meeting everyday needs of people everywhere Annual ... - Unilever

20 Unilever Annual Review 1998 Business Overview
Turnover £ million
3 912
94
Operating profit £ million
335
94
4 320
95
376
95
■ Results hit by severe economic crisis
in South East Asia
■ Operating margins maintained at
current exchange rates
4 807
4 425
96
394
354
96
■ total business including discontinued operations
■ continuing business
■ Shift in emphasis from growth to
improvement of strong market position
4 598
4 408
97
386
371
97
3 888
98
306
98
Asia and Pacific
£ million 1998 1998 1997 Change
at current at constant at constant
Continuing business rates rates rates
Turnover 3 888 5 072 4 408 15%
Operating profit 306 442 371 19%
Operating profit before exceptional items 341 476 390 22%
The region presented considerable challenges in 1998. We performed
well and made good progress in strengthening the business. However,
our results were hit by the severe economic crisis in South East Asia.
The currency devaluations in Indonesia, Thailand, Malaysia, the
Philippines and South Korea mean that the use of constant exchange
rates flatters our performance. At current rates, our sales and operating
profits for the region were down 12% and 13% respectively, although
operating margins were maintained as a percentage of turnover.
Our businesses and our people in the badly affected countries did
well in adapting to the adverse circumstances. We successfully shifted
emphasis from growth and development to maintenance of cash
margins and to improvement of our already strong market positions.
In managing the economic downturn in South East Asia, we called
on both our long history in the region and also our global knowledge.
In handling the effect of rapidly devaluing currencies we drew on the
experience of colleagues in Latin America. In terms of consumer
reach and product affordability, we adopted and adapted ideas from
a number of regions.
Key was our ability to make less expensive products to meet the
needs of consumers with reduced spending power. This called on our
proven track record for creativity in the way we formulate, package
and distribute products. Speed in development was also critical.
In Indonesia we quickly introduced small sachets for margarine and
toothpaste, in similar style to the shampoo sachets we already sell
successfully in the region. In Thailand we rapidly created a value range
of fabric wash, fabric softener and dish wash products.
“The economic downturn in South East Asia has changed
people’s needs – both in terms of what they can afford
and where they shop...”
In the Philippines we have introduced deliveries by tricycle, bicycle and
on foot to ensure we reach the growing number of small shops that are
opening in areas too inaccessible for traditional distribution methods.