4th Quarter & Final Results to 31 December 1999
Unilever PLC
Unilever NV
22 February 2000
1. UNILEVER 1999 RESULTS
2. UNILEVER PLANS FASTER GROWTH, WITH BACKGROUND NOTES
3. UNILEVER ANNOUNCES BOARD APPOINTMENTS
4. UNILEVER'S ACQUISITIONS AND DISPOSALS IN 1999
---------------------------------------------------------------
UNILEVER ANNUAL RESULTS 1999
Unilever today announces its unaudited provisional results for the
fourth quarter and for the year 1999.
'Margins improved to a record high and we ended the year with
strong sales growth in the fourth quarter. We also today announce
a plan to accelerate top-line growth and to step up the rate of
margin improvement' the Chairmen commented.
FINANCIAL HIGHLIGHTS
Q4 1999 £ Millions Full Year 1999
constant %change constant %change current %change
6,913 +4% Turnover 27,634 +2% 26,994 -%
732 +8% Operating profit - 3,065 +7% 3,012 +5%
before exceptional items
657 +2% Pre-tax profit 2,917 (5)% 2,860 (7)%
427 - % Net profit 1,866 (5)% 1,825 (7)%
470 (1)% Net profit - before 1,990 +3% 1,947 +1%
exceptional items
EPS 26.59p +1% 26.01p (2)%
EPS- before exceptional 28.37p +9% 27.76p +7%
items*
*See note on page 11
KEY FEATURES
Fourth quarter sales increase by 4%.
Operating margins before exceptional items up 50 basis points to
11.1% - a record year.
Annual earnings per share before exceptionals rise 9% at constant
rates, 7% at current rates.
A proposed final dividend of 8.57p per 1.40p ordinary PLC share,
increasing the total dividend per share by 17%.
CHAIRMEN'S COMMENT & OUTLOOK
'We have made good progress pursuing our strategy of brand focus
and margin improvement against a challenging economic and
competitive background. Our home and personal care categories all
grew strongly and we saw further improved margins in foods. We are
pleased with the developments in Western Europe and the recovery
in South East Asia. Marketing investments in Latin America
impacted profitability.'
'The fourth quarter saw the business achieve the highest level of
underlying growth for two years. This mostly came from businesses
that have already implemented our strategy of focusing on fewer
brands. This is early proof the strategy is working. The proposed
dividend per share increase demonstrates our confidence in the
future sustainability of earnings growth.'
'We expect top-line growth to improve this year. It will be in the
range of 3 - 4% with the stronger growth coming later in the year.
The driving force will be the continued momentum in developing and
emerging markets and further progress in Western Europe and North
America. We are confident we will see further margin improvement
in 2000 leading to an annual rate of earnings per share growth
before exceptional items in the range of 8 - 10%.'
N W A FitzGerald A Burgmans
Chairman, Unilever PLC Chairman, Unilever NV
FULL YEAR FINANCIAL RESULTS
Earnings Per Share
EPS at constant rates of exchange and before exceptional
items, taking account of the share consolidation, rose 9%. Due
to the relative strength of sterling the rise in EPS before
exceptional items at current rates is reduced by 2% to an
increase of 7%. The negative swing in exceptionals further
reduces EPS to 2% below 1998.
Results
Operating profit at constant rates and before exceptional
items rose by 7%, whilst net profit, on the same basis,
increased 3%. This difference is explained by lower interest
income resulting from the reduction in net funds following the
payment of the special dividend in June 1999. Net profit after
exceptional items is 5% below last year, largely due to the
exceptional profit on disposal of Plant Breeding International
Cambridge in 1998. At current rates of exchange, net profit
after exceptional items decreased 6% in guilders, 7% in
sterling and 10% in US dollars, reflecting the relative
strength of the latter currency.
FULL YEAR PERFORMANCE BY REGION
The following commentary is based on operating profit before
exceptional items, at constant rates of exchange.
EUROPE: Operating profit rose 7% and margins advanced to a
record 12% for the year.
Volume development in the corporate categories in Western
Europe was positive with a full percentage point improvement.
The disposal of low yielding food businesses, however, led to
a marginal fall in overall sales. Operating profits and
margins were ahead of last year.
Home and personal care drove growth during the year with
outstanding performances in deodorants and personal wash. It
was also another good year for laundry with Persil/Omo/Skip
tablets extending their sector leadership and the successful
launch of Comfort Easy Iron.
Market shares advanced in most home and personal care
categories and in deodorants we achieved a fourth year of
double digit volume growth with strong performances from our
brands, Rexona, Axe/Lynx and Sure and the successful roll-out
of the new Dove anti-perspirant range. All this was achieved
despite intense competitive activity. The year again saw Dove
confirm itself as our fastest growing personal care brand
across all the categories in which it operates.
In foods, profits were up, but volumes were marginally down on
last year. Our spreads and cooking products business showed a
marked improvement in margins, but volumes continued to track a
declining market. Our culinary operations grew strongly with 5%
volume growth and our geographic coverage will be enhanced once
the recently announced Amora Maille acquisition is completed
later in 2000.
Ice cream volumes rose 2% - most of the growth coming from
multi-packs and desserts, principally Carte D'Or. Sales were
ahead in our tea operations, based on the rapid expansion of
Lipton ready to drink tea, which grew by 13%, and the
successful promotion of speciality teas, notably the Tcha
green teas range.
In Central and Eastern Europe the expected improvements on the
anniversary of the Russian crisis did not materialise in the
fourth quarter and results for the year as a whole were below
1998. Efforts in the year were focused on building a local
infrastructure and improving our competitiveness so as to be
able to benefit from an eventual improvement in trade
conditions.
NORTH AMERICA: Good volume and share development in most home
and personal care categories with weaker results
in foods.
Our home and personal care businesses delivered an excellent
performance, but results in most food categories were lower.
There was a modest improvement in overall sales and profits.
Volumes in our home and personal care businesses grew a strong
5% over the year with a marked acceleration in the fourth
quarter. The fastest growing categories were deodorants,
personal wash, with Dove strengthening its No. 1 position and
hair, where Thermasilk and Suave were outstanding performers.
Our laundry business had a good year ending with 4% growth,
recovering well from a poor start in the first quarter. There
was a similar development in the prestige business, which
returned to growth in the second half of the year on the
strength of the Elizabeth Arden launches of Green Tea and
Cerruti Image.
In our professional cleaning business profits were adversely
impacted by a sales reorganisation and some account losses.
Foods sales were down 2%. This was due to planned exit from the
industrial tomato business, together with the effect of reduced
trade inventories in several categories. In margarine, decline
in the traditional category was partially offset by the
successful launch of Take Control our cholesterol reducing
spread that has now taken leadership of that category. In
culinary products Wishbone dressings and Rag£ pasta sauce
showed excellent progress, however we lost share in side dishes
due to supply problems. Novelty ice cream sales increased, but
in packaged ice cream Breyers faced intense competitive
pressure.
AFRICA AND MIDDLE EAST: Our businesses performed strongly in
Africa and made good progress in the Middle East.
Overall sales increased 8% and volumes grew over 6% in
corporate categories. Operating profits and margins were also
well ahead for the year.
We recorded excellent growth, in particular in laundry, with
the Omo brand featuring strongly, in oral care, where Close-Up
sustained market leadership in West Africa and in skin where we
made good progress through the Pond's franchise. Our tea
businesses performed well, and in Dubai we brought our new tea
production facilities successfully on stream, enhancing our
competitiveness.
Improvements in the region were broadly based with particularly
good performances in South Africa, Israel and Morocco and a
turn-around in Nigeria.
ASIA AND PACIFIC: We made excellent progress throughout the
region across most countries and categories.
In South East Asia we have more than matched the economic
recovery whilst elsewhere our businesses have prospered despite
less helpful economic environments. Overall results were
excellent with volumes rising by over 7% and operating profit
23% ahead of 1998. Results were particularly strong in India,
Indonesia, Philippines and Vietnam. There were also creditable
performances in China and Japan. This regional picture is one
of sustained innovation-led growth.
Hair performed strongly with underlying volume growth of 16%
driven by new Hazeline shampoos in China and strong
performances from Lux in Japan and Sunsilk in the Philippines.
Our skin businesses also grew strongly with the outstanding
performer being Ponds Double White in Japan.We stepped up
levels of marketing support throughout the year and these
peaked in the fourth quarter as we invested for growth.
Nevertheless margins improved a full percentage point over the
twelve month period. Our laundry business also benefited from
this increased marketing spend with volumes and shares rising
in several countries, notably in India and Indonesia. Overall
progress in foods was less satisfactory as tea sales in India
only started to recover towards the end of the year following
the withdrawal of the discriminatory excise duty on packet tea.
LATIN AMERICA: A resilient performance as we invest to protect
and build market positions.
The year was characterised by difficult economic conditions in
several countries coupled with a competitive challenge in our
largest regional category, laundry. The fourth quarter saw
little change in this competitive dynamic. The necessary
marketing and pricing investment have adversely impacted
overall profits which declined 6% (21% at current rates). We
have retained all our leading positions in all the key markets.
Oral, hair and deodorants all had good years, increasing sales
and market share with excellent progress being made in the
important Brazilian market. Key brand extensions here were
Close-Up and Seda. Sales in our foods operation were
generally lower. However, overall margins and profits
increased, particularly in Mexico.
CASH FLOW
Cash flow from operations was well ahead of last year,
increasing by almost £700 million to £3.7 billion mainly due to
lower working capital outflows and improved results (before
acquisitions and disposals). Returns from investments and
servicing of finance reduced because of lower funds following
payment of the special dividend in 1999.
BALANCE SHEET
The main movements in the balance sheet in the year were in Net
Funds, Trade and other creditors, and Capital and reserves.
Net Funds, at closing rates of exchange, were £425 million at
the end of 1999 compared to over £4 billion at the end of 1998;
net gearing remains zero. The decrease mainly reflects the
payment of the special dividend in June 1999 (a provision for
which was included in Trade and other creditors at the end of
1998), partly offset by strong underlying cash flow during the
year.
Capital and reserves increased by £1.5 billion to £4.8 billion.
This mainly reflects profits for the period, net of the
proposed final dividend for 1999, together with the issue of
211 million of NV preference shares, amounting to £0.9 billion
in value, to those shareholders in Unilever NV who elected to
receive the special dividend in this form. In addition,
reserves are also impacted by currency retranslation where the
strength of sterling between the two balance sheet dates
results in a £281million loss on retranslation of net assets.
During the year 27 businesses were purchased for a
consideration of £329 million while proceeds from disposal of
23 businesses realised £88 million.
FINAL DIVIDEND
The Boards will recommend to the Annual General Meetings, to be
held 3 May 2000, a final dividend of 8.57p per 1.4p ordinary
share of Unilever PLC, an increase of 11% over last year and a
final dividend of Fl. 1.91 per Fl. 1.12 ordinary share of
Unilever N.V., an increase of 12% over last year. This will
bring the total dividend to 12.50p per ordinary share of 1.4p,
an increase of 17% over last year and Fl. 2.79 per ordinary
share of Fl. 1.12, an increase of 11% over last year.
YEAR 2000
The Y2K transition went smoothly, confirming the success of the
thorough work done. No significant issues have arisen with
supply chain partners following close co-operation with the
well executed industry preparations in which Unilever played a
leading part.
Unilever's spend for its Y2K programme amounts to £200 million.
This includes all external costs, associated depreciation on
capital expenditure, and directly related internal costs from
1996 to completion of the programme.
EURO REPORTING
We have been publishing supplementary results information in
euro throughout 1999 and will replace the guilder and sterling
with the euro as the reporting currency from the first quarter
2000. Following this change supplementary information will be
available in sterling and US dollars.
Supplementary information in euro is given in the attachment to
this announcement.
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 1998. This reporting convention
facilitates comparisons since the impact of exchange rate fluctuations
is eliminated.
Fourth Quarter £ Millions - constant Full Year
1999 1998 %Incr./ 1999 1998 %Incr./
(Decr.) (Decr.)
6,913 6,662 4 % TURNOVER 27,634 27,094 2 %
669 609 10 % OPERATING PROFIT 2,886 2,955 (2)%
732 676 8 % Operating Profit before 3,065 2,871 7 %
exceptional items
9 6 Income from fixed investments 35 25
(21) 31 Interest (net) (4) 105
657 646 2 % PROFIT BEFORE TAXATION 2,917 3,085 (5)%
(195) (207) Taxation (918) (1,015)
462 439 5 % PROFIT AFTER TAXATION 1,999 2,070 (3)%
(35) (12) Minority Interests (133) (97)
NET PROFIT AT CONSTANT 1998
427 427 - % EXCHANGE RATES 1,866 1,973 (5)%
470 477 (1)% Net Profit before 1,990 1,937 3 %
exceptional items
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CURRENT EXCHANGE RATES (unaudited)
The profit and loss account given below is stated at current exchange
rates, i.e. the results of each period are translated at the exchange
rates prevailing during the appropriate period; further information is
given on page 11. The reported results are therefore impacted by
exchange rate movements between the periods.
Fourth Quarter £ Millions - current Full Year
1999 1998 %Incr./ 1999 1998 %Incr./
(Decr.) (Decr.)
6,635 6,701 (1)% TURNOVER 26,994 27,094 - %
638 615 4 % OPERATING PROFIT 2,835 2,955 (4)%
703 682 3 % Operating Profit before 3 ,012 2,871 5 %
exceptional items
8 6 Income from fixed investments 34 25
(20) 33 Interest (net) (9) 105
626 654 (4)% PROFIT BEFORE TAXATION 2,860 3,085 (7)%
(186) (208) Taxation (902)(1,015)
440 446 (1)% PROFIT AFTER TAXATION 1,958 2,070 (5)%
(35) (12) Minority Interests (133) (97)
NET PROFIT AT EXCHANGE RATES
405 434 (6)% CURRENT IN EACH PERIOD 1,825 1,973 (7)%
452 482 (6)% NET PROFIT - before 1,947 1,937 1 %
exceptional items
COMBINED EARNINGS PER SHARE *
6.11p 5.84p 5 % - per 1.40p (1998: 1.25p) 26.01p 26.45p (2)%
ordinary share
5.96p 5.69p 5 % - per 1.40p (1998: 1.25p) 25.36p 25.80p (2)%
ordinary share - diluted
Preference dividends (13) (4)
Dividends on ordinary capital (820) (829)
Special dividend - (4,979)
PROFIT OF THE YEAR RETAINED 992 (3,839)
* See note on page 11 on 'Share consolidation'.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
£ Millions Full Year
1999 1998
Net profit 1,825 1,973
Currency retranslation ( 211) (143)
Total recognised gains/(losses) since 1,614 1 ,830
last annual accounts
SUMMARY BALANCE SHEET (unaudited)
£ Millions
As at 31st
December
1999 1998
Goodwill 400 200
Fixed assets 5,572 5,885
Stocks 3,185 3,351
Debtors 4,777 4,755
Cash and current investments 3,402 7,329
Trade & other creditors (6,326) (11,586)
11,010 9,934
Borrowings 2,977 3,250
Provisions for liabilities and charges 2,848 3,044
Minority interests 360 288
Capital and reserves 4,825 3,352
11,010 9,934
CASH FLOW STATEMENT (unaudited)
£ Millions Full Year
1999 1998
Cash flow from operating activities 3,724 3,026
Dividends from joint ventures 18 16
Returns on investments and servicing of finance (103) 45
Taxation (951) (845)
Capital expenditure and financial investment (989) (939)
Acquisitions and disposals (240) 226
Dividends paid on ordinary share capital (4,848) (719)
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF (3,389) 810
LIQUID RESOURCES AND FINANCING
Management of liquid resources 3,740 (1,341)
Financing (96) 28
INCREASE / (DECREASE) IN CASH IN THE PERIOD 255 (503)
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET FUNDS
NET FUNDS AT 1 JANUARY 4,079 3,183
INCREASE / (DECREASE) IN CASH IN THE PERIOD 255 (503)
Cash flow from (increase)/decrease in borrowings 99 (16)
Cash flow from increase/(decrease) in liquid (3,740) 1,341
resources
Change in net funds resulting from cash flows (3,386) 822
Borrowings within group companies acquired (19) (11)
Borrowings within group companies sold 3 2
Liquid resources within group companies acquired 2 -
Liquid resources within group companies sold - (1)
Non cash movements (141) (7)
Currency retranslation (113) 91
MOVEMENT IN NET FUNDS IN THE PERIOD (3,654) 896
NET FUNDS AT 31 DECEMBER 425 4,079
GEOGRAPHICAL ANALYSIS
Fourth Quarter £ Millions Full Year
1999* 1998* %Incr./ 1999** 1999* 1998* %Incr./
(Decr.)* (Decr.)*
Turnover
2,963 2,961 - % Europe 12,378 12,571 12,711 (1)%
1,439 1,427 1 % North America 5,822 5,683 5,640 1 %
427 380 13 % Africa and Middle East 1,514 1,608 1,439 8 %
1,128 1,005 12 % Asia and Pacific 4,429 4,261 3,888 10 %
956 889 8 % Latin America 2,851 3,511 3,362 4 %
6,913 6,662 4 % TURNOVER 26,994 27,634 27,094 2 %
Operating profit - before
exceptional items
286 207 38 % Europe 1,491 1,513 1,420 7 %
214 244 (13)% North America 641 626 605 3 %
35 27 33 % Africa and Middle East 165 176 150 17 %
87 86 1 % Asia and Pacific 435 417 341 23 %
110 112 (1)% Latin America 280 333 355 (6)%
732 676 8 % Sub-total 3,012 3,065 2,871 7 %
(63) (67) Exceptional items (177) (179) 84
669 609 10 % OPERATING PROFIT 2,835 2,886 2,955 (2)%
% % Operating margin - before % % %
exceptional items
9.7% 7.0% Europe 12.0% 12.0% 11.2%
14.8% 17.1% North America 11.0% 11.0% 10.7%
8.2% 6.9% Africa and Middle East 10.9% 10.9% 10.0%
7.7% 8.6% Asia and Pacific 9.8% 9.8% 8.8%
11.5% 12.6% Latin America 9.8% 9.5% 10.6%
10.6% 10.1% OPERATING MARGIN BEI 11.2% 11.1% 10.6%
9.7% 9.1% OPERATING MARGIN 10.5% 10.4% 10.9%
* at constant 1998 annual average exchange rates.
** at exchange rates current in the year.
OPERATIONAL ANALYSIS
Fourth Quarter £ Millions Full Year
1999* 1998* %Incr./ 1999** 1999* 1998* %Incr./
(Decr (Decr.)*
TURNOVER
3,233 3,325 (3)% Foods 13,508 13,797 14,103 (2)%
1,300 1,365 (5)% Oil and dairy based 4,795 4,921 5,154 (5)%
foods and bakery
759 794 (4)% Ice cream and beverages 4,372 4,456 4,437 - %
1,174 1,166 1 % Culinary and frozen products 4,341 4,420 4,512 (2)%
1,579 1,473 7 % Home Care and 5,998 6,250 5,905 6 %
Professional Cleaning
1,909 1,737 10 % Personal Care 7,032 7,122 6,680 7 %
192 127 51 % Other Operations 456 465 406 14 %
6,913 6,662 4 % TURNOVER 26,994 27,634 27,094 2 %
OPERATING PROFIT - before
exceptional items
285 286 - % Foods 1,340 1,360 1,339 2 %
168 141 19 % Oil and dairy based 513 524 495 6 %
foods and bakery
(15) 5 - % Ice cream and beverages 391 399 399 - %
132 140 (5)% Culinary and frozen products 436 437 445 (2)%
123 137 (10)% Home Care and 562 576 603 (4)%
Professional Cleaning
294 233 26 % Personal Care 1,040 1,057 855 24 %
30 20 53 % Other Operations 70 72 74 (3)%
732 676 8 % Subtotal 3,012 3,065 2,871 7 %
(63) (67) Exceptional items (177) (179) 84
669 609 10 % OPERATING PROFIT 2,835 2,886 2,955 (2)%
OPERATING MARGIN - before exceptional items
8.8 % 8.6% Foods 9.9 % 9.9% 9.5%
13.0% 10.4% Oil and dairy based foods and bakery 10.7 % 10.6% 9.6%
(2.0)% 0.6% Ice cream and beverages 8.9 % 8.9% 9.0%
11.3% 11.9% Culinary and frozen products 10.1 % 9.9% 9.9%
7.8% 9.3% Home Care and Professional Cleaning 9.4 % 9.2% 10.2%
15.4% 13.4% Personal Care 14.8 % 14.8% 12.8%
15.4% 15.3% Other Operations 15.4 % 15.4% 18.2%
10.6% 10.1% OPERATING MARGIN BEI 11.2 % 11.1% 10.6%
9.7% 9.1% OPERATING MARGIN 10.5 % 10.4% 10.9%
* at constant 1998 annual average exchange rates
** at exchange rates current in the year
NOTES
Acquisitions
In 1999 the effect on turnover and operating profit of acquisitions
made in the year was £90 million and a £4 million loss respectively.
Exchange Rates
The results for 1999 and the comparative figures for 1998 have been
translated at constant average rates of exchange, being the annual
average rates for 1998. For our reporting currencies these were £1 =
Fl. 3.29 = US $1.66. 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:
Fourth Quarter Full Year
1999 £1 = Fl. 3.46 = US $ 1.63 £1 = Fl. 3.35 = US $ 1.62
1998 £1 = Fl. 3.15 = US $ 1.67 £1 = Fl. 3.29 = US $ 1.66
The balance sheet figures have been translated at year-end rates of
exchange. For our reporting currencies these were £1 = Fl. 3.55 = US
$1.62 (31 December 1998: £1 = Fl. 3.12 = US $1.66).
Share consolidation
On 10th May 1999 the 1.25p ordinary shares of PLC were consolidated,
so that every 112 1.25p ordinary shares was replaced by 100 1.40p
ordinary shares. This consolidation was associated with the payment on
9th June 1999, of a special dividend of 66.13p per 1.25p share, so
that the economic impact was that of a share buy back at fair value at
that date and therefore, in accordance with UK Accounting Standard
FRS14, earnings per share for prior periods have not been restated.
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 = Fl. 12, in accordance with the Equalisation Agreement, taking
into account the share consolidation.
The diluted earnings per share is 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.
Constant rates Current rates
COMBINED EPS Thousands of units
1999 1998 1999 1998
1.40p 1.25p 1.40p 1.25p
Net profit 1,866 1,973 1,825 1,973
less: Preference dividends 13 4 13 4
Net profit attributable to 1,853 1,969 1,812 1,969
ordinary capital
Average number of combined 6,967,884 7,441,098 6,967,884 7,441,098
share units
Combined EPS 26.59p 26.45p 26.01p 26.45p
COMBINED EPS - Before Thousands of units
exceptional items
1999 1998 1999 1998
1.40p 1.25p 1.40p 1.25p
Net profit 1,866 1,973 1,825 1,973
Add back exceptional items 124 (36) 122 (36)
net of tax
Net profit before exceptional 1,990 1,937 1,947 1,937
items
less: Preference dividends 13 4 13 4
Net profit attributable 1,977 1,933 1,934 1,933
before exceptional items
Average number of combined 6,967,884 7,441,098 6,967,884 7,441,098
share units
Combined EPS before 28.37p 25.97p 27.76p 25.97p
exceptional items
COMBINED EPS - Diluted Thousands of units
1999 1998 1999 1998
1.40p 1.25p 1.40p 1.25p
Net profit attributable to 1,853 1,969 1,812 1,969
ordinary capital
Adjusted average combined 7,144,743 7,627,728 7,144,743 7,627,728
share units
Combined diluted EPS 25.94p 25.80p 25.36p 25.80p
Provisional Status
The profit and loss account, balance sheet and cash flow and
supplementary information contained in this document is provisional
and an abridged version of that which will appear in the Group's full
accounts to be published on 29 March 2000. The full accounts for
Unilever N.V. and Unilever PLC have not yet been filed with the
Commercial Registry in the Netherlands, the Registrar of Companies in
the United Kingdom or the Securities and Exchange Commission in the
United States, and have not yet been reported on by the auditors.
Dividends
The Boards have resolved to recommend to the Annual General Meetings
to be held on 3 May 2000 the declaration of final dividends in
respect of 1999 on the Ordinary capitals at the following rates which
are equivalent in value at the rate of exchange applied in terms of
the Equalisation Agreement between the two companies:
NV Fl. 1.91 per ordinary share (1998: Fl. 1.70), bringing the total
of NV's dividend for 1999 to Fl. 2.79 per ordinary share (1998:
Fl. 2.51).
PLC 8.57p per ordinary share (1998: 7.75p), bringing the total of
PLC's dividend for 1999 to 12.50p per ordinary share (1998:
10.70p).
The NV final dividend will be paid on 22 May 2000, to shareholders
registered at close of business on 4 May 2000.
The PLC final dividend will be paid on 22 May 2000, to shareholders
registered at close of business on 25 April 2000.
In previous years Advance Corporation Tax ('ACT') in respect of any
dividend paid by PLC was treated as part of the dividend for the
purpose of equalising NV's and PLC's dividends under the Equalisation
Agreement. In line with this, PLC's 1998 interim dividend was
calculated by reference to the then rate of ACT (twenty/eightieths).
ACT was abolished with effect from 6 April 1999 and therefore PLC's
1998 final dividend, and all 1999 dividends have been calculated
without reference to ACT.
Dates
The Annual Review and Annual Accounts 1999 will be published on 29th
March, 2000.
The results for the first quarter 2000 will be published on Wednesday
10th May, 2000.
Salient figures for the above results will be published in the
Financial Times and Daily Telegraph on Wednesday 23rd February 2000.
Enquiries: Unilever Press Office 0171 822 6805
e-mail: press-office.london@unilever.com
Internet: http://www.unilever.com
UNILEVER PLANS FASTER GROWTH
Unilever today detailed its plans to accelerate top line growth and step up
the rate of margin improvement.
In September we announced our intention to focus on fewer, stronger brands to
promote faster growth. Today we announce a series of linked initiatives to
align our entire organisation behind these growth ambitions. By 2004 these
will increase annual top line growth to 5 per cent and operating margins to 15
per cent, a marked acceleration of previously announced targets. They will
underpin our commitment to double digit earnings growth.
'We see our future in a portfolio of strong brands with international and
local scale. These will increasingly reach the consumer via a diversity of
channels and a variety of communications media. That is at the heart of what
we are announcing today', said Chairman Antony Burgmans/Niall FitzGerald.
The principal components of the plans are :-
Brands: We will concentrate product innovation and brand development on a
focussed portfolio of 400 leading brands. These have been chosen both on the
basis of the strength of their current consumer appeal and their prospects for
sustained growth. They include familiar brands such as Dove, Lux, Lipton,
Magnum and Calvin Klein fragrances. We will invest a total of £1.0 billion in
additional marketing support over five years and by 2004, we expect this
investment to have driven growth rates in the focussed portfolio to at least 6
per cent per annum.
E-Business: E-Business is directly relevant to our growth plans in the areas
of brand communication and building direct relationships with consumers. The
development of on-line selling will be pioneered by the recently announced
venture with iVillage. Alliances with AOL, Microsoft, Excite@Home and WOWGO
are in place to support brand communication and build consumer understanding.
E-Business also offers significant opportunities in business to business
transactions throughout the supply chain and we will be rolling out a global
e-procurement system over the next two years. We are intent on achieving a
rapid expansion of E-Business and have committed £130 million to these
initiatives in 2000 and this will grow.
Supply Chain: Our local businesses will be involved in developing plans to
re-order our manufacturing activities into integrated regional networks in
support of our brands. Our target is a world class supply chain based on
some 150 key sites plus a number producing principally for local markets. As
a consequence we expect there will be a substantial reduction in the number of
manufacturing sites, probably by around 100. Provision for the costs and
asset write downs, which are expected to total in the region of £2.0 billion,
will be made as necessary consultations are completed and specific plans
finalised.
Simplification: Concentrating on 400 brands will give us the opportunity to
focus resources where they can be most effective, reduce overheads and
streamline the Corporate Centre. Central to the plans will be revised
knowledge and information systems to support our leading brands and the
re-designed supply chain. The costs, estimated at £1.3 billion, will be
provided for as plans are implemented.
Under-performing Businesses: The remaining businesses that do not meet
performance standards or which are no longer part of our strategy, will be
re-organised or divested. Specifically we will restructure Elizabeth Arden
during 2000, as part of our plans to create a fast growing international
cosmetics and fragrance business. The future of our European Bakery business
is under review. It is being restructured to improve performance
significantly or it will be divested by the year-end.
These initiatives are planned to deliver annualised savings of £1.0 billion by
2004. Of those savings, £750 million will be allocated to margin improvement
and £250 million to increasing resources behind the 400 leading brands. An
additional £200 million currently supporting non-priority brands will be
reallocated to the portfolio of leading brands, creating an increase in annual
investment of £450 million by 2004.
The programme is estimated to cost £3.3 billion in total, the majority of
which is expected to be exceptional restructuring cost. It is likely to lead
to a reduction of around 25,000 jobs over the next five years, primarily in
Europe and the Americas, representing ten percent of Unilever's total
workforce.
Niall FitzGerald/Antony Burgmans said: 'The move towards a streamlined, more
focused organisation will dramatically improve our ability to market our
leading brands. At the same time, we will continue to look aggressively for
value-adding acquisitions and alliances that will further consolidate and
reshape our industries.
'We are determined to deliver a step change in Unilever's growth rate and
further improve its operating performance. Today we are announcing changes
that mobilise the entire organisation behind our brands to drive growth and
margin improvement. There will be changes in the top organisation and
incentive schemes to put sharper focus on accountability and delivery.
'We are very aware that these initiatives will lead to job losses over the
five year period, but they are necessary for the long-term health of the
company. We will take the utmost care to implement these changes in close
consultation to minimise the personal impact.'
UNILEVER PLANS FASTER GROWTH - Background
1. BRANDS
The portfolio of 400 brands on which we will focus has been selected for:
Brand Appeal i.e. the strength of their current consumer appeal and how well
they will meet expected and emerging consumer needs over the next five to ten
years, and
Brand Scale i.e. their potential to justify and sustain significant
investment in technology, innovation and brand communication.
The portfolio has been classified into three types of brand, which will
determine the nature and degree of innovation and development they will
receive:
International Brands
These have a common appeal to consumers in many countries, enabling common
brand positionings, advertising campaigns and other marketing synergies.
Examples are Lipton tea or Magnum ice cream, which can be found in most
countries of the world, with formulations sufficiently similar to permit
largely similar marketing. Other examples are Dove soap and personal care
products, Omo fabric detergent, CloseUp toothpaste and Calvin Klein
fragrances.
International Brand Positionings
These cover brands where the marketing mix is focused on achieving the same
consumer positions, but where the brand names, for many reasons, are
different.
Examples in Foods are Becel (Germany, Netherlands) and Flora (UK), spreads
which are both positioned in the heart-health segment. Also, PG Tips (UK),
Bushells (Australia), Home Cup (Africa) and Ting Hua (China) are all
positioned as the archetypal tea brand in their particular market.
Local Jewels
These are brands with an exceptionally strong and often unique position, and
generally a long history, in particular countries or regions.
Examples are Oxo bouillon and Persil (UK), Wishbone salad dressing (USA), Joko
tea (Africa), Unox and Andrelon shampoo (Netherlands).
Average growth rates of the top 400 brands over the last two years has been
4.6 per cent per annum, with negative growth over-all for the remainder. By
2004 we will have accelerated growth for the 400 leading brands to over 6 per
cent per annum.
The impact of portfolio focus on growth and margin has already been strikingly
demonstrated in the 1998 performance of HPC Europe and Elida Faberge Brazil,
two early adopters of brand focus, and is now impressively confirmed in the
results of these two businesses in 1999.
E-BUSINESS BRIEFING PAPER
We are actively pursuing e-business opportunities, through partnerships where
appropriate. Our strategy is to develop e-business models to interact directly
with consumers and to identify scalability. We will use Web technologies to
support procurement and supplier management applications to improve business
processes and linkages with key customers.
E-Consumer
We have established Interactive Brand Centres in North America, Europe and
Asia to develop Internet expertise for all our marketeers.
Relationships
We are building the capability to provide information and services to
consumers quickly through alliances with existing independent Portals for
specific targeted audiences. These include Women through MSN's WomenCentral,
and iVillage and WOWGO, a new European portal for teenage girls.
Brand Communication
Our Brand Communication strategy, via online advertising and sales promotion
and information, has concentrated on using existing brands. Examples are
Mentadent (oral hygiene tips), Lipton Recipe Secrets (recipes), Dove Spa (skin
care advice) and www.eat.com.
Business to Consumer
We are experimenting with ways to meet consumer needs directly by using the
Web and other channels to provide products when and where consumers want them.
Women trying to conceive can now purchase Unipath's ClearPlan Easy Fertility
Monitor direct from www.clearplan.com. An alliance with Excite@Home, enables
us to develop service offerings for interactive TV. The development of
on-line selling will be pioneered by the recently announced venture with
iVillage.
E-Commerce
We are moving quickly to use Web based applications for greater efficiency in
our entire supply chain.
Retailer Relationships
We see opportunities to use internet technology to build on partnerships with
customers, from the international retailers to the small local store, to
improve our service levels and to create even more efficient distribution
systems with lower stock levels.
Existing Efficient Customer Response (ECR) programmes including supplier
managed inventories will be developed further and extended to more customers.
Procurement
We are rapidly expanding procurement via e-auctions on the Web, successfully
piloted in the US which is our centre of expertise in this area.
We intend to roll out e-procurement to build our global buying networks
rapidly in partnership with players who are leaders in this field and to
migrate a significant part of our procurement onto the Web in the next two
years.
Internal Processes
We already have a broad capability for accessing and sharing knowledge
internally through a dedicated intranet linking 70,000 desktops, through
which, amongst other things, we track and disseminate innovation projects.
This resource will be leveraged further to facilitate global marketing
applications and assessment of consumer trends.
SUPPLY CHAIN BRIEFING PAPER
The margin improvements of recent years owe much to the adoption of regional
manufacturing strategies and the consequent programme of plant
rationalisation.
We will now accelerate this programme, to ensure the focussed portfolio of 400
brands is supported by an equally focussed procurement and manufacturing base.
The procurement initiatives already announced and which will produce savings
of £1.0 billion by end 2002, are in addition to this programme.
An international framework for manufacturing
Central to our plans is a network of some 150 key manufacturing sites which
will be targeted for investment and development. They will be selected from
among our 380 existing sites world-wide with the overall aim of servicing the
400 brands in the most cost effective way. Of the balance, probably 100 sites
will no longer be required, while the remainder will service more local
markets.
The selection criteria for the key sites are clear. In addition to leveraging
scale, the relevance of the products made and the efficiencies achieved plant
by plant will determine selection.
There will be further benefits from driving these sites to achieve the highest
performance standards, benchmarked to the best practice of FMCG manufacture.
Procurement
There will be a similar programme to align our international procurement
activity with the requirements of the 400 brands. The function will be
re-organised, with emphasis on reducing component complexity and buying on an
international scale. Business to Business e-commerce will be a vital tool in
achieving our goal and we plan to migrate a significant part of our
procurement spend onto the Web in the next two years.
Cost/Benefits
The programme is expected to cost £2.0 billion in total.
Provision for these costs, including asset write-downs and redundancies, will
be made progressively as plans are finalised. The exact timing will be
governed in many territories, particularly Western Europe, by the need for
consultation prior to finalisation of plans. In addition to general benefits
of improved efficiencies and reduced costs, we plan to deliver a further 20
per cent improvement in fixed asset utilisation by 2004.
Next Steps
The necessary reviews are nearing completion and the overall framework is
clear. Specific decisions will be taken in due course, following all
necessary or relevant consultation. Specific announcements will follow, and we
will publicly report progress.
SIMPLIFICATION
Reducing the number of brands we actively manage from 1600 to 400 is a major
simplification of our core business and provides an opportunity to simplify
many other activities.
Reduced Overheads
Our organisation and management structure will be re-directed to the support
of 400 brands. This streamlining will mean not only more support behind fewer
priorities - but also a significant reduction in overall resources.
Savings will be made in Regional and Category managements as the direction of
our leading brands and our global supply chains are aligned. This also
provides an opportunity for streamlining our Corporate Centre.
Shared Services
Simplification is also made possible at a national and regional level where we
will seek to use Unilever scale wherever possible.
Our respective Foods and HPC companies in individual countries and regions
will be progressively integrated, yielding savings in back office costs. Most
importantly this will facilitate a single interface with our customers -
increasingly we will deal with the trade on a national or regional footing as
a Foods and/or an HPC business.
Systems Convergence
We already have a Unilever-wide communications network which links 70,000
employees through desk and lap top PCs. However, our knowledge and
information management systems are currently based on local operating company
requirements and often reflect local business processes. This will change.
We are moving to a harmonised and shared knowledge base for Unilever.
400 brands managed regionally and globally, require fewer systems. At the
same time as rationalising the absolute number of systems, we will be
concentrating financial processes into a small number of shared service
centres around the world.
Costs/Benefits
The costs of this re-engineering of our management services is estimated at
£1.3 billion up to 2004.
Next Steps
The necessary reviews are nearing completion and the overall framework is
clear. Specific decisions will be taken in due course, following all
necessary or relevant consultation. Specific announcements will follow, and we
will publicly report progress.
UNILEVER ANNOUNCES THREE NEW DIRECTORS
Three new directors will be recommended to Unilever shareholders for election
at their annual general meetings in London and Rotterdam on May 3, 2000. They
are:
Keki Dadiseth (b: 20-12-45): chairman of Hindustan Lever Ltd - the group's
Indian subsidiary - to become a director and member of the Executive
Committee. His first assignment will be to undertake a review of Unilever's
top organisation and report during the third quarter of 2000.
Andre van Heemstra (b: 31-01-46): president, East Asia Pacific Business Group,
to become personnel director and a member of the Executive Committee.
Charles Strauss (b: 21-01-43): president, Home & Personal Care-North America
Business Group, to become a director and will also assume chairmanship of the
North America Committee, which co-ordinates Unilever's North American
businesses.
Jan Peelen, currently personnel director and a member of the Executive
Committee, will retire at the annual shareholders' meetings.
Robert Phillips, currently a director and chairman of the North America
Committee, will also retire at those meetings.
Advisory Directors
Unilever has also announced today that The Rt Hon The Lord Brittan of
Spennithorne, QC, former vice president of the European Commission, will
become an advisory director of Unilever N.V. and Unilever PLC with effect from
May 1, 2000
Sir Derek Birkin, who has served as an advisory director since 1993, will
retire at the annual shareholders'meetings. He has served on the Nomination
and Remuneration Committees of the Board.
Business Group President
Tex Gunning, chairman of Van den Bergh Nederland, will be appointed as
president, East Asia Pacific Business Group.
Biographical Details
Keki Dadiseth: joined Hindustan Lever Ltd in 1973, and undertook a number of
roles before being seconded to Unilever in 1984 where he held senior financial
and commercial positions. Returning to India in 1987 he became
vice-president, personnel and two years later took on the additional
responsibility for HLL's personal products business. In 1991 he was appointed
executive director and head of detergents. He was made vice-chairman and
managing director of HLL in 1995, and became chairman in August 1996.
Andre van Heemstra: joined Unilever in 1970 and after holding various
positions with Lever in Holland, he was appointed director, marketing and
sales for East Africa Industries, Kenya, in 1980. Four years later he was
appointed managing director for detergents and personal products, Turkey. In
1988 he returned to the Netherlands where he held various senior marketing and
management positions until 1992 when he was appointed chairman of
Langnese-Iglo GmbH, Germany. In July 1996 became president of East Asia
Pacific Business Group.
Charles Strauss: held a number of senior marketing and management positions
before joining Unilever in 1986 on its acquisition of Ragu Foods, of which he
was president and ceo. He continued in this role until his appointment as
chairman and ceo of Unilever Germany's subsidiary, Langnese-Iglo in 1989. In
1992 he became president and ceo of Lever Brothers Company, New York, and a
director of Unilever United States Inc. He was president of Unilever's Latin
America business group from March 1996 to September 1999 when he took up his
present duties.
UNILEVER ACQUISITIONS AND DISPOSALS IN 1999
Unilever made 27 acquisitions in 1999. The most important were:
Varela SA Colombia Home & Personal Care
Mountain Cream China and Hong Kong Ice Cream
Beijing Tea Processing Factory China Tea
Sociedad Industrial Dominicana Dominican Republic Home & Personal Care
and Ice Cream
Miro Aebe Greece Tomato Products
Rossell India Tea Plantation
Selecta Dairy Products Inc. Philippines Ice Cream
Slotts & Kockens Sweden Culinary Brands
In addition to the above, agreement was reached to acquire two leading French
Culinary Brands, Amora and Maille, for £460 million.
Unilever disposed of 23 businesses during 1999, including Homann, a salad and
dressing business in Germany, a beverage business in Dubai and various other
small businesses.
The net consideration was £240 million.
NOT FOR PUBLICATION BEFORE 0700 HOURS ON TUESDAY 22 FEBRUARY 2000
UNILEVER PLC
NOTICE is hereby given that 25 April 2000 is the RECORD DATE for the final
ORDINARY DIVIDEND for 1999 payable on 22 May 2000.
S G WILLIAMS
Secretary
Port Sunlight
Wirral
Merseyside
CH62 4UJ
In accordance with the current procedure of The London Stock Exchange, the
1.4p Ordinary Shares in Unilever PLC will be quoted ex. dividend on 17 April
2000.
American shares each representing four 1.4p Ordinary Shares in Unilever PLC
The arrangements between Morgan Guaranty Trust Company of New York ('Morgan')
and Unilever PLC for the issue by Morgan in New York of Depositary Receipts
for American shares against the deposit with Morgan in London of 1.4p Ordinary
Shares in Unilever PLC provide that acceptance of ex. dividend shares tendered
to Morgan in London for deposit on or before the record date fixed in New York
for payment of a dividend on the American shares, shall be deferred until
after such record date.
The record date fixed for the final dividend for 1999 on the American Shares
is 25 April 2000.
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