Interim Results
Unilever PLC
31 July 2002
Embargoed: Not for publication or broadcast before 0700hrs, Wednesday 31st July
UNILEVER SECOND QUARTER AND HALF YEAR RESULTS 2002
(Unaudited)
Growth of leading brands improved in the second quarter and with a strong
marketing programme we expect a further increase in the second half year. This,
together with a robust increase in profitability, enables us to raise our
earnings outlook for the full year.
FINANCIAL HIGHLIGHTS
Constant exchange rates (2001 average)
Second Quarter 2002 € Millions Half Year 2002
13,352 - % Turnover * 25,642 -1 %
1,998 +14 % Operating profit * - beia ** 3,823 +16 %
1,364 -8 % Pre-tax profit 2,326 +12 %
658 -25% Net profit 1,121 - %
1,077 +31 % Net profit - beia ** 2,004 +33 %
Per NV share (€0.51), Euro
0.66 -25 % Earnings per share (EPS) 1.12 +1 %
1.09 +32 % EPS (beia) ** 2.02 +34 %
Per PLC share (1.4p), Euro cent
9.89 -25 % EPS 16.77 +1 %
16.32 +32 % EPS (beia) ** 30.28 +34 %
* Includes our share of Joint Ventures
** before exceptional items and amortisation of goodwill and intangibles
When expressed in current rates of exchange, earnings per share (beia) were up
25% for the quarter and 29% for the half year, while earnings per share fell by
28% in the quarter and by 3% for the half year.
KEY FEATURES FOR THE QUARTER
• Sales growth of the leading brands reached 4.5% for the last twelve months
with 4.4% in the quarter. They now represent 88% of our business.
• Operating margin (beia) moved strongly ahead to 15% in the quarter, up by
190 basis points.
• Net interest fell by 18% to €332 million through a combination of lower
rates, the benefits of strong cash flow from operations and disposal
proceeds.
• EPS (beia) grew by 32% due to improvements in profitability and a lower
tax rate.
• Lower pre-tax profit and EPS are explained by a substantial exceptional
profit in the second quarter of last year.
CHAIRMEN'S COMMENT & OUTLOOK
'We have now reached the mid-point in the Path to Growth strategy and we
continue to be confident about delivering our programme on time and in full.
Savings from restructuring and global buying are comfortably on plan and
together with an improving mix, deliver excellent progress in operating margin.
Brand focus continues apace with 88% of our turnover now attributable to leading
brands. These brands are showing great resilience in a tough economic
environment and will drive accelerating top line growth as we move into the
second half of Path to Growth.
On the completion of Path to Growth and looking beyond 2004, we will be
absorbing the normal costs of business restructuring within our operating margin
target of 16% plus. These costs are expected to be in the range of 0.5% to 1% of
sales.
The second quarter saw an expected increase in the rate of underlying sales
growth. Home and Personal Care leading brand growth returned to levels in line
with those needed to achieve the Path to Growth targets. In key areas of Foods
there has been a pick-up in the rate of growth as we put increasing levels of
innovation and investment behind our leading brands now that the key customer
and brand management elements of the Bestfoods integration are behind us.
We expect leading brands to be 90% of our business by the year-end and to
sustain their growth for the year in the range of 4.5% and 5.0%, while managing
through the economic cycle in some developing and emerging markets. Given the
strong increase in profitability and whilst retaining the capacity for an
increased level of marketing investment to support accelerating innovation in
the second half, we are raising our outlook for the year's EPS (beia) growth to
the mid teens.'
N W A FitzGerald A Burgmans
Chairman, Unilever PLC Chairman, Unilever N.V.
31 July, 2002
SECOND QUARTER AND HALF YEAR FINANCIAL RESULTS (at constant rates of exchange)
Underlying sales grew by 3.3%. The impact of planned disposals, notably the sale
of brands to secure regulatory approval for our acquisition of Bestfoods, and
the sale of Gortons, Unipath and DiverseyLever led to a small reduction in total
sales. These particularly impact European and North American sales.
Operating profit, before exceptional items and amortisation of goodwill and
intangibles (beia), increased by 14% for the quarter and by 16% for the half
year. Operating margin (beia) was 15% in the quarter, an increase of 190 basis
points, and was 14.9% for the half year, an increase of 210 basis points.
Amortisation of goodwill and intangibles was €342 million in the quarter and
€686 million for the half year.
Net exceptional operating profit for the quarter was €38 million which includes
€230 million of restructuring and profits on disposals of €268 million. This
compares with a net exceptional profit of €477 million in the second quarter of
last year, which included €798 million profit on the sale of the brands to
secure regulatory approval for our acquisition of Bestfoods. Associated costs
were €43 million in the quarter and €83 million in the half year.
Following the disposal of DiverseyLever on 3 May 2002, our share of the
operating profit of the new Johnson Diversey associate is €14 million in the
quarter.
Net interest payable was €332 million for the quarter, a reduction of €73
million from last year through a combination of lower rates, the benefits of
strong cash flow from operations and disposal proceeds. The net interest
includes €8 million as our share of Johnson Diversey's interest payable.
The effective tax rate for the quarter was 45% and reflects the
non-deductibility of Bestfoods goodwill amortisation. The underlying tax rate
for normal trading operations was 31%, which includes a favourable 1% from prior
year adjustments.
Minority interests in the quarter are €21 million higher than last year, due to
minority share in exceptional profits on disposals.
Net profit declined by 25% in the quarter and was flat for the half year, with
strong growth in operating profit beia and lower interest offset by the higher
exceptional profit on the sale of businesses in the previous year.
Earnings per share (beia) grew by 32% in the quarter and by 34% for the half
year. Earnings per share declined by 25% in the quarter and grew by 1% in the
half year reflecting the exceptional profit in 2001.
SECOND QUARTER PERFORMANCE BY REGION (at constant rates of exchange)
The following commentary is based on operating profit before exceptional items
and amortisation of goodwill and intangibles.
EUROPE:
Continuing good underlying sales growth with a further strong contribution from
Eastern Europe.
Underlying sales growth was 2% with a continuing strong contribution from
Central and Eastern Europe. Sales were 3% lower than last year through the
impact of disposals.
Key highlights in the development of our business were:
In Western Europe:
• Growth of 3% in branded Spreads and Cooking products due to the continuing
impact of innovations, especially in Flora/Becel which grew by 8%.
• Good growth in Savoury of 3.5% with Knorr 4% ahead reflecting a stronger
marketing programme. In Dressings Maille grew strongly but this was more
than offset by the planned reduction in the high level of promotions behind
Hellmann's, particularly in the UK. However consumer market share in all key
markets was stable to growing.
• Growth of nearly 6% in Personal Care driven by innovations behind Dove,
Axe and Rexona. Dove shampoo and conditioner are now available in nearly all
markets with a strong consumer acceptance and repeat purchase.
• In Laundry volume grew by over 3% with a particular contribution from
Fabric Conditioners. Price competition in Fabric Cleaning has partly eroded
the volume gain to give an underlying sales growth for Laundry of a little
over 1%, but with market share being maintained.
• Flat Ice Cream sales and a tough comparator on Frozen Foods have diluted
the overall European sales growth by a little over 1%. In Ice Cream, those
countries not affected by poor summer weather have shown good growth,
stimulated by innovation.
Central and Eastern Europe grew at over 10%, with particular strength in
Personal Care, Spreads, Tea and Ice Cream and continued good progress in Russia
and Romania.
Operating margin is maintained at 15% with improvements in gross margin from
restructuring and mix being reinvested in support for the leading brands.
NORTH AMERICA:
Excellent profits growth with underlying sales maintained against a strong
quarter last year.
Sales were 4% lower through the effect of planned disposals. Flat underlying
sales continue to reflect a tough comparator as a result of the later phasing of
innovation this year. Turnover was also impacted by the effect of increased
promotional investment in Foods, decline in the tail of non-leading brands and
the effect on trade stocks of the K-Mart store closure programme.
In Foods the build-up of market place activity started in the second quarter.
Underlying sales grew by 1.4% and investment in advertising and promotions has
been increased by 180 basis points.
Breyers, Ben & Jerry's and Slim•Fast all continued to grow at a healthy level.
In addition, Knorr and Wishbone grew in low double digits through innovation and
improved distribution. Bertolli, Country Crock, Lipton Tea and Skippy combined
to give mid-single digit growth with a step-up in market place activity and
increased support. Hellmann's mayonnaise continued to gain share but sales
declined as we responded to price competition from our major competitor in that
market. We continued our programme to reduce distribution of Hellmann's
dressings in favour of increased growth behind Wishbone and this has a short
term impact to reduce Foods sales growth. In both Lipton Savoury with Asian side
dishes and in Hellmann's with flavoured mayonnaise new products have been
launched through the quarter and further introductions have been announced
behind the Ragu and Lipton brands which will boost sales in the second half.
In Home and Personal Care the pattern of sales development was similar to that
in the first quarter. Overall sales declined by 2.6% with the key drivers being
phasing of innovation, the effect on trade stocks of K-Mart store closures and
in Laundry our immediate focus on improving profitability. Dove and Degree made
further progress in Skin and Deodorants and there was a strong performance from
Snuggle in Fabric Conditioners. A step-up in innovation in the second half
including the already announced launch of Axe deodorant, new variants of all
detergents and repackaging of Wisk are planned to drive growth.
Operating margin has progressed by 310 basis points to 16%. This is driven by
improvements in Laundry profitability but also widespread benefits from
restructuring and global procurement. The operating margin progression is after
a 130 basis points increase in advertising and promotions.
AFRICA, MIDDLE EAST AND TURKEY:
Good growth in both sales and profits.
Underlying sales grew by 4%. Sales grew by 7% including the increase in
ownership of the Robertson's business.
Business conditions are tough in Turkey as we go through the adjustment process
following the significant currency changes. Whilst sales declined in the
quarter, profitability has been further enhanced, and we are well placed to
benefit from an improving economic environment.
South Africa has continued to make excellent progress with broad-based growth.
There were particularly impressive performances in Skin, Oral, Deodorants,
Laundry and Spreads.
Operating margin has moved ahead by 350 basis points to 14.8% driven by our
savings programmes, firm pricing action to recover the impacts of devaluation
and an improved portfolio.
ASIA AND PACIFIC:
Return to healthy levels of growth as innovation and marketing support are
increased.
Underlying sales grew by 6%, a step-up compared with the first quarter
reflecting the phasing of our innovation activities.
Sales, including the impact of disposals, grew by nearly 3%.
Progress has been broad based. Japan, Indonesia, China, Korea, Malaysia,
Pakistan and Vietnam all had underlying sales growth of over 10%, with the India
consumer business and Australasia growing in mid-single digits. Home and
Personal Care brands led the way with Personal Care making particularly
impressive progress.
In Foods an improved business infrastructure and an increase in profitability
now provide the robust platform on which to accelerate growth. There are
promising early signs with broad based growth across South East Asia for the ex
Bestfoods business as it benefits from the Unilever distribution system and a
focus on affordable pack sizes.
Operating margins increased by 160 basis points to 13.0% with an additional
investment in advertising and promotions of 110 basis points.
LATIN AMERICA:
Sales and profits ahead strongly in the quarter despite difficult economic
conditions in key countries.
Underlying sales grew by 12%, with a strong contribution from price. Including
the impact of disposals, sales grew by 8%.
In Argentina consumer demand is well down and volumes have been affected as a
result. However our experienced local management have continued to manage
profits and cash in a manner which preserves the long term health of the
business.
Elsewhere in Latin America, there was a return to positive volume growth in the
quarter with volumes ahead by close to 2%.
Innovation continues to drive growth in Personal Care throughout the region.
Sedal grew strongly in Mexico, Venezuela and Ecuador, and Rexona was launched in
Colombia. Market shares are firm in Laundry in South Latin America with an
improved level of profitability.
In Foods there has been good growth in both Knorr and Hellmann's, which has
benefited from a relaunch with new packaging formats in Mexico. Spreads have
grown at 8% including the relaunch of Doriana in Brazil with a new olive oil
variant and the launch of Becel 'de Capullo' in Mexico. Ice Cream grew in low
double digits, led by our operations in Brazil.
Operating margins moved ahead by 510 basis points to 15.5% as a result of the
benefits of our savings programmes and pricing action to recover devaluation
driven cost increases.
CASH FLOW / BALANCE SHEET
Cash flow from operations for the half year of €3.5 billion was €0.3 billion
above the corresponding period last year. This was due to strong underlying
profit growth and lower seasonal working capital outflows, partly offset by cash
refunds from pension schemes which were received in 2001.
Returns on investment and servicing of finance reflect lower interest costs on
debt which has been reduced by cash from operations, disposal proceeds and
through lower interest rates.
Capital expenditure and financial investments are in line with previous year,
with reduced capital expenditure offset by lower proceeds from asset disposals
and increased purchases of own shares to hedge the extension of share option
schemes to more managers.
Net proceeds from disposals includes €1.1 billion cash from the disposal of
DiverseyLever.
Net debt has decreased by €3.2 billion since 31 December, mainly comprising
currency retranslation and other similar non cash gains of €2.3 billion on
dollar denominated liabilities, and proceeds from disposals.
Goodwill and intangibles have decreased by €3.1 billion including currency
retranslation of €2.6 billion and amortisation for the period of €0.7 billion,
offset by net additions of €0.2 billion.
Debtors include €0.4 billion proceeds due from the disposal of North American
Foods brands including Mazola.
Capital and reserves have decreased by €0.1 billion. Net profit of €1.1 billion
and goodwill writebacks of €0.4 billion following disposals are offset by a
currency retranslation of €1.1 billion and by purchases of own shares of €0.5
billion to hedge share options granted.
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 (within the meaning of the U.S. Private Securities Litigation
Reform Act 1995). Any forward-looking statements are based on current
expectations with respect to important risk factors. It is important to note
that the actual results could materially differ from the results anticipated
in any forward-looking statements which may be contained in this
announcement. Factors which might cause forward-looking statements to differ
materially from actual results include, among other things, the overall
economic, political, social and business conditions, the demand for our
goods and services, competition in the market, fluctuations in interest
rates and foreign currencies, the impact and other uncertainties of future
acquisitions and disposals and any changes in the tax laws and other
legislation and regulation, in the jurisdictions in which we operate.
We do not undertake any obligation to update any forward-looking statements
contained in or incorporated in this announcement to reflect actual results,
changes in assumptions or in other factors which may affect any
forward-looking statements.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
In the profit and loss account given below, the results in both years have been
translated at constant exchange rates, being the annual average exchange rates
for 2001. This reporting convention facilitates comparisons since the impact of
exchange rate fluctuations is eliminated.
Second Quarter € Millions - constant Half Year
2002 2001 % Incr./ 2002 2001 % Incr./
(Decr.) (Decr.)
13,352 13,412 - % TURNOVER 25,642 25,867 (1)%
(128) (167) Less: Share of turnover of joint ventures (284) (318)
13,224 13,245 - % GROUP TURNOVER 25,358 25,549 (1)%
1,669 1,869 (11)% GROUP OPERATING PROFIT 2,937 2,876 2 %
1,978 1,731 14 % Group operating profit beia * 3,779 3,247 16 %
30 477 Exceptional items (167) 318
(339) (339) Amortisation of goodwill and intangibles (675) (689)
25 18 Add: Share of operating profit of joint ventures 41 35
1,694 1,887 (10)% OPERATING PROFIT 2,978 2,911 2 %
1,998 1,757 14 % Operating profit beia * 3,823 3,300 16 %
38 477 Exceptional items (159) 318
(342) (347) Amortisation of goodwill and intangibles (686) (707)
14 - Share of operating profit of associates 14 -
(12) (1) Other income from fixed investments (14) 4
(332) (405) Interest (652) (839)
1,364 1,481 (8)% PROFIT BEFORE TAXATION 2,326 2,076 12 %
(607) (522) Taxation (1,039) (828)
757 959 (21)% PROFIT AFTER TAXATION 1,287 1,248 3 %
(99) (78) Minority Interests (166) (128)
658 881 (25)% NET PROFIT AT CONSTANT 2001 EXCHANGE RATES 1,121 1,120 - %
1,077 824 31 % Net profit before exceptional items & amortisation of 2,004 1,509 33 %
goodwill and intangibles (Constant rates)
628 871 (28) % NET PROFIT AT EXCHANGE RATES CURRENT IN EACH PERIOD 1,078 1,115 (3)%
1,030 829 24 % Net profit before exceptional items & amortisation of 1,933 1,513 28 %
goodwill and intangibles (Current rates)
COMBINED EARNINGS PER SHARE (Current rates)
0.62 0.88 (28)% - per €0.51 ordinary share (Euros) 1.07 1.11 (3)%
0.61 0.85 (28)% - per €0.51 ordinary share - diluted (Euros) 1.04 1.08 (3)%
9.43 13.10 (28)% - per 1.4p ordinary share (Euro cents) 16.11 16.61 (3)%
9.13 12.74 (28)% - per 1.4p ordinary share - diluted (Euro cents) 15.63 16.16 (3)%
* beia means before exceptional items and amortisation of goodwill and
intangibles.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited) Half Year
€ Millions 2002 2001
Restated
Net profit 1,078 1,115
Currency retranslation and other (2) (1,167) (543)
Total recognised gains / (losses) since last annual accounts (89) 572
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited) First Half Year
€ Millions 2002 2001
Restated
Shareholders' equity as at 1 January (1) 6,993 7,974
Net profit 1,078 1,115
Dividends (6) (10)
Goodwill movements 404 132
Currency retranslation and other (2) (1,123) (574)
Change in number of shares or certificates of shares held in (488) (455)
connection with share options
Shareholders' equity as at end period 6,858 8,182
SUMMARY BALANCE SHEET (unaudited) As at 29th As at 31st As at 30th
June December June
€ Millions 2002 2001 2001
Restated Restated
Goodwill and intangibles 21,925 25,045 27,027
Acquired businesses held for resale - - 1,820
Other fixed assets 8,772 10,124 10,998
Stocks 4,911 5,343 6,040
Debtors 10,394 9,953 10,587
Cash and current investments 3,664 2,301 3,492
Trade and other creditors (11,782) (12,738) (12,913)
37,884 40,028 47,051
Borrowings 23,616 25,500 31,084
Provisions for liabilities and charges 6,717 6,871 7,129
Minority interests 693 664 656
Capital and reserves 6,858 6,993 8,182
37,884 40,028 47,051
Restatements relate to the implementation of United Kingdom Financial Reporting
Standard 19 (see note on Page 13).
As at 31st As at 31st
December December
2001 2000
(1) Shareholders' equity as previously reported in 2001 Report & Accounts 7,195 8,169
Accounting policy change (202) (195)
Shareholders' equity as restated 6,993 7,974
(2) Includes gain on sale of interest in subsidiary to related party.
CASH FLOW STATEMENT (unaudited)
€ Millions Half Year
2002 2001
Cash flow from operating activities 3,502 3,226
Dividends from joint ventures and associates 12 15
Returns on investments and servicing of finance (823) (1,036)
Taxation (856) (638)
Capital expenditure and financial investment (925) (948)
Acquisitions and disposals 1,152 1,277
Dividends paid on ordinary share capital (1,041) (926)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID RESOURCES AND 1,021 970
FINANCING
Management of liquid resources (256) (443)
Financing (395) (591)
INCREASE / (DECREASE) IN CASH IN THE PERIOD 370 (64)
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT)
NET FUNDS / (DEBT) AT 1 JANUARY (23,199) (26,468)
INCREASE / (DECREASE) IN CASH IN THE PERIOD 370 (64)
Cash flow from (increase)/decrease in borrowings 394 581
Cash flow from increase/(decrease) in liquid resources 256 443
Change in net funds / (debt) resulting from cash flows 1,020 960
Borrowings within group companies acquired (91) -
Borrowings within group companies sold 19 1
Liquid resources within group companies acquired - -
Liquid resources within group companies sold (1) -
Non cash movements 1,120 (695)
Currency retranslation 1,180 (1,390)
MOVEMENT IN NET FUNDS / (DEBT) IN THE PERIOD 3,247 (1,124)
NET FUNDS / (DEBT) AT HALF YEAR (19,952) (27,592)
GEOGRAPHICAL ANALYSIS (CONSTANT)
Second Quarter € Millions Half Year
% Incr./ % Incr./
2002 2001 (Decr.) 2002 2001 (Decr.)
13,352 13,412 - % TURNOVER 25,642 25,867 (1)%
5,141 5,301 (3)% Europe 9,821 10,087
3,447 3,593 (4)% North America 6,678 6,941 (4)%
948 887 7 % Africa, Middle East and Turkey 1,751 1,658 6 %
2,089 2,034 3 % Asia and Pacific 4,031 3,971 2 %
1,727 1,597 Latin America 3,361 3,210 5 %
1,998 1,757 14 % OPERATING PROFIT - before exceptional items and 3,823 3,300 16 %
amortisation of goodwill and intangibles
770 795 (3)% Europe 1,455 1,401 4 %
550 464 19 % North America 1,034 835 24 %
140 100 Africa, Middle East and Turkey 213 177 20 %
271 232 17 % Asia and Pacific 592 494 20 %
267 166 Latin America 529 393 35 %
15.0 % 13.1% OPERATING MARGIN - before exceptional items and 14.9 % 12.8 %
amortisation of goodwill and intangibles
15.0 % 15.0% Europe 14.8 % 13.9 %
16.0 % 12.9% North America 15.5 % 12.0 %
14.8 % 11.3% Africa, Middle East and Turkey 12.2 % 10.7 %
13.0 % 11.4% Asia and Pacific 14.7 % 12.4 %
15.5 % 10.4% Latin America 15.8 % 12.2 %
OPERATIONAL ANALYSIS (CONSTANT)
Second Quarter € Millions Half Year
% Incr./ % Incr./
2002 2001 (Decr.) 2002 2001 (Decr.)
13,352 13,412 - % TURNOVER 25,642 25,867 (1)%
7,546 7,556 - % Foods 14,191 14,422 (2)%
2,455 2,434 1 % Savoury and Dressings 4,831 4,921 (2)%
1,602 1,659 (3)% Spreads and Cooking Products 3,173 3,292 (4)%
1,160 1,100 Health & Wellness and Beverages 2,212 2,130
2,329 2,363 (1)% Ice Cream and Frozen Foods 3,975 4,079 (3)%
2,411 2,635 (8)% Home Care and Professional Cleaning 4,945 5,219
3,283 3,064 7 % Personal Care 6,267 5,923 6 %
112 157 Other Operations 239 303
1,998 1,757 14 % OPERATING PROFIT - before exceptional 3,823 3,300 16 %
items and amortisation of goodwill and intangibles
1,083 1,101 (2)% Foods 1,961 1,891
350 394 (11)% Savoury and Dressings 695 745 (7)%
244 237 3 % Spreads and Cooking Products 481 479 1 %
97 131 Health & Wellness and Beverages 281 258 9 %
392 339 16 % Ice Cream and Frozen Foods 504 409 23 %
309 180 72 % Home Care and Professional Cleaning 606 418
589 457 29 % Personal Care 1,226 962 27 %
17 19 (13)% Other Operations 30 29
15.0 % 13.1 % OPERATING MARGIN - before exceptional items and 14.9 % 12.8 %
amortisation of goodwill and intangibles
14.3 % Foods 13.8 %
14.3 % 16.2 % Savoury and Dressings 14.4 % 15.2 %
15.2 % Spreads and Cooking Products 15.2 %
8.4 % Health & Wellness and Beverages 12.7 %
16.8 % Ice Cream and Frozen Foods 12.7 %
12.8 % Home Care and Professional Cleaning 12.3 %
18.0 % Personal Care 19.6 %
14.7 % Other Operations 12.4 %
NOTES
Exchange Rates
The results for 2002 and the comparative figures for 2001 have been translated
at constant average rates of exchange, being the annual average rates for 2001.
For our reporting currencies these were €1 = £0.62 = US $0.90. In addition, the
results, earnings per share and cash flow statement have been translated at
rates current in each period. For our reporting currencies these were:
Second Quarter Half Year
2002 €1 = £0.63 = US $0.92 €1 = £0.62 = US $0.90
2001 €1 = £0.61 = US $0.89 €1 = £0.62 = US $0.90
The balance sheet figures have been translated at period-end rates of exchange.
For our reporting currencies these were:
End June 2002 €1 = £0.65 = US $1.00
End December 2001 €1 = £0.61 = US $0.89
End June 2001 €1 = £0.60 = US $0.85
Current Rates of Exchange
For the first half year in current rates of exchange: Turnover is €24,993
million (4% decrease); Operating profit beia is €3,691 million (11% increase);
Operating profit is €2,876 million (1% decrease); Interest is a charge of €628
million (compared with a charge of €845 million last year); Pre-tax profit is
€2,248 million (8% increase); Net profit is €1,078 million (3% decrease); Net
profit beia is €1,933 million (28% increase); Earnings per share beia is €1.95
per NV share (29% increase) and €cent 29.19 per PLC share (29% increase);
Earnings per share is €1.07 per NV share (3% decrease) and €cent 16.11 per PLC
share (3% decrease).
Acquisitions
In the first half year 2002 the effect on turnover and operating profit of
acquisitions made in the period was €53 million and €2 million respectively.
Disposals
On 3 May 2002 the sale of the DiverseyLever institutional and industrial
cleaning business to Johnson Wax Professional was completed. Sales proceeds
amounted to cash of €1,128 million plus a loan note and a one third equity stake
in the combined business. The equity stake represents an investment in an
associate.
On 1 July 2002 the sale of 19 food brands to ACH Food Companies, Inc., a
subsidiary of Associated British Foods plc, was completed for a total of
approximately US $360 million in cash.
Reporting of turnover and operating profit
Turnover means Group turnover plus our share of turnover of joint ventures net
of our share of any sales to the joint ventures already included in the Group
figures. Operating profit means Group operating profit plus our share of
operating profit of joint ventures. These measures do not include our share of
the turnover or operating profit of associates.
FRS 19
From 1 January 2002 Unilever has adopted UK Financial Reporting Standard 19 (FRS
19) 'Deferred Tax' which requires full provision to be made for deferred taxes.
The impact of adoption of this standard has been reflected in all periods
covered by this announcement by means of prior period adjustments to the balance
sheets. As Unilever has previously provided for deferred taxes on a full
provision basis in accordance with Dutch law, FRS 19 does not have a material
impact on the profit and loss account.
The implementation of FRS 19 has resulted in a restatement of €(202) million to
the opening Capital and Reserves for 2002 (2001: €(195) million). In the 2002
opening balance sheet goodwill has been reduced by €52 million (2001: nil) while
debtors have been reduced by €141 million (2001: €134 million) through a
reduction in deferred tax assets, and deferred tax liabilities have been
increased by €9 million (2001: €61 million).
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 period, 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 Constant rates Current rates
2002 2001 2002 2001
Thousands of units
Average number of combined share units of €0.51 980,180 984,039 980,180 984,039
Average number of combined share units of 1.4p 6,534,531 6,560,258 6,534,531 6,560,258
COMBINED EPS
Net profit 1,121 1,120 1,078 1,115
Less: Preference dividends (25) (26) (25) (26)
Net profit attributable to ordinary capital 1,096 1,094 1,053 1,089
Combined EPS per €0.51 (Euros) 1.12 1.11 1.07 1.11
Combined EPS per 1.4p (Euro cents) 16.77 16.68 16.11 16.61
COMBINED EPS - BEIA
Net profit 1,121 1,120 1,078 1,115
Add back exceptional items net of tax 222 (292) 217 (288)
Add back amortisation of goodwill / intangibles net of tax 661 681 638 686
Net profit beia 2,004 1,509 1,933 1,513
Less: Preference dividends (25) (26) (25) (26)
Net profit attributable to ordinary capital - beia 1,979 1,483 1,908 1,487
Combined EPS beia per €0.51 (Euros) 2.02 1.51 1.95 1.51
Combined EPS beia per 1.4p (Euro cents) 30.28 22.61 29.19 22.66
COMBINED EPS - Diluted
Thousands of units
Adjusted average combined share units of €0.51 1,010,504 1,011,220 1,010,504 1,011,220
Adjusted average combined share units of 1.4p 6,736,691 6,741,465 6,736,691 6,741,465
Net profit attributable to ordinary capital 1,096 1,094 1,053 1,089
Combined diluted EPS per €0.51 (Euros) 1.08 1.08 1.04 1.08
Combined diluted EPS per 1.4p (Euro cents) 16.27 16.23 15.63 16.16
Dates
The results for the third quarter and announcement of interim dividends will be
published on Wednesday 30 October, 2002.
Salient figures for the above results will be published in the Daily Telegraph
on August 1 2002.
31 July 2002
Internet: http://www.unilever.com
E-mail: press-office.london@unilever.com
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES (unaudited)
In the profit and loss account given below, the results in both years have been
translated at constant exchange rates, being the annual average exchange rates
for 2001. This reporting convention facilitates comparisons since the impact of
exchange rate fluctuations is eliminated.
Second Quarter £ Millions - constant Half Year
2002 2001 % Incr./ 2002 2001 % Incr./
(Decr.)
(Decr.)
8,305 8,342 - % TURNOVER 15,949 16,089 (1)%
(80) (104) Less: Share of turnover of joint ventures (177) (198)
8,225 8,238 - % GROUP TURNOVER 15,772 15,891 (1)%
1,039 1,163 (11)% GROUP OPERATING PROFIT 1,827 1,789 2 %
1,231 1,077 14 % Group operating profit beia * 2,351 2,020 16 %
19 297 Exceptional items (104) 198
(211) (211) Amortisation of goodwill and intangibles (420) (429)
15 11 Add: Share of operating profit of joint ventures 25 22
1,054 1,174 (10)% OPERATING PROFIT 1,852 1,811 2 %
1,243 1,093 14 % Operating profit beia * 2,378 2,053 16 %
24 297 Exceptional items (99) 198
(213) (216) Amortisation of goodwill and intangibles (427) (440)
8 - Share of operating profit of associates 8 -
(8) (1) Other income from fixed investments (9) 2
(206) (252) Interest (405) (522)
848 921 (8)% PROFIT BEFORE TAXATION 1,446 1,291 12 %
(377) (325) Taxation (646) (515)
471 596 (21)% PROFIT AFTER TAXATION 800 776 3 %
(62) (48) Minority Interests (103) (79)
409 548 (25)% NET PROFIT AT CONSTANT 2001 EXCHANGE RATES 697 697 - %
670 513 31 % Net profit before exceptional items & amortisation of 1,246 939 33 %
goodwill and intangibles (Constant rates)
394 541 (27)% NET PROFIT AT EXCHANGE RATES CURRENT IN EACH PERIOD 671 695 (3)%
647 510 27 % Net profit before exceptional items & amortisation of 1,202 942 28 %
goodwill and intangibles (Current rates)
COMBINED EARNINGS PER SHARE (Current rates)
5.91p 8.12p (27)% - per 1.4p ordinary share 10.02p 10.34p (3)%
5.73p 7.91p (27)% - per 1.4p ordinary share - diluted 9.72p 10.07p (3)%
* beia means before exceptional items and amortisation of goodwill and
intangibles.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited) Half Year
£ Millions 2002 2001
Restated
Net profit 671 695
Currency retranslation and other (2) (473) (489)
Total recognised gains / (losses) since last annual accounts 198 206
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited) First Half Year
£ Millions 2002 2001
Restated
Shareholders' equity as at 1 January (1) 4,272 4,973
Net profit 671 695
Dividends (4) (6)
Goodwill movements 251 82
Currency retranslation and other (2) (435) (515)
Change in number of shares or certificates of shares held in (303) (284)
connection with share options
Shareholders' equity as at end period 4,452 4,945
SUMMARY BALANCE SHEET (unaudited) As at 29th As at 31st As at 30th
June December June
£ Millions 2002 2001 2001
Restated Restated
Goodwill and intangibles 14,232 15,300 16,335
Acquired businesses held for resale - - 1,100
Other fixed assets 5,694 6,185 6,647
Stocks 3,188 3,264 3,651
Debtors 6,747 6,080 6,399
Cash and current investments 2,378 1,405 2,111
Trade and other creditors (7,648) (7,781) (7,806)
24,591 24,453 28,437
Borrowings 15,329 15,578 18,787
Provisions for liabilities and charges 4,360 4,197 4,309
Minority interests 450 406 396
Capital and reserves 4,452 4,272 4,945
24,591 24,453 28,437
Restatements relate to the implementation of United Kingdom Financial Reporting
Standard 19 (see note on Page 13).
As at 31st As at 31st
December December
2001 2000
(1) Shareholders' equity as previously reported in 2001 Report & Accounts 4,396 5,095
Accounting policy change (124) (122)
Shareholders' equity as restated 4,272 4,973
(2) Includes gain on sale of interest in subsidiary to related party.
CASH FLOW STATEMENT (unaudited)
£ Millions Half Year
2002 2001
Cash flow from operating activities 2,178 2,010
Dividends from joint ventures and associates 8 9
Returns on investments and servicing of finance (512) (645)
Taxation (533) (397)
Capital expenditure and financial investment (577) (591)
Acquisitions and disposals 717 796
Dividends paid on ordinary share capital (648) (577)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID RESOURCES AND 633 605
FINANCING
Management of liquid resources (159) (276)
Financing (247) (366)
INCREASE / (DECREASE) IN CASH IN THE PERIOD 227 (37)
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT)
NET FUNDS / (DEBT) AT 1 JANUARY (14,173) (16,507)
INCREASE / (DECREASE) IN CASH IN THE PERIOD 227 (37)
Cash flow from (increase)/decrease in borrowings 246 360
Cash flow from increase/(decrease) in liquid resources 159 276
Change in net funds / (debt) resulting from cash flows 632 599
Borrowings within group companies acquired (57) -
Borrowings within group companies sold 12 1
Liquid resources within group companies acquired - -
Liquid resources within group companies sold (1) -
Non cash movements 697 (433)
Currency retranslation (61) (336)
MOVEMENT IN NET FUNDS / (DEBT) IN THE PERIOD 1,222 (169)
NET FUNDS / (DEBT) AT HALF YEAR (12,951) (16,676)
GEOGRAPHICAL ANALYSIS (CONSTANT)
Second Quarter £ Millions Half Year
% Incr./ % Incr./
2002 2001 (Decr.) 2002 2001 (Decr.)
8,305 8,342 - % TURNOVER 15,949 16,089 (1)%
3,198 3,297 (3)% Europe 6,109 6,274 (3)%
2,144 2,235 (4)% North America 4,153 4,317 (4)%
589 552 7 % Africa, Middle East and Turkey 1,089 1,032 6 %
1,300 1,265 3 % Asia and Pacific 2,508 2,470 2 %
1,074 993 8 % Latin America 2,090 1,996 5 %
1,243 1,093 14 % OPERATING PROFIT - before exceptional items and 2,378 2,053 16 %
amortisation of goodwill and intangibles
479 495 (3)% Europe 905 872 4 %
342 289 19 % North America 643 520 24 %
88 62 41 % Africa, Middle East and Turkey 133 110 20 %
168 144 17 % Asia and Pacific 368 307 20 %
166 103 61 % Latin America 329 244 35 %
15.0% 13.1% OPERATING MARGIN - before exceptional items and 14.9 % 12.8 %
amortisation of goodwill and intangibles
15.0% 15.0% Europe 14.8 % 13.9 %
16.0% 12.9% North America 15.5 % 12.0 %
14.8% 11.3% Africa, Middle East and Turkey 12.2 % 10.7 %
13.0% 11.4% Asia and Pacific 14.7 % 12.4 %
15.5% 10.4% Latin America 15.8 % 12.2 %
OPERATIONAL ANALYSIS (CONSTANT)
Second Quarter £ Millions Half Year
% Incr./ % Incr./
2002 2001 (Decr.) 2002 2001 (Decr.)
8,305 8,342 - % TURNOVER 15,949 16,089 (1)%
4,694 4,699 - % Foods 8,827 8,970 (2)%
1,527 1,514 1 % Savoury and Dressings 3,004 3,061 (2)%
997 1,032 (3)% Spreads and Cooking Products 1,974 2,048 (4)%
721 684 5 % Health & Wellness and Beverages 1,376 1,325 4 %
1,449 1,469 (1)% Ice Cream and Frozen Foods 2,473 2,536 (3)%
1,500 1,639 (8)% Home Care and Professional Cleaning 3,076 3,246 (5)%
2,042 1,906 7 % Personal Care 3,898 3,684 6 %
69 98 (29)% Other Operations 148 189 (21)%
1,243 1,093 14 % OPERATING PROFIT - before exceptional items and 2,378 2,053 16 %
amortisation of goodwill and intangibles
674 684 (2)% Foods 1,220 1,176 4 %
217 245 (11)% Savoury and Dressings 432 463 (7)%
152 147 3 % Spreads and Cooking Products 299 298 1 %
61 81 (26)% Health & Wellness and Beverages 175 160 9 %
244 211 16 % Ice Cream and Frozen Foods 314 255 23 %
192 112 72 % Home Care and Professional Cleaning 377 260 45 %
367 285 29 % Personal Care 763 599 27 %
10 12 (13)% Other Operations 18 18 5 %
15.0 % 13.1 % OPERATING MARGIN - before exceptional items and 14.9 % 12.8 %
amortisation of goodwill and intangibles
14.3 % 14.6 % Foods 13.8 % 13.1 %
14.3 % 16.2 % Savoury and Dressings 14.4 % 15.2 %
15.2 % 14.2 % Spreads and Cooking Products 15.2 % 14.5 %
8.4 % 11.9 % Health & Wellness and Beverages 12.7 % 12.1 %
16.8 % 14.4 % Ice Cream and Frozen Foods 12.7 % 10.1 %
12.8 % 6.8 % Home Care and Professional Cleaning 12.3 % 8.0 %
18.0 % 14.9 % Personal Care 19.6 % 16.2 %
14.7 % 12.0 % Other Operations 12.4 % 9.3 %
Earnings per share in Sterling Constant rates Current rates
2002 2001 2002 2001
Thousands of units
Average number of combined share units of 1.4p 6,534,531 6,560,258 6,534,531 6,560,258
COMBINED EPS
Net profit 697 697 671 695
Less: Preference dividends (16) (16) (16) (16)
Net profit attributable to ordinary capital 681 681 655 679
Combined EPS per 1.4p 10.43p 10.37p 10.02p 10.34p
COMBINED EPS - BEIA
Net profit 697 697 671 695
Add back exceptional items net of tax 138 (181) 135 (180)
Add back amortisation of goodwill / intangibles net of tax 411 423 396 427
Net profit beia 1,246 939 1,202 942
Less: Preference dividends (16) (16) (16) (16)
Net profit attributable to ordinary capital - beia 1,230 923 1,186 926
Combined EPS beia per 1.4p 18.83p 14.07p 18.16p 14.12p
COMBINED EPS - Diluted
Thousands of units
Adjusted average combined share units of 1.4p 6,736,691 6,741,465 6,736,691 6,741,465
Net profit attributable to ordinary capital 681 681 655 679
Combined diluted EPS per 1.4p 10.12p 10.09p 9.72p 10.07p
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