Unilever Second Quarter and Half Year Results 2003 -Unaudited-.Business Editors NEW YORK--(BUSINESS WIRE)--July 30, 2003 Outlook for full year earnings confirmed, supported by the sustained benefits of the Path to Growth strategy.
FINANCIAL HIGHLIGHTS
EUR Millions (constant 2002
average exchange rates)
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Second Quarter 2003 Half Year 2003
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12,362 - 1 % Turnover 23,486 - 3 %
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1,808 - 1 % Operating profit - beia(a) 3,431 - 1 %
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1,039 - 26 % Pre-tax profit 2,134 - 7 %
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595 - 13 % Net profit 1,265 + 14 %
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1,009 + 2 % Net profit - beia(a) 1,874 + 2 %
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1.03 + 3 % EPS NV - beia (a) (Euros) 1.91 + 4 %
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15.47 + 3 % EPS PLC - beia (a) 28.69 + 4 %
---------------------- (Euro cents) -------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles.
Earnings per share (beia) at current rates of exchange were 6% lower
than the prior year for both the quarter and half year.
KEY FEATURES -- Sales of the leading brands grew 3.1% in the first half year and now represent over 90% of our business. -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (beia) moved to 14.6% with Path to Growth savings continuing to deliver to plan and increases in advertising and promotions of 120 basis points in the half year. -- Interest on net borrowings was reduced by 9% in the half year and net debt at the quarter end, at closing rates of exchange, had further reduced to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 16.1 billion. -- EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. (beia) grew by 3% in the quarter and by 4% for the half year. -- Lower pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta and net profit in the second quarter reflect exceptional profits on the sale of businesses last year. CHAIRMEN'S COMMENT Through the Path to Growth strategy we have continued to build a more robust and valuable business: focussing on the strength of our leading brands; reshaping the portfolio and addressing under-performing businesses; and by using our scale to improve margins, capital efficiency and cash flow. We have continued to make excellent progress in personal care, savoury and dressings and in health spreads. Ice cream results across the world are good. The specific plans to focus and enhance profitability in laundry Laundry can be:
Before industrialization and tea are working well and Foodsolutions grew ahead of weak markets. There has been a disappointing recent performance in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. in HPC (Handheld PC) A palmtop computer that weighs less than one pound and runs specialized versions of popular applications. Microsoft coined the term for its Windows CE operating system, which is an abbreviated version of Windows. See Pocket PC. and Slim--Fast. Both are being addressed and will improve. Path to Growth represents a radical and wide-ranging wide-rang·ing adj. Covering a wide area; including much: a pianist's wide-ranging repertoire; a wide-ranging interview. business transformation programme. Mid way through year four we have had considerable success in brand focus, supply chain restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and with the integration of major acquisitions. These have led to continued margin expansion and stronger cash flow. We continue to aim for sustained top third TSR (Terminate and Stay Resident) Refers to a program that remains in memory when the user exits it in order that it be immediately available at the press of a hotkey. through robust value growth. We confirm our outlook for the year of low double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth in earnings per share (beia) and expect growth of the leading brands of some 4%. N W A FitzGerald A Burgmans Chairman, Unilever PLC Chairman, Unilever N.V. SECOND QUARTER AND HALF YEAR FINANCIAL RESULTS (at constant exchange rates) Note: These results include the previously announced changes in accounting for share options and pensions in both the prior and current years. Further details are given in the notes on page 13. The estimated impact of share options and pensions is to reduce growth in EPS before exceptional items and goodwill and intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. (beia) growth by 6 percentage points in 2003 which is included in the outlook for the year. Underlying sales grew by 2.4% in the quarter and by 2.1% in the first half year. The impact of our disposal programme as we reshape the portfolio under Path to Growth led to turnover being lower than last year by 1.5% in the quarter and by 2.5% in the first half. Operating margin (beia) at 14.6% was ahead of last year by 10 basis points in the quarter and by 20 basis points for the half year. The improved margin, applied to lower turnover through the impact of disposals, led to operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (beia) 1% lower for both the quarter and the first half. Amortisation of goodwill and intangibles was EUR 349 million in the quarter and EUR 640 million for the half year. Interest on net borrowings was 6% lower in the quarter and 9% lower in the half year, as we benefited from continued cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and proceeds of business disposals. Financing of pension fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. and liabilities, included in interest, represented a net charge of EUR 48 million in the quarter which compares with a credit of EUR 27 million in the prior year quarter. Net exceptional charges within operating profit were EUR 99 million in the quarter. This includes restructuring investment costs Those program costs required beyond the development phase to introduce into operational use a new capability; to procure initial, additional, or replacement equipment for operational forces; or to provide for major modifications of an existing capability. of EUR 111 million and profits on disposals of EUR 12 million. For the first half year net exceptional charges within operating profit were EUR 21 million which includes restructuring investment costs of EUR 183 million and profits on disposals of EUR 162 million. The effective tax rate was 38% in the quarter and reflects the non-tax-deductibility of Bestfoods goodwill amortisation. The underlying, or beia, tax rate was 30%, in line with our expectation for the full year. Net profit (beia) was up 2% in both the quarter and half year to EUR 1,009 million and EUR 1,874 million respectively. Net profit was 13% lower in the quarter as a result of exceptional profits on disposals in the prior year, principally that of DiverseyLever. For the first half year, net profit was 14% ahead of last year mainly due to lower after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. exceptional items, particularly lower restructuring costs as we move into the latter part of the programme. Earnings per share (beia) rose by 3% in the quarter and by 4% in the first half year, while earnings per share was 12% lower in the quarter but ahead by 16% in the half year. When expressed at current rates of exchange, earnings per share (beia) for the half year decreased by 6% in Euros, increased by 15% when measured in US $ and increased by 3% when measured in GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. Sterling. Turnover expressed at current rates of exchange decreased by 15% in Euros, increased by 5% when measured in US $ and decreased by 6% when measured in GBP Sterling. For further details of the results at current exchange rates and impact of exchange rate movements see notes on page 12. SECOND QUARTER PERFORMANCE BY REGION (at constant exchange rates) The following regional commentary is based on operating profit before exceptional items and amortisation of goodwill and intangibles. Sales growth is stated on an underlying basis, excluding the effects of acquisitions and disposals. Turnover includes the impact of acquisitions and disposals. EUROPE Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). Underlying sales grew by 3.3% with 40 basis points from price. Turnover was 1.7% lower than last year through the impact of planned disposals as we reshape our portfolio to faster growing and more profitable markets. There have been strong performances from Personal Care and an expected pick up in momentum in Foods from both the timing of Easter Easter [A.S. Eastre, name of a spring goddess], chief Christian feast, commemorating the resurrection of Jesus after his crucifixion. In the West, Easter is celebrated on the Sunday following the full moon next after the vernal equinox (see calendar); thus, it and our innovation programme. These were partly offset by declines in Home Care as we accelerate our focus on improving profitability to create the necessary platform for future growth. In Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). : -- There has been continued good growth in spreads and cooking products for our heart health brands Flora/Becel, but our family brands such as Rama and Blue Band have been affected by competition from lower butter butter, dairy product obtained by churning the fat from milk until it solidifies. In most areas the milk of cows is the basis, but elsewhere that of goats, sheep, and mares has been used. Butter was known by 2000 B.C. prices and in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). from low price competition. Overall we have maintained value market shares and gross margins are stable notwithstanding substantial movements in edible oil costs. We have a strong innovation programme in both this market and heart health brands over the balance of the year. -- Savoury and dressings have shown good progress supported by a range of innovations and market place activity under the Knorr Knorr can refer to:
kits, "good for you" soups A list of different types of soup/stew. Broths (stocks, bouillons) Strained liquid from cooking things in water Consommés Clarified meat or fish broth
adj. soup·i·er, soup·i·est 1. Having the appearance or consistency of soup. 2. Informal Foggy: soupy weather. 3. Informal Sentimental. snacks. -- Tea based beverages have performed well with an excellent contribution from Lipton For people named Lipton, see . Lipton is one of the world's best-known and best-selling brands of both hot leaf and ready-to-drink tea. It forms part of the Unilever portfolio. Ready-to-Drink including green tea and fruit juice variants. -- A strong quarter in ice cream was boosted by our innovations including Magnum 7 Sins, Magnum Moments and Magnum Snacking Bars, Carte d'Or Fruit and Fresh - a mix of yoghurt yogurt, yoghurt a form of curdled milk produced by fermentation with organisms of the genus Lactobacillus. Used in the treatment of convalescing calves and other young animals after attacks of diarrhea. and ice cream, and the continued roll-out of Cornetto Cornetto may refer to
been further enhanced by the relaunch Relaunch can refer to several things:
-- Frozen foods have yet to show broad based progress. Good performances by the Knorr brand and by Birds Eye
with innovations in children's meals and microwaveable vegetables have been offset by poorer performances elsewhere. -- The Slim--Fast relaunch in the UK has gone well with momentum building through the quarter. There have been further positive contributions from France and The Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. . -- Foodsolutions has grown in a difficult market, once again confirming the robustness of our business model and the strength of our team. -- A strong performance in Personal Care was led by Dove in skin cleansing and shampoo shampoo a cleaning agent, usually liquid, for hair; usually consists of a detergent and perfume. Some, usually referred to as medicated shampoos, contain therapeutic substances such as parasiticides, antimicrobials, ketatolytic agents, and antiseborrheic compounds such as selenium , Sunsilk which is now available in ten Western European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets, Rexona/Sure with the launch of the Crystal variant variant /var·i·ant/ (var´e-ant) 1. something that differs in some characteristic from the class to which it belongs. 2. exhibiting such variation. var·i·ant adj. , Axe with the launch of an anti-perspirant variant and a continuing strong contribution from earlier innovations. -- In Home Care we are focussing on priority brands and markets while improving the profitability of the portfolio as a whole. In the quarter, the impact of this strategy was to fully offset the growth in Personal Care, but with trading margins ahead by over 300 basis points. In Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90. Personal Care grew well, especially in skin, hair and deodorants, whilst in Foods good progress in savoury and dressings, tea and ice cream was partially offset by declines in spreads from low butter prices. Operating margin at 16.6% was 300 basis points ahead of last year after a 120 basis points increase in advertising and promotions. This reflects the contribution from our restructuring and savings programmes and our strategy for improving profitability in Home Care. NORTH AMERICA Turnover was 9% lower than last year, including just over 5 percentage points from disposals, principally DiverseyLever and Mazola. Underlying sales declined by 4% with negative pricing of 60 basis points. The combination of sharply reduced stocks in retailers, financial difficulties at key customers and distributors, lower sales of Slim--Fast and weak out of home channels particularly affecting our prestige fragrance business has reduced overall planned growth by the equivalent of just over 5 percentage points. Importantly, however, our overall market shares in both Home & Personal Care and in Foods other than Slim--Fast have remained stable. Unilever Unilever Either of two linked companies, Unilever PLC (based in London) and Unilever NV (based in Rotterdam). They are the holding companies for more than 500 firms worldwide that manufacture and sell soaps, foods, and other products. Bestfoods continues to show a good trend of improving performance as we move from integration to innovation and as we successfully implement the new "go to market" strategy. In particular there were good performances from Hellmann's boosted by Easter promotions and favourable pricing and innovation with Dippin' Sauce; from Bertolli particularly in olive oil olive oil, pale yellow to greenish oil obtained from the pulp of olives by separating the liquids from solids. Olive oil was used in the ancient world for lighting, in the preparation of food, and as an anointing oil for both ritual and cosmetic purposes. ; from Lipton through the continued success of Asian Side Dishes side dish n. A dish served as an accompaniment to the main course. Noun 1. side dish - a dish that is served with, but is subordinate to, a main course entremets, side order ; from Lawry's Lawry's The Prime Rib is a well-known restaurant on Restaurant Row on La Cienega Boulevard in Beverly Hills, California. Founded by Lawrence L. Frank and Walter Van de Kamp, it opened in 1938 and for many years was unique among restaurants in having but a single entrée (Or 'main through improved distribution and the Steak Sauce innovation and for Lipton tea with a successful Memorial Day promotion. Partially offsetting this was a weaker performance in spreads driven by poor category growth because of lower butter prices. In ice cream, weak out of home channels particularly impacted Ben & Jerry's but this was more than offset by another strong performance from Good Humor Noun 1. good humor - a cheerful and agreeable mood amiability, good humour, good temper humour, mood, temper, humor - a characteristic (habitual or relatively temporary) state of feeling; "whether he praised or cursed me depended on his temper at the time"; and Breyers, notwithstanding tough prior year comparators, and we are gaining market share. Our Foodsolutions business has done well in very weak market conditions. Underlying sales growth of 2%, mostly in volume, has strengthened our market position and gives a good base for our growth plans in the second half. In Home & Personal Care we have continued to invest behind our innovations and Dove and Axe have made strong contributions while Vaseline Vas·e·line A trademark for a brand of petroleum jelly. Vaseline trademark for white petrolatum (USP), petroleum jelly. Healthy Hands has also been successful. In laundry, all has made good progress, particularly in fabric conditioners Conditioners used on leather take many shapes and forms. They are used mostly to keep leather from drying out and deteriorating. A very old and widely used conditioner is dubbin. . Gains in value market share in Personal Care have been offset by share erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. in fabric cleaning as we implement a strategy to create a firmer and more profitable foundation on which to build future growth. Operating margin at 13.8% is 270 basis points behind the prior year with advertising and promotions flat. The one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. accounting impact of the "go to market" change as we accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. promotional funds at the time of shipment has impacted operating margin by 100 basis points. In addition, the short term effect of the loss of profit contribution from the sharply lower trade stocks had an impact equivalent to a further 100 basis points in the quarter, and we are absorbing ab·sorb tr.v. ab·sorbed, ab·sorb·ing, ab·sorbs 1. To take (something) in through or as through pores or interstices. 2. To occupy the full attention, interest, or time of; engross. the impact of higher commodity prices. AFRICA Africa (ăf`rĭkə), second largest continent (1997 est. pop. 743,000,000), c.11,677,240 sq mi (30,244,050 sq km) including adjacent islands. Broad to the north (c.4,600 mi/7,400 km wide), Africa straddles the equator and stretches c. , MIDDLE EAST AND TURKEY Underlying sales grew 9.2% with 7 percentage points from underlying volume growth. Turnover grew 5.8% including the impact of disposals. In Home & Personal Care there have been excellent performances from laundry, skin and hair. In laundry we have continued to strengthen our position through the Surf and Omo OMO On My Own OMO Open Market Operations OMO Odd Man Out OMO Om Shanti Om (movie, India) OMO One Man Operated (now replaced by OPO) OMO Other Military Operations OMO Old Mother Owl OMO Old Man Out brands whilst in skin and hair activities behind Dove, Lux and Sunsilk have been the key contributors. In Foods, there was good growth in savoury and dressings, especially with Knorr across the region and in ice cream with the success of the Heart brand re-launch in both Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. and Turkey. Operating margin at 11.8% was 320 basis points behind last year with 30 basis points lower advertising and promotions and reflects the impact of devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. driven cost increases, high edible oil prices in the north of the region, and factory start-up Start-up The earliest stage of a new business venture. costs as we enter new markets. ASIA Asia (ā`zhə), the world's largest continent, 17,139,000 sq mi (44,390,000 sq km), with about 3.3 billion people, nearly three fifths of the world's total population. PACIFIC Underlying sales grew by 3% with underlying volume growth of 2%. Leading brand growth of around 5% in Home & Personal Care and our retail foods business was offset by weak out of home channels for ice cream and Foodsolutions and our actions to reduce the non-leading brand business, particularly in Food. The net of acquisitions and disposals was favourable reflecting the Ajinomoto Ajinomoto Co., Inc. (味の素株式会社 transaction to give a turnover increase of 3.3%. In Home & Personal Care growth was close to 5% in the consumer branded businesses and just over 4% in total, reflecting the continued focus on managing the tail businesses in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. for value. Thailand Thailand (tī`lănd, –lənd), Thai Prathet Thai [land of the free], officially Kingdom of Thailand, constitutional monarchy (2005 est. pop. 65,444,000), 198,455 sq mi (514,000 sq km), Southeast Asia. , Vietnam Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos , Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). , Bangladesh Bangladesh (bäng-lädĕsh`, băng–) [Bengali,=Bengal nation], officially People's Republic of Bangladesh, republic (2005 est. pop. 144,320,000), 55,126 sq mi (142,776 sq km), S Asia. and Sri Lanka Sri Lanka (srē läng`kə) [Sinhalese,=resplendent land], formerly Ceylon, ancient Taprobane, officially Democratic Socialist Republic of Sri Lanka, island republic (2005 est. pop. all grew at over 10%, with Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. , The Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. , Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. and Japan growing in mid single digits. There has been good growth in laundry driven by Omo and Surf, strong growth in hair through innovations in Lux and Clear, whilst growth in skin was broad based with progress by Lux, Lifebuoy lifebuoy n → bouée f de sauvetage , Vaseline and Fair & Lovely. In Foods the improved momentum which started to be evident in quarter four of last year continued. In Japan, Lipton Ready to Drink tea led growth of over 10% in tea and China grew well off a small base driven by Knorr. Indonesia has continued to make progress with Bango
Brooke Bond & Company was founded by Arthur Brooke who was born at 6 George Street, Ashton under Lyne, Lancashire, England in 1845. He opened his first Tea Shop in Manchester, Lancashire. boilable bags. However these good performances were largely offset by our exit from low margin low growth businesses, and sales declines in both ice cream and in Foodsolutions brought about by weak out of home channels. Operating margin at 14.1% was 100 basis points ahead of last year with good momentum in gross margins and a 60 basis point increase in advertising and promotions. LATIN AMERICA Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. Underlying sales grew by 10% with pricing still the main driver as we recover devaluation-led cost increases, while underlying volumes declined 2%. Within this there was a return to underlying volume growth in Home & Personal Care offset by continuing market weakness in Food categories. Including the impact of disposals, turnover increased 7%. The key drivers of growth continue to be our Personal Care brands: Dove with continuing success in hair and with new skin cleansing variants in North Latin America; Sunsilk boosted by new variants across the region and by extending the brand into new geographies; Rexona Rexona is a deodorant brand manufactured by Anglo Dutch company Unilever. It was developed in 1908 by an Australian pharmacist and his wife. Currently, Rexona has at least 8 lines of deodorant. Each line features a specific quality sought in deodorants. following a relaunch in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and the launch of new variants in Andina and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. ; Lux with a range of innovations that has returned the brand to strong, broad based growth; Axe with the launch of new variants and extension to new geographies; and Pond's with the launch of new variants in Mexico. In laundry we have continued to maintain our strong share positions with progress behind all our key brands. In Foods there has been further good progress in ice cream, particularly in Brazil and Mexico, and we have also successfully launched Slim--Fast into Mexico. In the rest of our Foods portfolio, in competitive markets, we have continued to strengthen the base of our business with: innovations around AdeS, Arisco and the migration of CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) to Knorr in Brazil; good growth for Knorr and Hellmann's in the north of the region; initiatives to increase distribution, for example in Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. , and as we build on our well established Foodsolutions business. Overall growth in Foods is impacted by our actions to reduce the tail of non-leading brands by managing some brands for value through a harvest (tool, networking) Harvest - A highly scalable, customisable system for discovering resources on the Internet. Version: 1.3. http://tardis.ed.ac.uk/harvest/. strategy or through disposal. Operating margin at 11.9% was 290 basis points lower than last year after a 160 basis points increase in advertising and promotions. We are making good progress with both savings programmes and the recovery of devaluation-led cost increases, however overall operating margins continue to be affected by the impact of currency movements. CASH FLOW Cash flow from operations for the half year of EUR 2.5 billion was EUR 1.0 billion lower than the corresponding period last year. Operating profit (beia) at current rates of both periods was EUR 0.5 billion lower than last year mainly due to currency movements. Cash outflows from restructuring under the Path to Growth cost saving programme were EUR 0.2 billion higher this year. The remainder of the decrease is explained by seasonal outflows of working capital in the first half being higher than in the first half of last year. The net interest outflow reduced by EUR 0.3 billion in the half year reflecting lower debt, the positive impact of the US dollar weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. and the timing of interest payments during the year. Capital
expenditure and financial investment was EUR 0.2 billion lower in the
half year through lower spend on fixed assets fixed assets npl → activo sg fijofixed assets npl → immobilisations fpl fixed assets fix npl → and lower cash costs of share option hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. . The net effect on cash of acquisitions and disposals activity in the half year was broadly neutral. Net debt decreased by EUR 0.8 billion in the half year. Positive currency effects on our US$ debt more than offset the change in net funds of EUR(0.5) billion resulting from cash flows. BALANCE SHEET Capital and reserves increased by EUR 1.4 billion in the half year, coming mostly from a net profit of EUR 1.2 billion, a positive currency retranslation of EUR 0.5 billion offset by a reduction of reserves of EUR(0.4) billion due to the purchase of own shares to hedge share options granted. The effect of changes in the value of pension funds on reserves under FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. 17 rules was a reduction of EUR(53) million, for which further information is given on page 13. Creditors have reduced by EUR 1.1 billion following payment of the final dividend for 2002. EURO euro: see European Monetary System. euro Single currency of 15 countries of the European Union (EU), including Germany, France, and Italy. It is also the official currency in several areas outside the EU. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (within the meaning of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , 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)
Note: A description of the exchange rate conventions used is given on
page 12.
Second Quarter EUR Millions - constant Half Year
rates
------------------------- ----------------------
2003 2002% Incr./ 2003 2002 %
Restated (Decr.) Restated Incr./
(Decr.)
------------------------- ----------------------
12,362 12,547 (1)% TURNOVER 23,486 24,098 (3)%
Less: Share of turnover
(65) (122) of joint ventures (147) (264)
----------------- ---------------
12,297 12,425 (1)% Group turnover 23,339 23,834 (2)%
----------------- ---------------
1,345 1,644 (18)% Group operating profit 2,741 2,792 (2)%
Add: Share of operating
profit of joint
15 25 ventures 29 39
----------------- ---------------
1,360 1,669 (19)% OPERATING PROFIT 2,770 2,831 (2)%
----------------------------------------------------------------------
1,808 1,819 (1)% Operating profit beia(a) 3,431 3,467 (1)%
(99) 167 Exceptional items (21) (1)
Amortisation of
goodwill and
(349) (317) intangibles (640) (635)
----------------------------------------------------------------------
Share of operating
18 13 profit of associates 5 13
Other income from fixed
(14) (11) investments (11) (12)
Interest (excluding
pension related
(277) (296) amounts) (534) (590)
Net interest
(cost)/return on
pension scheme assets
(48) 27 and liabilities (96) 54
----------------- ---------------
1,039 1,402 (26)% PROFIT BEFORE TAXATION 2,134 2,296 (7)%
(393) (625) Taxation (741) (1,031)
----------------- ---------------
646 777 (17)% PROFIT AFTER TAXATION 1,393 1,265 10%
(51) (93) Minority interests (128) (156)
----------------- ---------------
595 684 (13)% NET PROFIT 1,265 1,109 14%
----------------- ---------------
----------------------------------------------------------------------
1,009 988 2% Net profit beia (a) 1,874 1,834 2%
----------------------------------------------------------------------
----------------------------------------------------------------------
COMBINED EARNINGS PER SHARE
(Constant rates)
- per EUR 0.51
ordinary NV share
0.61 0.69 (12)% (Euros) 1.29 1.11 16%
- per 1.4p ordinary
PLC share (Euro
9.07 10.28 (12)% cents) 19.28 16.60 16%
- per EUR 0.51
ordinary NV share -
1.03 1.00 3% beia (a) (Euros) 1.91 1.85 4%
- per 1.4p ordinary
PLC share - beia(a)
15.47 14.96 3% (Euro cents) 28.69 27.69 4%
- per EUR 0.51
ordinary NV share -
0.59 0.66 (12)% diluted (Euros) 1.25 1.07 16%
- per 1.4p ordinary
PLC share - diluted
8.79 9.95 (12)% (Euro cents) 18.71 16.10 16%
----------------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in our
accounting policy for share option costs (see notes on page 13).
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
----------------------------------------------------------------------
Net profit and earnings per share given below are stated at current
exchange rates i.e. the results in both years have been translated at
the exchange rates prevailing during the appropriate period.
For further details of the results at current exchange rates and
impact of exchange rate movements see notes on page 12.
EUR Millions -
Second Quarter current rates Half Year
------------------------- -------------------------
2003 2002 % Incr./ 2003 2002 % Incr./
----- -------- -------- ----- -------- --------
Restated (Decr.) Restated (Decr.)
-------- -------- -------- --------
564 688 (18)% NET PROFIT 1,201 1,129 6%
----------------------------------------------------------------------
932 1,003 (7)% Net profit
beia(a) 1,747 1,889 (8)%
----------------------------------------------------------------------
----------------------------------------------------------------------
COMBINED EARNINGS PER SHARE
(Current rates)
0.57 0.69 (17)% - per EUR 0.51 1.22 1.13 8%
ordinary NV
share (Euros)
8.59 10.35 (17)% - per 1.4p 18.28 16.89 8%
ordinary PLC
share (Euro cents)
0.95 1.01 (6)% - per EUR 0.51 1.78 1.90 (6)%
ordinary NV share
- beia(a) (Euros)
14.27 15.19 (6)% - per 1.4p 26.71 28.53 (6)%
ordinary PLC
share - beia(a)
(Euro cents)
0.55 0.67 (17)% - per EUR 0.51 1.18 1.09 8%
ordinary NV share
- diluted (Euros)
8.32 10.02 (17)% - per 1.4p 17.74 16.38 8%
ordinary PLC
share - diluted
(Euro cents)
----------------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
----------------------------------------------------------
EUR Millions - current rates Half Year
----------
2003 2002
------ ---------
Restated
---------
Net profit 1,201 1,129
Currency retranslation 459 (1,170)
------ ---------
Total recognised gains for the year 1,660 (41)
Pension gains / (losses) net of tax (53) (869)
------ ---------
Total recognised gains / (losses) since last annual
accounts 1,607 (910)
------ ---------
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in our
accounting policy for share option costs (see notes on page 13).
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
---------------------------------------------
EUR Millions - current rates Half Year
----------
2003 2002
------ ---------
Restated
---------
Shareholders' equity as at 1 January (1) 4,629 8,437
Net profit 1,201 1,129
Dividends 10 (6)
Goodwill written back on disposals 10 404
Currency retranslation 502 (1,126)
Change in number of shares or certificates of shares
held in connection with share options (382) (488)
Pension gains / (losses) net of tax (53) (869)
Adjustment of share option expense 66 42
----------------
Shareholders' equity as at the end of the period 5,983 7,523
----------------
SUMMARY BALANCE SHEET (unaudited)
---------------------------------
EUR Millions - current rates
As at As at As at
28th 31st 29th
June December June
2003 2002 2002
--------- --------- ---------
Restated Restated
--------- ---------
Goodwill and intangibles 19,478 20,274 21,853
Other fixed assets 7,538 8,115 8,772
Stocks 4,735 4,500 4,911
Debtors 7,668 6,951 9,536
Cash and current investments 2,922 3,478 3,664
Trade and other creditors (10,667) (11,732) (11,782)
-----------------------------
31,674 31,586 36,954
-----------------------------
Borrowings 19,064 20,444 23,616
Provisions for liabilities and charges 6,205 5,894 5,120
Minority interests 422 619 695
Capital and reserves 5,983 4,629 7,523
-----------------------------
31,674 31,586 36,954
-----------------------------
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in the
accounting policy for share option costs (see notes on page 13).
EUR Millions - current rates As at 1st As at 1st
January January
2003 2002
--------- ---------
(1) Shareholders' equity as previously
reported 5,867 6,993
Change in accounting policy -
pensions (1,238) 1,444
--------- ---------
Shareholders' equity as restated 4,629 8,437
--------- ---------
CASH FLOW STATEMENT (unaudited)
-------------------------------
EUR Millions - current rates Half Year
-----------
2003 2002
------- -------
Cash flow from group operating activities 2,490 3,502
Dividends from joint ventures 10 12
Returns on investments and servicing of finance (523) (823)
Taxation (652) (856)
Capital expenditure and financial investment (736) (925)
Acquisitions and disposals 20 1,152
Dividends paid on ordinary share capital (1,068) (1,041)
------- -------
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID
RESOURCES AND FINANCING (459) 1,021
Management of liquid resources 353 (256)
Financing (472) (395)
------- -------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (578) 370
------- -------
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
---------------------------------------------------------------
EUR Millions - current rates Half Year
------------
2003 2002
------------------
NET DEBT AT 1 JANUARY (16,966) (23,199)
------------------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (578) 370
Cash flow from (increase) / decrease in borrowings 472 394
Cash flow from increase / (decrease) in liquid
resources (353) 256
------------------
Change in net debt resulting from cash flows (459) 1,020
Borrowings within group companies acquired (26) (91)
Borrowings within group companies sold 5 19
Liquid resources within group companies acquired - -
Liquid resources within group companies sold (3) (1)
Non cash movements 272 1,120
Currency retranslation 1,035 1,180
------------------
MOVEMENT IN NET DEBT IN THE PERIOD 824 3,247
------------------
------------------
NET DEBT AT PERIOD END (16,142) (19,952)
------------------
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
-----------------------------------------------------
Second Quarter EUR Millions- Half Year
--------------------- constant rates -----------------------
2003 2002 %Incr./ 2003 2002 %Incr./
---- Restated (Decr.) ---- Restated (Decr.)
-------- ------ -------- -------
12,362 12,547 (1)%TURNOVER 23,486 24,098 (3)%
----------------------------------------------------------------------
5,042 5,131 (2)%Europe 9,365 9,801 (4)%
2,982 3,281 (9)%North 5,793 6,356 (9)%
America
Africa,
Middle East and
864 816 6% Turkey 1,642 1,515 8%
2,060 1,994 3% Asia and Pacific 3,947 3,849 3%
1,414 1,325 7% Latin America 2,739 2,577 6%
----------------------------------------------------------------------
1,808 1,819 (1)%OPERATING PROFIT-beia(a) 3,431 3,467 (1)%
----------------------------------------------------------------------
836 699 20%Europe 1,530 1,325 16%
412 541 (24)%North America 781 1,011 (23)%
Africa,
Middle
East and
102 122 (16)% Turkey 191 183 4%
289 261 11% Asia and Pacific 582 571 2%
169 196 (14)%Latin America 347 377 (8)%
----------------------------------------------------------------------
14.6% 14.5% OPERATING MARGIN-beia (a) 14.6% 14.4%
----------------------------------------------------------------------
16.6% 13.6% Europe 16.3% 13.5%
13.8% 16.5% North America 13.5% 15.9%
Africa,
Middle
East and
11.8% 15.0% Turkey 11.6% 12.1%
14.1% 13.1% Asia and Pacific 14.8% 14.8%
11.9% 14.8% Latin America 12.7% 14.6%
----------------------------------------------------------------------
(a)Before exceptional items and amortisation of goodwill
and intangibles
OPERATIONAL ANALYSIS (at constant rates - unaudited)
Second Quarter EUR Millions - Half Year
--------------------- constant rates -----------------------
2003 2002 %Incr./ 2003 2002 %Incr./
---- Restated (Decr.) ----- Restated (Decr.)
-------- ------- -------- -------
12,362 12,547 (1)% TURNOVER 23,486 24,098 (3)%
----------------------------------------------------------------------
7,139 7,214 (1)%Foods 13,201 13,562 (3)%
----------------------------------------------------------------------
2,393 2,301 4% Savoury and dressings 4,590 4,544 1%
1,334 1,536 (13)% Spreads and 2,632 3,046 (14)%
cooking products
Health &
1,057 1,098 (4)% wellness and beverages 2,033 2,092 (3)%
2,355 2,279 3% Ice cream and frozen
foods 3,946 3,880 2%
----------------------------------------------------------------------
Home care and
professional
1,997 2,192 (9)% cleaning 3,982 4,522 (12)%
3,156 3,037 4% Personal care 6,138 5,792 6%
70 104 (34)% Other operations 165 222 (26)%
----------------------------------------------------------------------
1,808 1,819 (1)%OPERATING PROFIT -beia (a) 3,431 3,467 (1)%
----------------------------------------------------------------------
1,109 997 11% Foods 1,908 1,796 6%
----------------------------------------------------------------------
Savoury and
328 307 7% dressings 702 612 14%
Spreads and
186 229 (19)% cooking products 377 453 (17)%
Health & wellness
125 85 48% and beverages 261 257 2%
Ice cream and
470 376 25% frozen foods 568 474 20%
----------------------------------------------------------------------
Home care and
professional
255 275 (7)% cleaning 502 533 (6)%
437 531 (18)% Personal care 1,020 1,109 (8)%
7 16 (60)% Other operations 1 29 (99)%
----------------------------------------------------------------------
OPERATING MARGIN -
14.6% 14.5% beia (a) 14.6% 14.4%
----------------------------------------------------------------------
15.5% 13.8% Foods 14.5% 13.2%
----------------------------------------------------------------------
Savoury and
13.7% 13.3% dressings 15.3% 13.5%
Spreads and
13.9% 14.9% cooking products 14.3% 14.9%
Health & wellness
11.9% 7.7% and beverages 12.9% 12.3%
Ice cream and
20.0% 16.5% frozen foods 14.4% 12.2%
----------------------------------------------------------------------
Home care and
12.8% 12.5% professional cleaning 12.6% 11.8%
13.9% 17.5% Personal care 16.6% 19.2%
9.4% 15.4% Other operations 0.2% 13.0%
----------------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
NOTES Exchange rate conventions and impact of movements in exchange rates Consistent with our previous practice, the following exchange rate conventions have been applied: In the profit and loss account information given on page 6 and the segmental segmental /seg·men·tal/ (seg-men´t'l) 1. pertaining to or forming a segment or a product of division, especially into serially arranged or nearly equal parts. 2. undergoing segmentation. analysis on pages 10 and 11, the results for 2003 and the comparative figures for 2002 have been translated at constant exchange rates, being the annual average exchange rates for 2002. This reporting convention facilitates comparisons since the impact of exchange rate fluctuations is eliminated, and is the basis on which we measure our annual operational performance internally. It also forms the basis for target setting and the annual outlook statement. For our reporting currencies Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. these rates were EUR 1 = GBP 0.63 = US $0.94. The results and earnings per share on page 7 and the cash flow statement on page 9 are translated at rates current in each period. For our reporting currencies these rates were EUR 1 = GBP 0.69 = US $1.10 for the half year 2003 and EUR 1 = GBP 0.62 = US $0.90 for half year 2002. As a result of the strengthening Euro, when expressed at current rates of exchange, earnings per share (beia) for the half year decreased by 6% in Euros, increased by 15% in US$ and increased by 3% in GBP Sterling. The balance sheet figures have been translated at period-end rates of exchange. For our reporting currencies these were EUR 1 = GBP 0.69 = US $1.14 at 28 June June: see month. 2003, EUR 1 = GBP 0.65 = US $1.05 at 31 December December: see month. 2002 and EUR 1 = GBP 0.65 = US $1.00 at 29 June 2002.
Results at current rates of exchange
Second Quarter EUR Millions - current Half Year
rates
----------------------- -----------------------
2003 2002 % Incr. 2003 2002 % Incr.
----------------------- -----------------------
Restated/(Decr.) Restated/(Decr.)
---------------- ----------------
11,148 12,755 (13)% Turnover 21,330 24,993 (15)%
--------------- ---------------
1,242 1,694 (27)% Operating profit 2,544 2,926 (13)%
----------------------------------------------------------------------
1,639 1,850 (11)% Operating profit beia(a) 3,135 3,596 (13)%
----------------------------------------------------------------------
Share of operating
profit of associates &
income from fixed
3 2 investments (6) 2
Interest (including net
interest (cost)/return
on pension scheme
(272) (279) assets and liabilities) (534) (575)
(365) (635) Taxation (690) (1,063)
(44) (94) Minority interests (113) (161)
--------------- ---------------
564 688 (18)% Net profit 1,201 1,129 6%
--------------- ---------------
----------------------------------------------------------------------
932 1,003 (7)% Net profit beia(a) 1,747 1,889 (8)%
----------------------------------------------------------------------
The impact of exchange rate movements on the half year results at
current exchange rates in Euros, GBP Sterling and US dollars is given
below, along with the year on year percentage change at constant
rates.
Half Year - Constant At current rates of exchange
Millions rates
-------- -----------------------------------------------
% Incr. EUR % Incr. GBP % Incr. US $ % Incr.
-------- --------------- --------------- ---------------
/(Decr.) 2003 /(Decr.) 2003 /(Decr.) 2003 /(Decr.)
-------- --------------- --------------- ---------------
Turnover (3)% 21,330 (15)% 14,611 (6)% 23,527 5%
Operating
profit beia(a) (1)% 3,135 (13)% 2,147 (4)% 3,458 7%
Net profit 14% 1,201 6% 823 17% 1,324 31%
---------------------- --------------- --------------- ---------------
Net profit
beia(a) 2% 1,747 (8)% 1,197 2% 1,927 13%
---------------------- --------------- --------------- ---------------
% Change in
EPS 16% 8% 19% 33%
---------------------- --------------- --------------- ---------------
% Change in
EPS - beia(a) 4% (6)% 3% 15%
---------------------- --------------- --------------- ---------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
Acquisitions and disposals On 15 May 2003 we announced the sale of the Van den Bergh Bergh , Henry 1811-1888. American reformer who founded the American Society for the Prevention of Cruelty to Animals (1866). Oils business in the U.K, to Pura PURA PACOM Utilization & Redistribution Agency PURA Public Utility Regulatory Act Foods Ltd, a subsidiary of ADM See add/drop multiplexer. (language) ADM - A picture query language, extension of Sequel2. ["An Image-Oriented Database System", Y. Takao et al, in Database Techniques for Pictorial Applications, A. Blaser ed, pp. 527-538]. International Ltd. This business has annual third party sales of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. EUR 60 million. FRS 17 From 1 January January: see month. 2003 we have adopted United Kingdom Financial Reporting Standard 17 (FRS 17) 'Retirement Benefits' which requires that pension assets and liabilities be stated at fair values. 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 and profit and loss accounts. The implementation of FRS 17 has resulted in a reduction of EUR 1,238 million in the opening capital and reserves for 2003 (2002: increase of EUR 1,444 million). In the 2003 opening balance sheet pension liabilities Pension liabilities Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country. have increased by EUR 1,752 million (2002: decrease of EUR 628 million). Deferred tax within liabilities has been reduced by EUR 1,785 million (2002: reduction of EUR 1,383 million). The change in debtors because of changes in pension assets and deferred tax is a net reduction of EUR 1,280 million in the 2003 opening balance (2002: reduction of EUR 561 million). Minority interests have also been reduced by EUR 9 million (2002: increase of EUR 6 million). In the profit and loss account for the first half of 2002 operating profit has increased by EUR 93 million and net interest has decreased by EUR 54 million. Total recognised gains and losses for the first half of 2002 have reduced by EUR 869 million for actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin gains and losses and differences between actual and expected return Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: on pensions plan assets. Share options In line with recommendations of various standard setting bodies, from 1 January 2003 we changed our accounting policy for share options. The impact of adoption of this change has been reflected in all periods covered by this announcement by means of prior period adjustments to the profit and loss accounts. We have been hedging our existing share option programmes by buying shares at the time of grant and taking the financing cost within interest. The accounting change is to include an additional non cash charge against operating profit to reflect the full value to the employee of the share options granted. In determining this charge we are applying a Black-Scholes based valuation spread over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period of the option. In the profit and loss account for the first half of 2002 operating profit has been reduced by EUR 42 million, and in the first half of 2003 a charge of EUR 66 million has been included in operating profit. 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 GBP 1 = EUR 5.445, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen Agreement. The diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 Leverhulme Trust is a research and educational charity based in London, England. Founded in 1925 after the death of the Victorian entrepreneur William Hesketh Lever to continue his philanthropic work, the Trust was originally endowed with a shareholding in Lever . 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 for the half year
Constant rates Current rates
----------------------------------------
2003 2002 2003 2002
----------------------------------------
Restated Restated
---------- ----------
Thousands of units
Average number of combined
share units of EUR 0.51 971,433 980,180 971,433 980,180
Average number of combined
share units of 1.4p 6,476,222 6,534,531 6,476,222 6,534,531
COMBINED EPS EUR Millions
------------------------------
Net profit 1,265 1,109 1,201 1,129
Less: Preference dividends (17) (25) (17) (25)
----------------------------------------
Net profit attributable to
ordinary capital 1,248 1,084 1,184 1,104
----------------------------------------
----------------------------------------
Combined EPS per EUR 0.51
(Euros) 1.29 1.11 1.22 1.13
Combined EPS per 1.4p (Euro
cents) 19.28 16.60 18.28 16.89
----------------------------------------
COMBINED EPS - beia(a) EUR Millions
------------------------------
Net profit 1,265 1,109 1,201 1,129
Add back exceptional items net
of tax 0 114 1 122
Add back amortisation of
goodwill / intangibles net of
tax 609 611 545 638
----------------------------------------
Net profit beia(a) 1,874 1,834 1,747 1,889
Less: Preference dividends (17) (25) (17) (25)
----------------------------------------
Net profit attributable to
ordinary capital - beia(a) 1,857 1,809 1,730 1,864
----------------------------------------
----------------------------------------
Combined EPS - beia(a) per
EUR 0.51 (Euros) 1.91 1.85 1.78 1.90
Combined EPS - beia(a) per
1.4p (Euro cents) 28.69 27.69 26.71 28.53
----------------------------------------
COMBINED EPS - Diluted Thousands of units
------------------------------
Adjusted average combined
share units of EUR 0.51 1,000,970 1,010,504 1,000,970 1,010,504
Adjusted average combined
share units of 1.4p 6,673,136 6,736,691 6,673,136 6,736,691
EUR Millions
Net profit attributable to
ordinary capital 1,248 1,084 1,184 1,104
----------------------------------------
----------------------------------------
Combined diluted EPS per
EUR 0.51 (Euros) 1.25 1.07 1.18 1.09
Combined diluted EPS per 1.4p
(Euro cents) 18.71 16.10 17.74 16.38
----------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
Dates The results for the third quarter and announcement of interim dividends will be published on 29 October October: see month. 2003. ENQUIRIES: UNILEVER PRESS OFFICE +44 (0) 20 7822 6805 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the : http://www.unilever.com E-mail: press-office.london London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. @unilever.com 30 July July: see month. 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE RATES
(unaudited)
Note: A description of the exchange rate conventions used is given on
page 12.
Second Quarter US $ Millions - Half Year
constant rates
------------------------ ----------------------
2003 2002 % Incr./ 2003 2002 %Incr./
Restated (Decr.) Restated (Decr.)
------------------------ ----------------------
11,621 11,796 (1)% TURNOVER 22,079 22,655 (3)%
Less: Share of turnover
(61) (115) of joint ventures (138) (248)
---------------- ---------------
11,560 11,681 (1)% Group turnover 21,941 22,407 (2)%
---------------- ---------------
1,264 1,545 (18)% Group operating profit 2,577 2,624 (2)%
Add: Share of operating
profit of joint
14 23 ventures 27 37
---------------- ---------------
1,278 1,568 (19)% OPERATING PROFIT 2,604 2,661 (2)%
------------------------ ---------------------------------------------
Operating profit
1,700 1,709 (1)% beia(a) 3,226 3,259 (1)%
(93) 157 Exceptional items (20) (1)
Amortisation of
goodwill and
(329) (298) intangibles (602) (597)
------------------------ ---------------------------------------------
Share of operating
17 12 profit of associates 5 12
Other income from fixed
(13) (11) investments (10) (11)
Interest (excluding
pension related
(260) (278) amounts) (502) (554)
Net interest (cost) /
return on pension
scheme assets and
(45) 26 liabilities (90) 51
---------------- ---------------
977 1,317 (26)% PROFIT BEFORE TAXATION 2,007 2,159 (7)%
(369) (588) Taxation (696) (970)
---------------- ---------------
608 729 (17)% PROFIT AFTER TAXATION 1,311 1,189 10%
(49) (87) Minority interests (121) (146)
---------------- ---------------
559 642 (13)% NET PROFIT 1,190 1,043 14%
---------------- ---------------
------------------------ ---------------------------------------------
949 929 2% Net profit beia(a) 1,763 1,725 2%
------------------------ ---------------------------------------------
------------------------ ---------------------------------------------
COMBINED EARNINGS PER
SHARE
(Constant rates)
- per EUR 0.51
ordinary NV share
0.57 0.64 (12)% (US $) 1.21 1.04 16%
- per 5.6p ordinary
0.34 0.38 (12)% PLC share (US $) 0.72 0.62 16%
- per EUR 0.51
ordinary NV share -
0.97 0.94 3% beia(a) (US $) 1.80 1.74 4%
- per 5.6p ordinary
PLC share - beia(a)
0.58 0.56 3% (US $) 1.08 1.04 4%
- per EUR 0.51
ordinary NV share -
0.55 0.62 (12)% diluted (US $) 1.17 1.01 16%
- per 5.6p ordinary
PLC share - diluted
0.33 0.38 (12)% (US $) 0.70 0.61 16%
------------------------ ---------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in our
accounting policy for share option costs (see notes on page 13).
NET PROFIT AND EARNINGS PER SHARE - CURRENT EXCHANGE RATES (unaudited)
Net profit and earnings per share given below are stated at current
exchange rates i.e. the results in both years have been translated at
the exchange rates prevailing during the appropriate period.
For further details of the results at current exchange rates and
impact of exchange rate movements see notes on page 12.
Second Quarter US $ Millions - Half Year
---------------------- current rates ----------------------
% %
2003 2002 Incr./ 2003 2002 Incr./
Restated (Decr.) Restated(Decr.)
----- -------- ------- ----- -------- ------
641 628 2% NET PROFIT 1,324 1,014 31%
----------------------------------------------------------------------
1,053 921 14% Net profit beia(a) 1,927 1,698 13%
----------------------------------------------------------------------
----------------------------------------------------------------------
COMBINED EARNINGS PER SHARE
(Current rates)
- per EUR 0.51 ordinary NV
0.65 0.63 3% share (US $) 1.34 1.01 33%
- per 5.6p ordinary PLC
0.39 0.38 3% share (US $) 0.81 0.61 33%
- per EUR 0.51 ordinary NV
1.07 0.93 16% share - beia(a) (US $) 1.96 1.71 15%
- per 5.6p ordinary PLC
0.65 0.56 16% share - beia(a) (US $) 1.18 1.03 15%
- per EUR 0.51 ordinary NV
0.63 0.61 4% share - diluted (US $) 1.30 0.98 33%
- per 5.6p ordinary PLC
0.38 0.37 4% share - diluted (US $) 0.78 0.59 33%
----------------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (unaudited)
US $ Millions - current rates Half Year
-----------------
2002
2003 Restated
------ ----------
Net profit 1,324 1,014
Currency retranslation 994 (215)
-----------------
Total recognised gains for the year 2,318 799
Pension gains / (losses) net of tax (58) (781)
-----------------
Total recognised gains / (losses) since last annual
accounts 2,260 18
-----------------
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in our
accounting policy for share option costs (see notes on page 13).
MOVEMENTS IN SHAREHOLDERS' EQUITY (unaudited)
US $ Millions - current rates Half Year
----------------
2003 2002
------- --------
Restated
--------
Shareholders' equity as at 1 January (1) 4,856 7,470
Net profit 1,324 1,014
Dividends 11 (6)
Goodwill written back on disposals 11 363
Currency retranslation 1,038 (153)
Change in number of shares or certificates of shares
held in connection with share options (422) (439)
Pension gains / (losses) net of tax (58) (781)
Adjustment to cost of share options 73 38
----------------
Shareholders' equity as at the end of the period 6,833 7,506
----------------
SUMMARY BALANCE SHEET (unaudited)
US $ Millions - current rates As at As at As at
28th 31st 29th
June December June
2003 2002 2002
-------- --------- --------
Restated Restated
--------- --------
Goodwill and intangibles 22,244 21,268 21,803
Other fixed assets 8,608 8,513 8,751
Stocks 5,407 4,721 4,899
Debtors 8,757 7,292 9,514
Cash and current investments 3,337 3,649 3,656
Trade and other creditors (12,182) (12,308) (11,754)
---------------------------
36,171 33,135 36,869
---------------------------
Borrowings 21,771 21,446 23,562
Provisions for liabilities and charges 7,086 6,183 5,108
Minority interests 481 650 693
Capital and reserves 6,833 4,856 7,506
---------------------------
36,171 33,135 36,869
---------------------------
Restatements relate to the implementation of United Kingdom Financial
Reporting Standard 17 'Retirement Benefits' and changes in our
accounting policy for share option costs (see notes on page 13).
US $ Millions - current rates As at 1st As at 1st
January January
2003 2002
---------- ----------
(1) Shareholders' equity as previously reported 6,154 6,192
Change in accounting policy - pensions (1,298) 1,278
---------------------
Shareholders' equity as restated 4,856 7,470
---------------------
CASH FLOW STATEMENT (unaudited)
US $ Millions - current rates Half Year
-----------------
2003 2002
-------- --------
Cash flow from group operating activities 2,746 3,148
Dividends from joint ventures 11 11
Returns on investments and servicing of finance (576) (740)
Taxation (719) (770)
Capital expenditure and financial investment (813) (832)
Acquisitions and disposals 22 1,036
Dividends paid on ordinary share capital (1,177) (936)
-----------------
CASH INFLOW / (OUTFLOW) BEFORE MANAGEMENT OF LIQUID
RESOURCES AND FINANCING (506) 917
Management of liquid resources 389 (230)
Financing (520) (355)
-----------------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (637) 332
-----------------
RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET DEBT (unaudited)
US $ Millions - current rates Half Year
-----------------
2003 2002
-------- --------
NET DEBT AT 1 JANUARY (17,797) (20,540)
-----------------
INCREASE / (DECREASE) IN CASH IN THE PERIOD (637) 332
Cash flow from (increase) / decrease in borrowings 520 354
Cash flow from increase / (decrease) in liquid
resources (389) 230
-----------------
Change in net debt resulting from cash flows (506) 916
Borrowings within group companies acquired (28) (82)
Borrowings within group companies sold 5 17
Liquid resources within group companies acquired - -
Liquid resources within group companies sold (3) (1)
Non cash movements 300 1,007
Currency retranslation (405) (1,223)
-----------------
MOVEMENT IN NET DEBT IN THE PERIOD (637) 634
-----------------
-----------------
NET DEBT AT PERIOD END (18,434) (19,906)
-----------------
GEOGRAPHICAL ANALYSIS (at constant rates - unaudited)
------------------------------------------------------
US $ Millions - constant rates
Second Quarter Half Year
--------------- -----------
2002 % Incr./ 2002 % Incr./
2003 Restated (Decr.) 2003 Restated (Decr.)
---- -------- -------- ---- -------- ---------
11,621 11,796 (1)% TURNOVER 22,079 22,655 (3)%
----------------------------------------------------------------------
4,740 4,823 (2)% Europe 8,804 9,214 (4)%
2,802 3,085 (9)% North America 5,445 5,975 (9)%
Africa, Middle East
812 767 6% and Turkey 1,544 1,424 8%
1,937 1,875 3% Asia and Pacific 3,711 3,619 3%
1,330 1,246 7% Latin America 2,575 2,423 6%
----------------------------------------------------------------------
OPERATING PROFIT -
1,700 1,709 (1)% beia (a) 3,226 3,259 (1)%
----------------------------------------------------------------------
786 656 20% Europe 1,439 1,246 16%
387 508 (24)% North America 734 950 (23)%
Africa, Middle East
97 115 (16)% and Turkey 180 172 4%
272 246 11% Asia and Pacific 547 537 2%
158 184 (14)% Latin America 326 354 (8)%
----------------------------------------------------------------------
OPERATING MARGIN -
14.6% 14.5% beia (a) 14.6% 14.4%
------------------------------------------------------------
16.6% 13.6% Europe 16.3% 13.5%
13.8% 16.5% North America 13.5% 15.9%
Africa, Middle East
11.8% 15.0% and Turkey 11.6% 12.1%
14.1% 13.1% Asia and Pacific 14.8% 14.8%
11.9% 14.8% Latin America 12.7% 14.6%
------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
OPERATIONAL ANALYSIS (at constant rates - unaudited)
----------------------------------------------------
US $ Millions - constant rates
Second Quarter Half Year
-------------- ---------
2002 % Incr./ 2002 % Incr./
2003 Restated (Decr.) 2003 Restated (Decr.)
---- -------- -------- ---- --------- ---------
11,621 11,796 (1)% TURNOVER 22,079 22,655 (3)%
----------------------------------------------------------------------
6,711 6,781 (1)% Foods 12,410 12,749 (3)%
----------------------------------------------------------------------
Savoury and
2,250 2,163 4% dressings 4,316 4,272 1%
Spreads and
1,254 1,444 (13)% cooking products 2,474 2,864 (14)%
Health & wellness
994 1,032 (4)% and beverages 1,911 1,966 (3)%
Ice cream and
2,213 2,142 3% frozen foods 3,709 3,647 2%
----------------------------------------------------------------------
Home care and
professional
1,878 2,061 (9)% cleaning 3,744 4,251 (12)%
2,966 2,855 4% Personal care 5,770 5,445 6%
66 99 (34)% Other operations 155 210 (26)%
----------------------------------------------------------------------
OPERATING PROFIT -
1,700 1,709 (1)% beia (a) 3,226 3,259 (1)%
----------------------------------------------------------------------
1,043 936 11% Foods 1,794 1,688 6%
----------------------------------------------------------------------
Savoury and
308 288 7% dressings 660 576 14%
Spreads and
174 215 (19)% cooking products 354 426 (17)%
Health & wellness
119 80 48% and beverages 246 241 2%
Ice cream and
442 353 25% frozen foods 534 445 20%
----------------------------------------------------------------------
Home care and
professional
239 259 (7)% cleaning 472 501 (6)%
412 499 (18)% Personal care 960 1,043 (8)%
6 15 (60)% Other operations 0 27 (99)%
----------------------------------------------------------------------
OPERATING MARGIN -
14.6% 14.5% beia (a) 14.6% 14.4%
-------------------------------------------------------------
15.5% 13.8% Foods 14.5% 13.2%
-------------------------------------------------------------
Savoury and
13.7% 13.3% dressings 15.3% 13.5%
Spreads and
13.9% 14.9% cooking products 14.3% 14.9%
Health & wellness
11.9% 7.7% and beverages 12.9% 12.3%
Ice cream and
20.0% 16.5% frozen foods 14.4% 12.2%
------------------------------------------------------------
Home care and
professional
12.8% 12.5% cleaning 12.6% 11.8%
13.9% 17.5% Personal care 16.6% 19.2%
9.4% 15.4% Other operations 0.2% 13.0%
-------------------------------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
Earnings per share in US Dollars for the half year
---------------------------------------------------
Constant rates Current rates
-------------- -------------
2003 2002 2003 2002
Restated Restated
---- --------- ---- ----------
Thousands of units
Average number of combined
share units of EUR 0.51 971,433 980,180 971,433 980,180
Average number of combined
share units of 5.6p 1,619,055 1,633,633 1,619,055 1,633,633
COMBINED EPS US $ Millions
------------------------------
Net profit 1,190 1,043 1,324 1,014
Less: Preference dividends (16) (24) (19) (22)
----------------------------------------
Net profit attributable to
ordinary capital 1,174 1,019 1,305 992
----------------------------------------
----------------------------------------
Combined EPS per EUR 0.51 $1.21 $1.04 $1.34 $1.01
Combined EPS per 5.6p $0.72 $0.62 $0.81 $0.61
----------------------------------------
COMBINED EPS - beia (a) US $ Millions
------------------------------
Net profit 1,190 1,043 1,324 1,014
Add back exceptional items
net of tax 0 108 2 111
Add back amortisation of
goodwill / intangibles
net of tax 573 574 601 573
----------------------------------------
Net profit beia (a) 1,763 1,725 1,927 1,698
Less: Preference dividends (16) (24) (19) (22)
----------------------------------------
Net profit attributable to
ordinary capital - beia (a) 1,747 1,701 1,908 1,676
----------------------------------------
----------------------------------------
Combined EPS - beia (a)
per EUR 0.51 $1.80 $1.74 $1.96 $1.71
Combined EPS - beia (a)
per 5.6p $1.08 $1.04 $1.18 $1.03
----------------------------------------
COMBINED EPS - Diluted Thousands of units
------------------------------
Adjusted average combined
share units of EUR 0.51 1,000,970 1,010,504 1,000,970 1,010,504
Adjusted average combined
share units of 5.6p 1,668,284 1,684,173 1,668,284 1,684,173
US $ Millions
Net profit attributable to
ordinary capital 1,174 1,019 1,305 992
----------------------------------------
----------------------------------------
Combined diluted EPS
per EUR 0.51 $1.17 $1.01 $1.30 $0.98
Combined diluted EPS per 5.6p $0.70 $0.61 $0.78 $0.59
----------------------------------------
(a) Before exceptional items and amortisation of goodwill and
intangibles
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