SOURCE: Unilever

August 06, 2009 02:06 ET

Unilever 2nd Quarter Results 2009

LONDON--(Marketwire - August 6, 2009) -


SECOND QUARTER UNDERLYING SALES GROWTH 4.1%, VOLUME GROWTH 2.0%.
   CASH FLOW EUR 1.6 BILLION AHEAD OF LAST YEAR IN FIRST HALF.

Key Financials (unaudited,   Second Quarter 2009    Half Year 2009
at current rates)

Turnover (EUR million)       10,458        + 1%     19,963    + 0%
Operating profit
(EUR million)                 1,320        - 4%      2,554    - 20%

Operating profit before
RDIs* (EUR million)           1,523        - 4%      2,915    - 3%

Net profit (EUR million)        833        - 15%     1,636    - 31%
Net profit before RDIs*
(EUR million)                   997        - 12%     1,914    - 12%
Earnings per share (EUR)       0.27        - 16%     0.53     - 33%
Earnings per share
before RDIs* (EUR)             0.33        - 12%     0.63     - 13%

* RDIs: Restructuring, disposals and other one-off items



Note: operating profit in the first half of 2008 included profits on
disposal of EUR516 million pre-tax.



Second Quarter highlights

  * Underlying sales growth 4.1%. Volume growth 2.0%, with all regions
    positive. Growth driven by improved execution, innovation
    and increased marketing spend.

  * Advertising and promotion spend increased by 50 bps.

  * Operating margin before RDIs down by 60 bps (including 30 bps of
    margin dilution from disposals), in line with expectations.


First Half Highlights

  * Underlying sales growth 4.4%, with volumes up 0.2%. Turnover in
    line with last year after the effects of currency movements (-0.9%)
    and disposals/acquisitions (-3.2%).

  * Operating margin before RDIs down by 50 bps (including 30 bps of
    margin dilution from disposals), in line with expectations.

  * Earnings per share before RDIs down 13%, including -6% from the
    pensions finance charge and -3% from a higher first half tax
    charge.

  * Net cash flow from operating activities EUR1.6 billion ahead of last
    year with much improved working capital.


Paul Polman, Chief Executive Officer:  "While conditions remain
difficult in many markets, I am encouraged by the return to volume
growth across all regions and the majority of countries and categories.
More of our brands are improving share again behind strong innovations,
greater consumer value, increased marketing support and better
execution.  We continue to focus on restoring volume growth
while protecting margins and cash flow for the year as a whole."


6 August 2009


INTERIM MANAGEMENT REPORT FOR HALF YEAR TO JUNE 2009

In the following commentary we report underlying sales growth
(abbreviated to 'USG' or 'growth') at constant exchange rates,
excluding the effects of acquisitions and disposals. Turnover includes
the impact of exchange rates, acquisitions and disposals. Unilever
uses'constant rate' and 'underlying' measures primarily for internal
performance analysis and targeting purposes. We also comment on trends
in operating margins before RDIs (restructuring, disposals, and other
one-off items).  We may also discuss net debt, for which we provide an
analysis in the notes to the financial statements.  Unilever believes
that such measures provide additional information for shareholders on
underlying business performance trends. Such measures are not defined
under IFRS and are not intended to be a substitute for GAAP measures of
turnover, operating margin, profit, EPS and cash flow. Please refer
also to notes 2 and 3 to the financial statements. Further information
about certain of these measures is available on our website
at www.unilever.com/investorrelations


OPERATIONAL REVIEW

                Second Quarter 2009           Half Year 2009

                Turnover USG  Volume Price  Turnover USG  Volume Price
                EUR m      %     %       %    EUR m    %     %     %

Asia Africa CEE 3,856    8.2   3.3     4.8    7,431   8.8   1.3   7.4

Americas        3,335    4.9   1.6     3.2    6,491   5.9   0.4   5.5

Western Europe  3,267   (1.1)  1.0    (2.0)   6,041  (1.9) (1.2) (0.7)

Unilever Total 10,458    4.1   2.0     2.1   19,963   4.4   0.2   4.2

Savoury,
dressings &
spreads         3,232   (0.2)                 6,544   1.4

Ice cream &
beverages       2,468    4.9                  4,132   4.5

Personal care   2,996    5.4                  5,803   4.6

Home care &
other           1,762    9.2                  3,484   9.9

Unilever Total 10,458    4.1                  19,963  4.4



REGIONS

Asia Africa CEE - Half year USG +8.8%, Volume +1.3%

Underlying sales have grown in all our main developing and emerging
markets and in all categories. The region returned to positive volume
growth in the second quarter as we rolled out innovations and increased
our level of marketing support. Overall consumer demand in our
categories has continued to grow this year, but with volumes increasing
at a slower rate than in the past.

We have established a regional supply chain centre, based in Singapore,
and are progressively rolling out common systems across the region. We
have continued to invest in our priority markets of Russia and China.
We have completed a new global R&D centre in Shanghai.  In Russia, we
completed the acquisition of Baltimor, the market leader in ketchup, on
3 July, and we have announced the construction of a new ice cream
factory to support Inmarko which has grown rapidly since its
acquisition last year.

The operating margin before RDIs was up by 150 bps in the first half
year.

The Americas - Half year USG +5.9%, Volume +0.4%

The region has sustained a good performance.  North America grew by
2.7% in the first half year, with volumes sustained at last year's
levels despite lower foodservice sales including the exit from
unbranded business. Sales in Latin America have grown at around 10% in
the first half year with an improving volume trend.

The integration of the US, Canada and Caribbean businesses is
progressing well and Canada will move onto the US SAP platform on 1
October. Our new Customer Insight and Innovation Centre is helping to
generate ideas for fresh ways of growing with our customers.

The operating margin before RDIs was up by 40 bps in the first half
year.

Western Europe - Half year USG -1.9%, Volume -1.2%

Markets remain very challenging.  Our own business returned to positive
volume growth in the second quarter, with an improving trend across all
key countries and benefiting from good ice cream sales in the first
half of the season. Net prices were lower than last year as commodity
cost pressures eased and we restored price competitiveness.

We made good progress on reducing costs. This includes rationalising
the supply chain, investing in more efficient production lines,
leveraging our single IT system to drive regional synergies and
streamlining overheads.

The operating margin before RDIs was lower by 330 bps in the first half
year reflecting high commodity costs, the depreciation of sterling, and
investments to reignite volume growth.


CATEGORIES

We have grown sales in all categories in the first half year, despite
the economic environment. We are seeing the benefits of rolling out
innovations faster across countries and regions under our strong global
brands. Consumers are looking, more than ever, for good value in the
products they buy, so our innovation programme places even greater
emphasis on superior functional benefits, backed up by clinical proofs
and strong communication. At the same time we continue to build
consumption in our categories by developing new market segments and
converting users from alternative products.

Savoury, dressings and spreads - Half year USG +1.4%

In spreads and dressings, we continued the roll-out of the
successful'goodness of margarine' campaign, while reducing prices to
reflect the
easing of edible oil prices.  We are re-launching our value brands in a
number of countries to compete at the lower end of the market. In
savoury, Knorr has grown well in the Americas and Asia Africa CEE but
sales were down in Western Europe. We have implemented comprehensive 30
day action plans to address this and have seen an improving trend,
particularly in Germany. The roll-out of Knorr Stockpots
throughout Europe has gone well and consumption is building. In
the US we have capitalised on the move to more in-home eating with
successful campaigns behind Hellmann's mayonnaise, Ragu pasta sauces
and Bertolli frozen meals.  This was partly offset by lower Foodservice
sales, including the exit from unbranded business.  Hellmann's new'double
whisked' light mayonnaise is driving good growth for the brand
globally.

Ice cream and beverages - Half year USG +4.5%

The good performance in the first half has been led by strong growth in
Developing and Emerging markets in both ice cream and tea. In tea we
are benefiting from innovations behind a portfolio of brands covering
all consumer income levels. We have introduced a range of herbal
infusions under our value brand in Russia and a new flavour under our
value brand in Poland. Growth of our premium brand Lipton has been
boosted by pyramid bags, while Lipton Linea slimming teas are building
well in Europe and have recently been launched in Russia and China. We
have continued to extend distribution for ice cream brands in Asia
Africa CEE and Latin America with good results. In Western Europe we
saw good growth in the second quarter, and sales were up for the half
year. Magnum, with the successful 'Temptation' variant, and Ben &
Jerry's were particularly strong.


Personal care - Half year USG +4.6%

Growth in personal care was driven by our global innovation programme,
supported by strong advertising, as well as an increased focus on value
across the portfolio. Skin cleansing performed well with new functional
advertising for Dove bar, the roll-out of Lux Soft Skin in Latin
America and campaigns that address current heightened needs
for hygiene. In North America we also introduced Dove shower
gels with new technology which reverses dryness.  In hair care we
benefited from the launch of Lux Shine in China and Japan, continued
momentum for Clear anti-dandruff shampoo in Developing and Emerging
markets and good growth for Suave, our value brand in the US.  We have
launched a new Dove deodorant which makes underarms look and feel
hair-free for longer and a new Axe body spray fragrance. The successful
Signal White Now oral care range has been extended with the
introduction of a mouthwash line.


Home care and other - Half year USG +9.9%


Both laundry and household cleaning have performed very well in the
first half year. Growth has come from innovation supported by strong
advertising and increased promotional intensity. In laundry, we have
upgraded our 'Dirt is Good' range in key Developing and Emerging
markets and launched a version for semi-automatic machines in Brazil.
In Europe we are seeing good momentum in Small & Mighty concentrated
liquids and in new 'clear and fresh' Surf detergents.
 In household cleaning Cif 'acti-fizz' and Domestos '24 hour
protection' continue to do well and we have now launched Cif in India.



ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FIRST HALF YEAR

Finance costs and tax

The cost of financing net borrowings was EUR244 million. This was EUR36
million higher than last year because of a higher average level of net
debt and one-off charges this year. The interest rate on borrowings was
4.6%, slightly lower than last year.

There was a net charge of EUR90 million for pensions financing compared
with a credit of EUR67 million in the first half of last year.

The effective tax rate was 29.4% and the underlying tax rate, before
RDIs, was 28.5%. The underlying tax rate is expected to be lower in the
second half and to be around 27% for the year as a whole. Our longer
term guidance remains around 26%.

Joint ventures, associates and other income from non-current
investments

Net profit from joint ventures and associates, together with other
income from non-current investments contributed EUR72 million. This
compares with EUR92 million last year which included a one-time gain on
the extension of the Pepsi/Lipton joint venture for ready-to-drink
tea in the first quarter.  On an underlying basis there was an increase
of EUR4 million.


Cash Flow

Cash flow from operating activities was EUR1.6 billion higher than last
year in the first half. Working capital improvement has been a priority
for the business and the good progress made has largely offset the
normal seasonal working capital movements.

Balance sheet

Balances at the half year include the acquisition of the TIGI hair care
business. The net deficit on pensions increased from EUR3.4 billion at
the start of the year to EUR3.7 billion, mainly reflecting lower
corporate bond rates used to discount liabilities.  Changes in the
level and maturity profile of financial liabilities reflect bond issues
and redemptions since the start of the year. Currency changes had
significant effects on goodwill and financial liabilities.



PRINCIPAL RISK FACTORS

On pages 25 to 27 of our 2008 Report and Accounts we set out our
assessment of the principal risk issues that would face the business
through 2009, including global economic slowdown and changing consumer
demand; competitive markets and consolidation of customers; financial
risks relating to liquidity, currency, interest, pensions and taxation;
exposure to developing and emerging markets; input costs, supplier and
supply chain reliance; safety, sustainability and environment;
restructuring and changes to the way we operate; and people and talent.
 In our view, the nature and potential impact of such risks remains
essentially unchanged as regards our performance over the second half
of 2009.



COMPETITION LAW INVESTIGATIONS

As previously reported, in June 2008 the European Commission initiated
an investigation into potential competition law infringements in the
European Union in relation to consumer detergents. Unilever has
received a number of requests for information from the European
Commission regarding the investigation and has been subject to
unannounced investigations at some of its premises. No statement of
objections against Unilever has been issued to date.  It is too early
to be able reasonably to assess the outcome or to estimate the fines
which the Commission may seek to impose on Unilever as a result of this
investigation, if determined against Unilever. Therefore no provision
has been made. However, substantial fines can be levied as a result of
European Commission investigations. Fines imposed in other sectors for
violations of competition rules have amounted to hundreds of millions
of euros.


Unilever is, as previously reported, involved in a number of other
on-going investigations by national competition authorities within the
EU in relation to potential national competition law infringements,
primarily in relation to the home care and personal care sectors. It is
too early to be able reasonably to assess the outcome or to estimate
the fines which the authorities may seek to impose on Unilever as a
result of these national investigations, if determined against
Unilever. Therefore no provision has been made.



OTHER INFORMATION

This document represents Unilever's half-yearly report for the purposes
of the Disclosure and Transparency Rules (DTR) issued by the UK
Financial Services Authority (DTR 4.2) and the Dutch Act on Financial
Supervision, section 5:25d (8)/(9) (Half-yearly financial reports). In
this context: (i) the condensed set of financial statements can be
found on pages 6 to 14; (ii) pages 2 to 5 comprise the interim
management report; and (iii) the Directors' responsibility statement
can be found on page 15.  No material related parties transactions have
taken place in the first six months of the year.




CAUTIONARY STATEMENT

This announcement may contain forward-looking statements, including'forward-
looking statements' within the meaning of the United States
Private Securities Litigation Reform Act of 1995. Words such as'expects',
'anticipates', 'intends', 'believes', or the negative of
these terms and other similar expressions of future performance or
results, including any financial objectives, and their negatives are
intended to identify such forward-looking statements. These
forward-looking statements are based upon current expectations and
assumptions regarding anticipated developments and other factors
affecting the Group. They are not historical facts, nor are they
guarantees of future performance. Because these forward-looking
statements involve risks and uncertainties, there are important factors
that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including,
among others, competitive pricing and activities, consumption levels,
costs, the ability to maintain and manage key customer relationships
and supply chain sources, currency values, interest rates, the ability
to integrate acquisitions and complete planned divestitures, the
ability to complete planned restructuring activities, physical risks,
environmental risks, the ability to manage regulatory, tax and legal
matters and resolve pending matters within current estimates,
legislative, fiscal and regulatory developments, political, economic
and social conditions in the geographic markets where the Group
operates and new or changed priorities of the Boards. Further details
of potential risks and uncertainties affecting the Group are described
in the Group's filings with the London Stock Exchange, Euronext
Amsterdam and the US Securities and Exchange Commission, including the
Annual Report and Accounts on Form 20-F. These forward-looking
statements speak only as of the date of this announcement. 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.


ENQUIRIES


Media: Media Relations Team          Investors: Investor Relations
                                     Team
UK +44 20 7822
6805 tim.johns@unilever.com          +44 20 7822 6830
                                     investor.relations@unilever.com
or +44 20 7822
6010 trevor.gorin@unilever.com

NL +31 10
217 4844  fleur-van.bruggen@unilever.com




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