventures
1,487 1,562 (5)% OPERATING PROFIT 3,927 4,092 (4)%
1,848 1,904 (3)% Operating profit beia * 4,916 5,017 (2)%
(71) (57) Exceptional items (135) (77)
(290) (285) Amortisation of goodwill (854) (848)
and intangible assets
15 9 Share of operating profit 37 13
of associates
6 - Other income from fixed 28 (11)
investments
(170) (189) Interest (507) (630)
(20) (41) Other finance income/ (66) (125)
(cost) - pensions and
similar obligations
1,318 1,341 (2)% PROFIT BEFORE TAXATION 3,419 3,339 2 %
(389) (446) Taxation (1,084) (1,133)
929 895 4 % PROFIT AFTER TAXATION 2,335 2,206 6 %
(46) (65) Minority interests (152) (177)
883 830 6 % NET PROFIT 2,183 2,029 8 %
1,187 1,155 3 % Net profit beia * 3,074 2,893 6 %
COMBINED EARNINGS PER
SHARE
(Constant rates)
0.91 0.85 7 % - per €0.51 ordinary NV 2.24 2.07 8 %
share (Euros)
13.66 12.80 7 % - per 1.4p ordinary PLC 33.64 31.05 8 %
share (Euro cents)
1.23 1.19 3 % - per €0.51 ordinary NV 3.17 2.96 7 %
share - beia * (Euros)
18.38 17.83 3 % - per 1.4p ordinary PLC 47.50 44.41 7 %
share - beia * (Euro
cents)
0.89 0.83 7 % - per €0.51 ordinary NV 2.18 2.01 8 %
share - diluted (Euros)
13.27 12.44 7 % - per 1.4p ordinary PLC 32.65 30.15 8 %
share - diluted (Euro
cents)
* Before exceptional items and amortisation of goodwill and intangible assets
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
Net profit and earnings per share given below are stated at average current
exchange rates i.e. the results in both periods have been translated at the
exchange rates prevailing during the period.
For further details of the results at current exchange rates and impact of
exchange rate movements see notes on page 12.
Third Quarter € Millions - Nine Months
current rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
867 831 4 % NET PROFIT 2,131 2,032 5 %
1,159 1,157 0 % Net profit beia * 2,993 2,904 3 %
COMBINED EARNINGS
PER SHARE
(Current rates)
0.89 0.85 4 % - per €0.51 2.19 2.07 6 %
ordinary NV share
(Euros)
13.39 12.82 4 % - per 1.4p 32.83 31.10 6 %
ordinary PLC
share (Euro
cents)
1.19 1.19 0 % - per €0.51 3.08 2.97 4 %
ordinary NV share
- beia * (Euros)
17.95 17.88 0 % - per 1.4p 46.25 44.59 4 %
ordinary PLC
share - beia *
(Euro cents)
0.86 0.83 4 % - per €0.51 2.12 2.01 6 %
ordinary NV share
- diluted (Euros)
13.01 12.46 4 % - per 1.4p 31.87 30.20 6 %
ordinary PLC
share - diluted
(Euro cents)
* Before exceptional items and amortisation of goodwill and intangible assets
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
€ Millions - current rates Nine Months
2004 2003
Restated
Net profit 2,131 2,032
Pensions - actuarial gains / (losses) net of tax (88) 61
Currency retranslation 11 342
Total recognised gains / (losses) for the period 2,054 2,435
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
€ Millions - current rates Nine Months
2004 2003
Restated
Shareholders' equity as at 1 January 5,920 4,702
Net profit 2,131 2,032
Dividends (612) (577)
Goodwill written back on disposals 14 143
Change in number of shares or certificates held in (353) (371)
connection with share options
Actuarial gains / (losses) on pension schemes net (88) 61
of tax
Share option credit 174 130
Currency retranslation (7) 384
Shareholders' equity as at the end of the period 7,179 6,504
SUMMARY BALANCE SHEET (unaudited)
€ Millions - As at 25 As at 31 December As at 27 September
current rates September 2003 2003
2004 Restated
Goodwill and
intangible 17,127 17,713 19,097
assets
Other fixed 6,827 6,854 7,212
assets
Stocks 4,182 4,175 4,585
Debtors 6,214 5,881 7,027
Cash and current
investments 2,667 3,345 3,027
Trade and other (9,907) (10,304) (11,023)
creditors
27,110 27,664 29,925
Borrowings 14,369 15,900 17,390
Provisions for
liabilities
and charges 1,428 1,645 1,807
(excluding
pensions and
similar
obligations)
Net pension
asset for (543) (490) (410)
funded schemes
in surplus
Net pension
liability for 1,629 1,629 1,631
funded schemes
in deficit
Net pension
liability for 2,677 2,620 2,586
unfunded schemes
Minority 371 440 417
interests
Capital and 7,179 5,920 6,504
reserves
27,110 27,664 29,925
Amounts for September 2003 have been restated following a number of
reclassifications, principally the presentation of net pension assets for funded
schemes in surplus.
CASH FLOW STATEMENT (unaudited)
€ Millions - current rates Nine Months
2004 2003
Cash flow from group operating activities 4,461 4,687
Dividends from joint ventures 19 27
Returns on investments and servicing of finance (565) (829)
Taxation (1,106) (990)
Capital expenditure and financial investment (845) (707)
Acquisitions and disposals 100 229
Dividends paid on ordinary share capital (1,120) (1,068)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID 944 1,349
RESOURCES AND FINANCING
Management of liquid resources (347) 13
Financing (1,335) (1,959)
INCREASE / (DECREASE) IN CASH IN THE PERIOD (738) (597)
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
€ Millions - current rates Nine Months
2004 2003
NET DEBT AT 1 JANUARY (12,555) (16,966)
INCREASE / (DECREASE) IN CASH IN THE PERIOD (738) (597)
Cash flow from (increase) / decrease in borrowings 1,487 1,964
Cash flow from sale and leaseback transaction (147) -
Cash flow from increase / (decrease) in liquid 347 (13)
resources
Change in net debt resulting from cash flows 949 1,354
Borrowings within group companies acquired - (26)
Borrowings within group companies sold 41 5
Liquid resources within group companies sold (2) (3)
Non cash movements (564) 250
Currency retranslation 283 1,023
MOVEMENT IN NET DEBT IN THE PERIOD 707 2,603
NET DEBT AT PERIOD END (11,848) (14,363)
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
Third Quarter € Millions - Nine Months
constant
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
10,641 11,081 (4)% TURNOVER 31,264 32,248 (3)%
4,443 4,776 (7)% Europe 13,028 13,890 (6)%
2,492 2,553 (2)% North 7,323 7,433 (1)%
America
869 859 1 % Africa, 2,442 2,457 (1)%
Middle East
and Turkey
1,718 1,802 (5)% Asia and 5,162 5,273 (2)%
Pacific
1,119 1,091 3 % Latin 3,309 3,195 4 %
America
1,848 1,904 (3)% OPERATING 4,916 5,017 (2)%
PROFIT - beia
*
894 906 (1)% Europe 2,242 2,404 (7)%
444 443 0 % North 1,133 1,097 3 %
America
133 143 (6)% Africa, 338 327 4 %
Middle East
and Turkey
224 242 (8)% Asia and 688 755 (9)%
Pacific
153 170 (10)% Latin 515 434 19 %
America
17.4 % 17.2 % OPERATING 15.7 % 15.6 %
MARGIN - beia
*
20.1 % 18.9 % Europe 17.2 % 17.3 %
17.8 % 17.4 % North 15.5 % 14.8 %
America
15.3 % 16.6 % Africa, 13.9 % 13.3 %
Middle East
and Turkey
13.0 % 13.4 % Asia and 13.3 % 14.3 %
Pacific
13.7 % 15.7 % Latin 15.6 % 13.6 %
America
* Before exceptional items and amortisation of goodwill and intangible assets
OPERATIONAL ANALYSIS (at constant rates - unaudited)
Third Quarter € Millions - Nine Months
constant
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
10,641 11,081 (4)% TURNOVER 31,264 32,248 (3)%
6,002 6,282 (4)% Foods 17,600 18,366 (4)%
2,088 2,083 0 % Savoury and 6,304 6,254 1 %
dressings
1,171 1,226 (4)% Spreads and 3,440 3,673 (6)%
cooking
products
836 925 (10)% Health & 2,517 2,718 (7)%
wellness and
beverages
1,907 2,048 (7)% Ice cream 5,339 5,721 (7)%
and frozen
foods
1,737 1,819 (5)% Home care 5,223 5,402 (3)%
2,852 2,889 (1)% Personal 8,245 8,246 0 %
care
50 91 (44)% Other 196 234 (16)%
operations
1,848 1,904 (3)% OPERATING 4,916 5,017 (2)%
PROFIT -
beia *
1,044 1,162 (10)% Foods 2,790 2,937 (5)%
366 346 6 % Savoury and 1,085 988 10 %
dressings
176 238 (26)% Spreads and 537 601 (11)%
cooking
products
125 141 (11)% Health & 355 370 (4)%
wellness and
beverages
377 437 (14)% Ice cream 813 978 (17)%
and frozen
foods
210 233 (10)% Home care 636 695 (8)%
589 514 14 % Personal 1,491 1,391 7 %
care
5 (5) 211 % Other (1) (6) 88 %
operations
17.4 % 17.2 % OPERATING 15.7 % 15.6 %
MARGIN -
beia *
17.4 % 18.5 % Foods 15.9 % 16.0 %
17.5 % 16.6 % Savoury and 17.2 % 15.8 %
dressings
15.0 % 19.4 % Spreads and 15.6 % 16.4 %
cooking
products
15.0 % 15.1 % Health & 14.1 % 13.6 %
wellness and
beverages
19.8 % 21.4 % Ice cream 15.2 % 17.1 %
and frozen
foods
12.1 % 12.8 % Home care 12.2 % 12.9 %
20.6 % 17.8 % Personal 18.1 % 16.9 %
care
11.3 % (5.7)% Other (0.4)% (2.7)%
operations
* Before exceptional items and amortisation of goodwill and intangible assets
NOTES
Exchange rate conventions and impact of movements in exchange rates
The following exchange rate conventions have been applied:
In the profit and loss account information given on page 6 and the segmental
analysis on pages 10 and 11, the results for 2004 and the comparative figures
for 2003 have been translated at constant exchange rates, being the annual
average exchange rates for 2003. This reporting convention facilitates
comparisons since the impact of exchange rate fluctuations is eliminated, and is
the basis on which we measure our operational performance internally. It also
forms the basis for target setting and the annual outlook statement. For our
reporting currencies these rates were €1 = £0.69 = US $1.13.
The results and earnings per share on page 7 and the cash flow statement on page
9 are translated at average exchange rates current in each period. For our
reporting currencies these rates were €1 = £0.67 = US $1.23 for the first nine
months of 2004 and €1 = £0.69 = US $1.11 for the first nine months of 2003.
The lower Euro EPS and turnover at current rates of exchange reflects the
progressive strengthening of the Euro through 2003, particularly against the US
$. For illustrative purposes, if the exchange rates for the first nine months of
2004 were to remain in place through the remainder of the year, then growth for
the year would be around 3% lower at current rates than at constant rates.
The balance sheet figures have been translated at period-end rates of exchange.
For our reporting currencies these were €1 = £0.68 = US $1.23 at 25 September
2004, €1 = £0.71 = US $1.26 at 31 December 2003 and €1 = £0.69 = US $1.15 at
27 September 2003.
Results at current rates of exchange
Third Quarter € Millions - Nine Months
current
rates
2004 2003 % Incr. 2004 2003 % Incr.
/(Decr.) /(Decr.)
10,260 11,122 (8)% Turnover 30,133 32,452 (7)%
1,437 1,568 (8)% Operating 3,783 4,112 (8)%
profit
1,784 1,910 (7)% Operating 4,743 5,045 (6)%
profit beia *
19 8 Share of 60 2
operating
profit of
associates &
income from
fixed
investments
(175) (230) Interest (530) (764)
(including
net interest
on pension
scheme assets
and
liabilities)
(372) (449) Taxation (1,040) (1,139)
(42) (66) Minority (142) (179)
interests
867 831 4 % Net profit 2,131 2,032 5 %
1,159 1,157 0 % Net profit 2,993 2,904 3 %
beia *
The impact of exchange rate movements on the nine months results at current
exchange rates in Euros, £ Sterling and US $ is given below, along with the year
on year percentage change at constant rates.
Nine Constant rates At current rates of exchange
Months -
Millions
% Incr. € % Incr. £ % Incr. US $ % Incr.
/(Decr.) 2004 /(Decr.) 2004 /(Decr.) 2004 /(Decr.)
Turnover (3)% 30,133 (7)% 20,295 (9)% 36,943 2 %
Operating
profit (2)% 4,743 (6)% 3,195 (8)% 5,815 4 %
beia *
Net 8 % 2,131 5 % 1,435 2 % 2,612 16 %
profit
Net profit
beia * 6 % 2,993 3 % 2,016 1 % 3,669 14 %
% Change
in 8 % 6 % 3 % 16 %
EPS
% Change
in 7 % 4 % 1 % 14 %
EPS - beia*
* Before exceptional items and amortisation of goodwill and intangible assets
Interim dividends
The Boards have declared interim dividends in respect of 2004 on the ordinary
shares at the following rates which are equivalent in value at the rate of
exchange applied under the terms of the Equalisation Agreement between the two
companies:
NV
Per ordinary share €0.63 (2003: €0.59)
PLC
Per ordinary share 6.33p (2003: 6.16p)
The NV interim dividend will be payable as from 26 November 2004, to
shareholders registered at close of business on the record date of 27 October
2004.
The PLC interim dividend will be paid on 26 November 2004, to shareholders
registered at close of business on the record date of 5 November 2004.
Dividend on New York shares of NV
The N.V. interim dividend, when converted at the Euro/Dollar European Central
Bank rate of exchange on 26 October 2004, represents US $0.805392 per New York
Share of €0.51* (2003: US $0.688707) before deduction of Netherlands withholding
tax. The New York shares of NV will go ex-dividend on 28 October 2004; US dollar
checks for the interim dividend, after deduction of Netherlands withholding tax
at the appropriate rate, will be mailed on 24 November 2004, to holders of
record of New York shares at the close of business on 1 November 2004. The
interim dividend will be payable on 26 November 2004.
* This amount is a representation in euros on the basis of Article 67c Book 2 of
the Dutch Civil Code, rounded to two decimal places, of underlying Dutch
guilders, as these have not been converted into euros in Unilever N.V.'s
Articles of Association.
Dividend on American Depositary Receipts of PLC
Each American Depositary Receipt of PLC represents four 1.4p ordinary shares of
PLC. The PLC interim dividend will therefore be 25.32p per American Depositary
Receipt. When converted at the Bank of England sterling/dollar rate of exchange
on 26 October 2004, the interim dividend for holders resident in the US will
therefore be US $0.4654 per American Depositary Receipt (2003: US $0.4167).
The American Depositary Receipts of PLC will go ex-dividend on 3 November 2004;
US dollar checks for the interim dividend will be mailed on 24 November 2004 to
holders of record of American Depositary Receipts at the close of business on 5
November 2004. The interim dividend will be payable on 26 November 2004.
PREFERENCE SHARES
On 24 March 2004 Unilever announced its intention to exercise its option to
convert its €0.05* N.V. preference shares into ordinary Unilever N.V. shares
during the first quarter of 2005. A group of shareholders representing
approximately 10% of the preference shares outstanding have submitted a request
to the Enterprise Chamber of the Amsterdam Court of Appeal, for an inquiry into
the company's policy on the preference shares. The oral hearing of the case took
place on 6 September 2004. The Enterprise Chamber has stated that a decision can
be expected as soon as possible. Unilever's intentions as regards to the
preference shares have not changed.
For further information see: www.unilever.com/investorcentre/
shareholderinformation/nvshares/
* This amount is a representation in euros on the basis of Article 67c Book 2 of
the Dutch Civil Code, rounded to two decimal places, of underlying Dutch
guilders, as these have not been converted into euros in Unilever N.V.'s
Articles of Association.
COMBINED EARNINGS PER SHARE
The combined earnings per share calculations are based on the average number of
share units representing the combined ordinary shares of NV and PLC in issue
during the year, less the average number of shares held to meet options granted
under various employee share plans.
The number of combined share units is calculated from the underlying NV and PLC
shares using the exchange rate of £1 = €5.445, in accordance with the
Equalisation Agreement.
The diluted earnings per share are based on the average number of share units,
plus all shares under option, together with certain PLC shares which may be
issued in 2038 under the arrangements for the variation of the Leverhulme Trust.
The number of shares is reduced, in accordance with FRS 14, by the number of
shares that could be purchased at fair value with the expected proceeds from the
exercise of options by employees.
Earnings per share in Euro for the nine months
Constant rates Current rates
2004 2003 2004 2003
Thousands of units
Average number of
combined 963,943 969,730 963,943 969,730
share units of
€0.51
Average number of
combined 6,426,284 6,464,865 6,426,284 6,464,865
share units of
1.4p
COMBINED EPS € Millions
Net profit 2,183 2,029 2,131 2,032
Less: Preference (21) (21) (21) (21)
dividends
Net profit
attributable to 2,162 2,008 2,110 2,011
ordinary capital
Combined EPS per
€0.51 2.24 2.07 2.19 2.07
(Euros)
Combined EPS per
1.4p (Euro 33.64 31.05 32.83 31.10
cents)
COMBINED EPS - € Millions
beia *
Net profit 2,183 2,029 2,131 2,032
Add back
exceptional items 79 51 86 52
net of tax
Add back
amortisation of
goodwill / 812 813 776 820
intangible
assets net of tax
Net profit beia * 3,074 2,893 2,993 2,904
Less: Preference (21) (21) (21) (21)
dividends
Net profit
attributable to 3,053 2,872 2,972 2,883
ordinary capital
- beia *
Combined EPS -
beia* per 3.17 2.96 3.08 2.97
€0.51 (Euros)
Combined EPS -
beia* per 47.50 44.41 46.25 44.59
1.4p (Euro cents)
COMBINED EPS - Thousands of units
Diluted
Adjusted average
combined 993,118 998,908 993,118 998,908
share units of
€0.51
Adjusted average
combined 6,620,789 6,659,387 6,620,789 6,659,387
share units of
1.4p
€ Millions
Net profit
attributable to 2,162 2,008 2,110 2,011
ordinary capital
Combined diluted
EPS per 2.18 2.01 2.12 2.01
€0.51 (Euros)
Combined diluted
EPS per 32.65 30.15 31.87 30.20
1.4p (Euro cents)
* Before exceptional items and amortisation of goodwill and intangible assets
DATES
The results for the fourth quarter and for the year 2004 and the proposed final
dividends will be published on Thursday 10 February 2005.
27 October 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
Note: A description of the exchange rate conventions used is given on page 12.
Third Quarter £ Millions - Nine Months
constant
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
7,356 7,659 (4)% TURNOVER 21,610 22,290 (3)%
(37) (43) Less: Share of (106) (133)
turnover of
joint
ventures
7,319 7,616 (4)% Group 21,504 22,157 (3)%
turnover
1,018 1,072 (5)% Group operating 2,689 2,803 (4)%
profit
10 9 Add: Share of 25 26
operating
profit of joint
ventures
1,028 1,081 (5)% OPERATING 2,714 2,829 (4)%
PROFIT
1,277 1,317 (3)% Operating 3,398 3,468 (2)%
profit beia *
(48) (39) Exceptional (93) (53)
items
(201) (197) Amortisation of (591) (586)
goodwill and
intangible
assets
11 6 Share of 26 9
operating
profit of
associates
4 0 Other income 19 (8)
from fixed
investments
(118) (130) Interest (350) (435)
(14) (29) Other finance (46) (87)
income/(cost) -
pensions and
similar
obligations
911 928 (2)% PROFIT BEFORE 2,363 2,308 2 %
TAXATION
(269) (309) Taxation (749) (783)
642 619 4 % PROFIT AFTER 1,614 1,525 6 %
TAXATION
(31) (45) Minority (105) (123)
interests
611 574 6 % NET PROFIT 1,509 1,402 8 %
820 798 3 % Net profit beia 2,124 1,999 6 %
*
COMBINED
EARNINGS PER
SHARE
(Constant
rates)
9.44 8.85 7 % - per 1.4p 23.25 21.46 8 %
ordinary PLC
share (pence)
12.70 12.33 3 % - per 1.4p 32.83 30.70 7 %
ordinary PLC
share - beia *
(pence)
9.17 8.60 7 % - per 1.4p 22.57 20.84 8 %
ordinary PLC
share - diluted
(pence)
* Before exceptional items and amortisation of goodwill and intangible assets
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
Net profit and earnings per share given below are stated at average current
exchange rates i.e. the results in both years have been translated at the
exchange rates prevailing during the appropriate period.
For further details of the results at current exchange rates and impact of
exchange rate movements see notes on page 12.
Third Quarter £ Millions - Nine Months
current rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
582 578 1 % NET PROFIT 1,435 1,401 2 %
779 805 (3)% Net profit beia * 2,016 2,002 1 %
COMBINED EARNINGS
PER SHARE
(Current rates)
9.00 8.92 1 % - per 1.4p 22.11 21.44 3 %
ordinary PLC
share (pence)
12.07 12.44 (3)% - per 1.4p 31.15 30.74 1 %
ordinary PLC
share - beia *
(pence)
8.75 8.67 1 % - per 1.4p 21.46 20.82 3 %
ordinary PLC
share - diluted
(pence)
* Before exceptional items and amortisation of goodwill and intangible assets
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
£ Millions - current rates Nine Months
2004 2003
Restated
Net profit 1,435 1,401
Pension - actuarial gains / (losses) net of tax (60) 42
Currency retranslation (145) 429
Total recognised gains / (losses) for the period 1,230 1,872
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
£ Millions - current rates Nine Months
2004 2003
Restated
Shareholders' equity as at 1 January 4,190 3,058
Net profit 1,435 1,401
Dividends (413) (398)
Goodwill written back on disposals 9 98
Change in number of shares or certificates held in (237) (256)
connection with share options
Actuarial gains / (losses) on pension schemes net (60) 42
of tax
Share option credit 117 90
Currency retranslation (137) 462
Shareholders' equity as at the end of the period 4,904 4,497
SUMMARY BALANCE SHEET (unaudited)
£ Millions - As at 25 September 2004 As at 31 December As at 27 September
current
rates
2003 2003
Restated
Goodwill and
intangible
assets 11,699 12,535 13,202
Other fixed
assets 4,664 4,850 4,985
Stocks 2,857 2,955 3,170
Debtors 4,244 4,162 4,858
Cash and
current
investments 1,822 2,367 2,093
Trade and
other
creditors (6,768) (7,292) (7,620)
18,518 19,577 20,688
Borrowings 9,815 11,252 12,022
Provisions
for
liabilities
and charges
(excluding
pensions and 975 1,164 1,249
similar
Obligations)
Net pension
asset for
funded
schemes (371) (347) (283)
in surplus
Net pension
liability
for
funded 1,113 1,153 1,127
schemes
in deficit
Net pension
liability
for
unfunded 1,829 1,854 1,788
schemes
Minority
interests 253 311 288
Capital and
reserves 4,904 4,190 4,497
18,518 19,577 20,688
Amounts for September 2003 have been restated following a number of
reclassifications, principally the presentation of net pension assets for funded
schemes in surplus.
CASH FLOW STATEMENT (unaudited)
£ Millions - current rates Nine Months
2004 2003
Cash flow from group operating activities 3,004 3,229
Dividends from joint ventures 13 18
Returns on investments and servicing of finance (380) (570)
Taxation (745) (682)
Capital expenditure and financial investment (569) (487)
Acquisitions and disposals 67 158
Dividends paid on ordinary share capital (754) (736)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID 636 930
RESOURCES AND FINANCING
Management of liquid resources (233) 8
Financing (900) (1,350)
INCREASE / (DECREASE) IN CASH IN THE PERIOD (497) (412)
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
£ Millions - current rates Nine Months
2004 2003
NET DEBT AT 1 JANUARY (8,885) (11,036)
INCREASE / (DECREASE) IN CASH IN THE PERIOD (497) (412)
Cash flow from (increase) / decrease in borrowings 1,002 1,353
Cash flow from sale and leaseback transaction (99) -
Cash flow from increase / (decrease) in liquid 233 (8)
resources
Change in net debt resulting from cash flows 639 933
Borrowings within group companies acquired - (18)
Borrowings within group companies sold 28 3
Liquid resources within group companies sold (1) (2)
Non cash movements (380) 172
Currency retranslation 507 19
MOVEMENT IN NET DEBT IN THE PERIOD 793 1,107
NET DEBT AT PERIOD END (8,092) 9,929
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
Third Quarter £ Millions - Nine Months
constant
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
7,356 7,659 (4)% TURNOVER 21,610 22,290 (3)%
3,072 3,302 (7)% Europe 9,005 9,601 (6)%
1,723 1,765 (2)% North 5,062 5,138 (1)%
America
601 594 1 % Africa, 1,688 1,698 (1)%
Middle East
and Turkey
1,187 1,245 (5)% Asia and 3,568 3,644 (2)%
Pacific
773 753 3 % Latin 2,287 2,208 4 %
America
1,277 1,317 (3)% OPERATING 3,398 3,468 (2)%
PROFIT - beia
*
617 625 (1)% Europe 1,549 1,661 (7)%
307 307 0 % North 783 758 3 %
America
92 99 (6)% Africa, 234 226 4 %
Middle East
and Turkey
155 168 (8)% Asia and 476 522 (9)%
Pacific
106 118 (10)% Latin 356 300 19 %
America
17.4 % 17.2 % OPERATING 15.7 % 15.6 %
MARGIN - beia
*
20.1 % 18.9 % Europe 17.2 % 17.3 %
17.8 % 17.4 % North 15.5 % 14.8 %
America
15.3 % 16.6 % Africa, 13.9 % 13.3 %
Middle East
and Turkey
13.0 % 13.4 % Asia and 13.3 % 14.3 %
Pacific
13.7 % 15.7 % Latin 15.6 % 13.6 %
America
* Before exceptional items and amortisation of goodwill and intangible assets
OPERATIONAL ANALYSIS (at constant rates - unaudited)
Third Quarter £ Millions - Nine Months
constant
rates
2004 2003 % Incr./ 2004 2003 % Incr./
(Decr.) (Decr.)
7,356 7,659 (4)% TURNOVER 21,610 22,290 (3)%
4,148 4,342 (4)% Foods 12,165 12,695 (4)%
1,443 1,440 0 % Savoury and 4,357 4,323 1 %
dressings
810 847 (4)% Spreads and 2,378 2,539 (6)%
cooking
products
578 640 (10)% Health & 1,740 1,879 (7)%
wellness and
beverages
1,317 1,415 (7)% Ice cream 3,690 3,954 (7)%
and frozen
foods
1,201 1,258 (5)% Home care 3,610 3,734 (3)%
1,972 1,996 (1)% Personal 5,699 5,699 0 %
care
35 63 (44)% Other 136 162 (16)%
operations
1,277 1,317 (3)% OPERATING 3,398 3,468 (2)%
PROFIT -
beia *
721 803 (10)% Foods 1,928 2,030 (5)%
253 240 6 % Savoury and 750 683 10 %
dressings
121 164 (26)% Spreads and 371 415 (11)%
cooking
products
87 97 (11)% Health & 245 256 (4)%
wellness and
beverages
260 302 (14)% Ice cream 562 676 (17)%
and frozen
foods
145 161 (10)% Home care 439 480 (8)%
407 356 14 % Personal 1,031 962 7 %
care
4 (3) 211 % Other - (4) 88 %
operations
17.4 % 17.2 % OPERATING 15.7 % 15.6 %
MARGIN -
beia *
17.4 % 18.5 % Foods 15.9 % 16.0 %
17.5 % 16.6 % Savoury and 17.2 % 15.8 %
dressings
15.0 % 19.4 % Spreads and 15.6 % 16.4 %
cooking
products
15.0 % 15.1 % Health & 14.1 % 13.6 %
wellness and
beverages
19.8 % 21.4 % Ice cream 15.2 % 17.1 %
and frozen
foods
12.1 % 12.8 % Home care 12.2 % 12.9 %
20.6 % 17.8 % Personal 18.1 % 16.9 %
care
11.3 % (5.7)% Other (0.4)% (2.7)%
operations
* Before exceptional items and amortisation of goodwill and intangible assets
Earnings per share in Sterling for the nine months
Constant rates Current rates
2004 2003 2004 2003
Thousands of units
Average number of
combined 6,426,284 6,464,865 6,426,284 6,464,865
share units of
1.4p
COMBINED EPS € Millions
Net profit 1,509 1,402 1,435 1,401
Less: Preference (14) (15) (14) (15)
dividends
Net profit
attributable to 1,495 1,387 1,421 1,386
ordinary capital
Combined EPS per
1.4p 23.25 21.46 22.11 21.44
(pence)
COMBINED EPS - £ Millions
beia *
Net profit 1,509 1,402 1,435 1,401
Add back
exceptional items 54 35 58 36
net of tax
Add back
amortisation of
goodwill / 561 562 523 565
intangible
assets net of tax
Net profit beia * 2,124 1,999 2,016 2,002
Less: Preference (14) (15) (14) (15)
dividends
Net profit
attributable to 2,110 1,984 2,002 1,987
ordinary capital
- beia *
Combined EPS -
beia* per 32.83 30.70 31.15 30.74
1.4p (pence)
COMBINED EPS - Thousands of units
Diluted
Adjusted average
combined 6,620,789 6,659,387 6,620,789 6,659,387
share units of
1.4p
£ Millions
Net profit
attributable to 1,495 1,387 1,421 1,386
ordinary capital
Combined diluted
EPS per 22.57 20.84 21.46 20.82
1.4p (pence)
* Before exceptional items and amortisation of goodwill and intangible assets
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