1 Restoring competitiveness and growth CAGNY February 2006 Patrick Cescau Group Chief Executive Officer Rudy Markham Chief Financial Officer Safe Harbour Statement This presentation may contain forward-looking statements, including ‘forward- looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F. These forward-looking statements speak only as of the date of this presentation. The presentation refers to certain non-GAAP measures such as underlying sales growth, ungeared free cash flow and return on invested capital. These measures are not intended to be a substitute for GAAP measures. Definitions and reconciliations to GAAP measures can be found at www.unilever.com/ourcompany/investorcentre/.
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Restoring competitiveness and growth
CAGNY February 2006
Patrick CescauGroup Chief Executive Officer
Rudy MarkhamChief Financial Officer
Safe Harbour Statement
This presentation may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F. These forward-looking statements speak only as of the date of this presentation.
The presentation refers to certain non-GAAP measures such as underlying sales growth, ungeared free cash flow and return on invested capital. These measures are not intended to be a substitute for GAAP measures. Definitions and reconciliations to GAAP measures can be found at www.unilever.com/ourcompany/investorcentre/.
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Introducing Unilever
Introducing Unilever
Patrick Cescau
150 million times a day, in 150 countries, people use Unilever products to look good, feel good and get more out of life.
Brands people love
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Powerful category positions and global brands
Our 12 €1bn brands
World Number 1
World Number 2
Local strength
Source: Euromonitor, UL estimates
Savoury & Dressings
Spreads
Weight Management
Tea
Ice Cream
Laundry - #1 in D&E
Household Care
Daily Hair Care - #1 in D&E
Skin
Deodorants
Oral Care
Foods Home & Personal Care
Global reach and scale
The Americas | €13 bn | 33%
2005 Turnover | €40 billion
Europe | €16 bn | 41%
Asia/Africa | €11 bn | 26%
• Third largest consumer goods company in the world
growth priorities• continued flow of savings• 100 bps restructuring
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Long term targets:
FCF €25-30bn during 2005-2010
Improved ROIC
Through:
Top-line growth ahead of markets which are expected to grow 2-4% pa
Improved operating margin, after 50-100 bps restructuring
Improved capital efficiency
Improved tax efficiency (sustainable rate of 28%)
Value Creation to 2010
Overarching ambition remains top one-third TSR
Unlocking the potential of
our portfolio
Unlocking the potential of
our portfolio
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strongermarketgrowth
weakermarketgrowth
0.5
0.4
0.2
(0.3)
(1.3)
(1.6)
1.7
0.7
0.5
(1.6)
(1.7)
Unilever
HPC Foods
Unilever’s market-weighted growth is in line with our peer group
Average relative to the key peer group 2001-04
Source: Euromonitor, Unilever
Europe, % sales Unilever and key peer group
Not over-exposed in Europe
66%63%62%
51%48%
40%26%
24%16%
41%Unilever
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Sales mix by region
Strong exposure to high-growth D&E geographies
25
24
41
40
53
66
26
48
51
63
62
16
19
34
21
30
23
11
52
31
29
23
25
7212
13
14
20
21
22
23
24
30
38
43
56Unilever HPC
Unilever
Unilever Foods
Rest of World Europe N America
Source: Company reports, UL estimates
Strong global and local positions
LocalGlobal
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Strong global and local positions
LocalGlobal• Strong local positions we can
defend
• e.g., Laundry & Hair in D&E
• Leading, competitive global positions
• With attractive profitability
• Across Developed and Developing & Emerging markets
• In faster growing categories in which we have strong track record:
• Most of Personal Care
• Savoury, Ice Cream, Heart Health
Our issue is not our portfolio but what we do with it
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Portfolio strategy
High growth spaces
Strong market positions
Building on our strengths
Vitality D&EPersonal Care
More value from the portfolio
High growth spaces
Strong market positions
Vitality D&EPersonal Care
How do we know this focus
will deliver the results we want?
Portfolio strategy
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Vitality - Opportunity
Growing, profitable markets
On-trend with the consumer
Across categories
Developed and D&E
Unique portfolio
Consumer intimacy
Vitality brands
Strong capabilities
Unilever’s DNA
Vitality - Strengths
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2005: One-a-day drinks to help reduce blood pressure
Heart Health –building a € 1 billion brand
1950s Becelheart healthmargarine
2001: Cholesterol lowering: from spreads to milk, yoghurt and daily drinks … a €300m-plus business in 3 years
30 countriesGeographic expansion
Prod
uct i
nnov
atio
n
Heart Health vitality marketing
Consumer intimacy Credibility through experts Educate to empower
Health PR Customer partnershipsLocal activation
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Transforming the growth potential of a global brand in leaf tea through vitality innovation and communication.
Lipton
“Tea can do that” - Advertising
Lipton
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Tea can do that
System Sales (all formats, all channels)
2001 2005200420032002
2000
2500
€m
illion
s
1500
1999 2000
Growth:1999 to 2005 +7% p.a
2005 +11%
Personal Care - Opportunity
Growing markets: + 4-5% p.a.
Profitable: margins above average
Low private label penetration: < 5%
Category stretch
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Personal Care - Strength
Global leaders in Mass Skin /Personal Wash and Deodorants
Leaders in Hair in D&E
2000-’05 +6.5% p.a., ahead of market
From 15% to 26% of portfolio in 10 years
Over 50% of PC sales in D&E
Powerful, iconic brands
Deos
Hand & Body
Hair
Face
Liquids
Dove –building a €2.3 billion brand
86 countriesGeographic expansion
Prod
uct i
nnov
atio
n
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Dove brand development
Becoming a truly global, iconic brand
An idea … … that connects with consumers everywhere
Dove brand development
Becoming a truly global, iconic brand
An idea … … that connects with consumers everywhere
The Campaign for Real Beauty
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“Little Girls” - Advertising
Dove brand development
We love Dove’s curves
Growing turnover
0
100
200
300
400
500
600
700
'80 '85 '90 '95 '00 '05
euro
s m
illio
ns
… and profit
0
500
1000
1500
2000
2500
'80 '85 '90 '95 '00 '05
euro
s m
illio
ns
+18% p.a. Brand contribution
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Developing and emerging markets
• World population growth almost all in the developing world
• By 2010 nearly 90% of world population will be in D&E
• Consumer spending growing faster than in the developed world - already greater at PPP
• Rising per capita income gives disproportionate growth in per capita consumption for Unilever categories
Opportunity
D&E strengths
• Global scale, local roots
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Affluent
Aspiring
Striving
Leverage global mixes
Increase consumption & uptrade
Drive penetration
Meeting the needs of consumers at every economic level
D&E strengths
• Global scale, local roots
• Sustained performance
• 8% pa organic sales growth over 15 years
• Good profitability – margins close to UL average
• Growing part of our portfolio
Up from 20% to 38% in 15 years
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Unilever in D&E – Laundry
ASIA ULOther
LATAMUL
Other
AMET UL
Strong leadership positions
Other
Strong local franchises
Source: Fabiric cleaning data - Nielsen, IRI, Unilever estimates
2003 2005 20071997 2001
IdeaPack
Suppliers
Innovation
Identity360º
Driving local alignment
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A single cornerstone position
An idea … … that connects with consumers everywhere
Dirt is Good in India and Brazil
Advertising
A single cornerstone position
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Brand Health MeasuresThailand Indonesia Vietnam China India
Stain Attributes
Laundry is Simpler
Getting Dirty is a positive part of life
==
=== =
Delivering results2005 Sales Growth
0% 5% 10% 15% 20%
Asia
Africa
Latin America
Portfolio strategy
High growth spaces
Strong market positions
Building on our strengths
Vitality D&EPersonal Care
More value from the portfolio
This focus delivers the results
we want
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More value from the portfolio
Win with Customers
The organization to deliver
World class capabilitiesBrilliant Consumer
Marketing
Unilever’s change agenda
More value from the portfolio
Win with Customers
The organization to deliver
World class capabilitiesBrilliant Consumer
Marketing
Unilever’s change agenda
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More value from the portfolio
High growth spaces
Strong market positions
Building on our strengths
Vitality D&EPersonal Care
Sharpening our choices
Fast-growing categoriesFast-growing geographiesStrong local positionsWinning brand mixes
Channeling resources
Strong positions in lower-growth spaces
Invest to win
Invest to compete
Funds for growth
Highly profitable businesses whose role is to generate funds
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More value from the portfolio
Win with Customers
The organization to deliver
World class capabilitiesBrilliant Consumer
Marketing
Unilever’s change agenda
• One CEO and Unilever Executive team
The right organization to drive more value from the portfolio
• Flatter structure, fewer layers
• Majority of top 20 businesses reporting directly to the Unilever Executive
• 1/3 reduction in executive management numbers by end 2006
CEO
EuropeAmericas Asia / Africa
Foods Finance
HPC HR
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The right organization -categories
CEO
EuropeAmericas Asia / Africa
Foods Finance
HPC HR
• Brand development
• Innovation
• World class mixes
• Category strategy
The right organization -regions
CEO
EuropeAmericas Asia / Africa
Foods Finance
HPC HR• Brilliant Go-to-Market
execution
• Deploying brands and innovations
• Customer focus
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The right organization to enable the change
Closer to consumers and customers, faster, more agile, fit to compete
€700 million savings by end 2006€1bn savings by end 2007
By end 2005, over 80% of turnover managed through ‘One Unilever’ organisationsBy end 2006 a single management team in all marketsSimplified, standardised business processesTop management structure streamlined
Progress on ‘One Unilever’
More value from the portfolio
The organization to deliver
World class capabilities
Unilever’s change agenda
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Brands with a distinctive personality
AXE gives guysthe edge in themating game
Brands with enduring ideas...
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...ideas that may provoke debate and social change.
Brands that are driven by true insight...
Sunsilk for mulatto hair Sunsilk for afro hair
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Lux Pearls in Brazil- the first soap bar designed for black and mulatto skin
...that may be universal or local.
Brands that have proprietary design
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…superior sensories...
…outstanding ergonomics...
Anti-Hangover Re-load Snake Peel Boost
Axe Shower
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…compelling claims...
Visibly whiter teeth in two weeks
...and breakthrough science.
Pond’s anti-ageing -laser treatment in a bottle
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Brands that open up new market segments...
Brands that talk to both the head…
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…and the heart...
…with ads one cannot misswhether in print...
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Axe: Residue - Advertising
… or on TV.
Brands that are rooted in a clear and consistent category strategy.
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Big brand ideas brought to lifein the marketplace...
…activated in a way...
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Dove - Piazza Venezia, Roma
... that cannot be missed.
Brands that stand out on the street...
Outdoor media
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Brands that go where the people go...
Interior Morocco
Brighton, UK
…that make one stop and look…
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The Fair & Lovely Foundation- India
…and reach out into the community.
Brands that are promoted creatively...
Win an exotic trip abroad with Lipton Ice in Portugal
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Lux Super Rich : Bangkok - longest catwalk ever
...ignite the brands with drama...
...and mount events with mass participation.
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Brands that go on line...
Video Blog daily web journal of Evan &
Gareth’s adventuresreaches 800,000 boys in 8 weeks
…and connect in novel ways.
Axe Mojo Master Fantasy Seduction On Line Gaming.100 girls, 500 moves.Target 3 million players.
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Brands that inspire customer co-operation…
The Axe Effect caught on US Wal*Mart security cameras
...dominate the shelf...
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...enliven the aisle...
...and bring powerful in-store events.
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More value from the portfolio
Win with Customers
The organization to deliver
World class capabilities
Unilever’s change agenda
Bringing the breadth of our portfolio to life
One Unilever
100% Availability
Trade spend & promotion effectiveness
Category Thought Leadership
Winning with customers – our change programme
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Clearest strategy 9 4
Most important brands 6 5
Best combination of growth & profit 8 4
Most helpful consumer insight 6 5
Most innovative marketing 6 5
Delivering results in the U.S.
2004 2005
More value from the portfolio
The organization to deliver
World class capabilities
Changing Unilever
• Sharper choices and resource allocation, disciplined execution
• High growth spaces, strong market positions
• Building on our strengths
• Distinct, complementary roles
• Capability-building programmes underway and delivering results
• A new organization, simpler, more focused and aligned
• Closer to consumers and customers, fit to compete
