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Unilever – Barclays Global Consumer Staples conference
Andrew Stephen
September 7th 2016
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 ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, 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 Unilever Group (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. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain competitive; Unilever’s investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; the production of safe and high quality products; secure and reliable IT infrastructure; successful execution of acquisitions, divestitures and business transformation projects; economic and political risks and natural disasters; financial risks; failure to meet high and ethical standards; and managing regulatory, tax and legal matters. 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.
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 in the Group’s Annual Report on Form 20-F for the year ended 31 December 2015 and the Annual Report and Accounts 2015.
SAFE HARBOUR STATEMENT
Agenda for today
Profitable growthEmerging markets
A world of opportunity The next wave of savings
Portfolio & Innovation
Our strategy for long-term value creation
Sustainable Living: More growth, Lower costs, Less risk, More trust
Winning with brands and innovation
Winning in the marketplace
Winning through continuous improvement
Winning with people
Step up profitabilityScale household
care
Grow the coreBuild premium
Accelerate growthStrong cash flow
Grow ice cream ROICAccelerate tea
Differentiated category strategiesThe Compass
Food
Consistent Competitive
Profitable Responsible
H1 2016 - consistent, competitive, profitable & responsible growth
Sustainable living brands
1%faster growth
+4.3%
2013
+2.9%
2014
+4.1%
2015
+4.7%
H1 2016
Core operating margin
+50bps
H1 2016 H1 2016
Unilever
Market
+5.7%
PC
+2.3%
+6.5%
HC
+4.1%
RefreshH1’16Underlying sales growth Nielsen market growthUnderlying sales growth
H1 2016 results - delivering against strategic priorities
Building premium in Personal Care Accelerated growth in Foods
Improved ROIC in Ice Cream
Price index > 120
USG%
2.3%Brands >120 price index
+8%
H1 USG%
1.5%
15%
Estimated H1’16 MAT, vs. H1’14
+130bps+300bps
Improved margins in Home Care
COM%
9.8%7.6%
15%6.3%
(0.6%)
Agenda for today
Profitable growthEmerging markets
A world of opportunity The next wave of savings
Portfolio & Innovation
A strong portfolio of brands Increasing consumer reach
Share of top 50 FMCG brands based on shopper decisions
14%24%
UnileverNearest competitor
Source: Kantar World Panel Report Analysis of 300 billion shopping decisions to determine how many times a brand was chosen during the course of a year
Unrivalled global scale
Number of households gained in 2015
32m
25m
24m
19m
18m
16m
Sunsilk
Lifebouy
Dove
Close-up
Vim
Lux
Global scale and local relevance
Local brandsGlobal brands, locally adapted Global brands at scale
Bigger, better, faster innovation
More differentiated technology Faster global roll-outs
45% of projects with differentiated technology
Faster local execution
Up to 30% reduction in roll-out time Up to 50% reduction in lead time
Innovation in high-growth segments
NATURALS
AYURVEDIC
FAL Ayurvedic Indulekha
Neutral detergent
Ben & Jerry’sNon-Dairy
TRESemmé Botanique
Lipton Pure Leaf
Knorr meal makers
FREE-FROM
Ayush
Lux Silicone-free
AcquisitionsDisposals
2011 2012 2014 20152013 2010 2011 2013 20142012
+€3.8bn
20092010
-€3.0bnT/O T/O
20152016
1.9x TO multiple
2.3x TO multiple
Personal Care Foods Refreshment Home Care
2009 2016
Active portfolio management
Personal Care now our largest business
Personal Care
Foods
Refreshment
Home Care
38%
24%
19%
19%
28%
35%
19%
18%
% turnover
Personal Care
Innovating with flexible business models
More entrepreneurial
New segments
New channels
New capabilities
High-growth
Foods Refreshment
Home Care
Innovating with flexible business models
Personal Care Home Care
Foods Refreshment
Prestige skin care Subscription-based male grooming Purifiers
Food service Retail-led Pepsi-Lipton JVBen & Jerry’s
Agenda for today
Profitable growthEmerging markets
A world of opportunity The next wave of savings
Portfolio & Innovation
Emerging Markets fundamental to Unilever’s growth and value creation
58% turnover
55% EBIT
70% volume
+4.3%
+1.3%+2.7%
+4.3%
+5.0%
+2.9%
+5% 25 year average
+9%25 year average
Underlying volume growth
Underlying sales growth
REFRESHMENT
FOODS
HOME CARE
PERSONAL CARE
Macro trends driving growth across our categories
800m more people in middle income: Increased per capita consumption
400m more people in EM cities: More kitchens and more bathrooms
300m more women in the workforce:More Personal Care, meal solutions & laundry aids
+7%€12bn
€8bn +6%
+7%
+9%
€5bn
€5bn
2015 Turnover USG%
A portfolio that consistently builds scale
Spans price points and consumer needs
Local touch: 80% of EM leadership teams are locals
Example: Laundry
Mor
e be
nefit
s
Rising income
Global brands, made locally relevant
4million
8million
Outlets reached directly or via distributors
Strengthening our distribution in small stores
An end-to-end digitally enabled solution Rolling out across our distributors
2020 target: Cover 50% of indirect sales
2013 2014 2015 2016
ThailandVietnam
PhilippinesIndonesiaMyanmar, Cambodia
KenyaSri Lanka
Ghana
Tanzania
Cote D’Ivoire
Nigeria
UAE
India
Extending our distribution in new channels
Grocery.comMarket Place
Beauty.com Hybrid
India: Taking off in different waysChina: already well-established
2010 2011 2012 2013 2014 2015 Q1'16
China
India
E-commerce as % of sales
Building e-commerce in key geographic hubs
10%
5%
Alibaba Tencent Baidu
Agenda for today
Profitable growthEmerging markets
A world of opportunity The next wave of savings
Portfolio & Innovation
Continuous improvement in our cost base
€1bnper annum
Maxing the mix Supply chain savings Project Half Advertising efficiency
2012 2015
GM% + 170bps
2012-2015
> €500m savingsOverheads % sales
>€200m2012-2015
Building resilience & agility to underpin profitable growth
Connected 4 GrowthMore global
and More local
Net Revenue Management
Zero Based Budgeting
Peer
rang
e
Zero Based Budgeting
Decisions based on data
Focused on value & growth
Driven by experienced business leadership
Right challenge, right time
Our approach
TravelPromotional re-pack
Market research
Benchmarking examples
Consultants
Value targeting
Median
Best in class
Building resilience & agility to underpin profitable growth
Connected 4 GrowthMore global
and More local
Net Revenue Management
Zero Based Budgeting
Savings of at least
€1bn by 2018
Plus ongoing supply chain savings €1bn per annum, re-invested
Creating long-term value – even in challenging market conditions
Unilever
Market
2013 2015
Underlying Sales Growth Core Operating Margin
+2.9%
Core EPS
+6% p.a.
Current
+11% p.a.
Constant
+40bps
+40bps+30bps
Cumulative Free Cash Flow
+4%
2013-2015 2014
€12bn
Return on invested capital Dividends
+19%+18%
2012 2015
2013-2015
+7%pa
2013-2015
Our priorities remain unchanged
Volume-driven growth ahead of our markets
Steady and sustainable improvement in core operating margin
Strong cash flow
Unilever – Barclays Global Consumer Staples conference
Andrew Stephen
September 7th 2016