Unilever Annual Report & Accounts and Form 20-F 2000

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12 Unilever Annual Report & Accounts and Form 20-F 2000 Operating review by region Africa and Middle East 2000 2000 1999 1998 Change at constant rates at current at constant at current at current 2000 over 1999 over € million 2000 rates 1999 rates (b) 1999 rates 1998 rates 1999 1998 Group turnover 2 447 2 369 2 298 2 228 3% 8% Group operating profit BEIA (a) 281 273 251 225 9% 17% Exceptional items (36) (33) 15 (1) Amortisation of goodwill and intangibles (1) (1) — (1) Group operating profit 244 239 266 223 (10)% 24% Group operating margin 10.0% 10.1% 11.6% 10.0% Group operating margin BEIA (a) 11.5% 11.5% 10.9% 10.1% (a) Before exceptional items and amortisation of goodwill and intangibles. (b) See page 7. 2000 results compared with 1999 In Africa and Middle East, overall sales were up by 3%, with profits increasing by 9%. The momentum in Africa was driven by progress across all our key categories, with particularly strong performances from laundry, oral care, deodorants and culinary products. We increased the direct coverage of outlets with the roll-out of a distribution model based on our experience in rural India. In South Africa, we introduced laundry tablets, with other innovative launches including Omo liquid bleach, Flora pro•activ and Lipton Ice Tea. Unilever consumer product businesses are being supplied with innovative tea products from our East African plantations. In the Middle East, sales stagnated in adverse business conditions and we concentrated on maintaining market positions. Group turnover € million Group operating profit BEIA (a) 2000 1999 1998 2 447 2 298 2 228 1999 results compared with 1998 Our businesses in Africa and Middle East had another good year despite depressed oil prices in early 1999 and economic and political instability in parts of Africa. Volumes grew by more than 6% in our corporate categories, operating profits climbed by 17%, sales increased by 8% and margins also rose. In Africa, we attained excellent growth in Home & Personal Care – our largest business in the region. Laundry, oral and mass skin were strong. To increase the affordability of our € million 2000 1999 1998 281 251 225 Group operating profit € million 2000 1999 1998 Report of the Directors brands, we launched sachet versions of toothpaste and laundry products in most African markets. Our South African operations flourished, with share increases in priority categories. We introduced our ice cream brands to the South African townships for the first time, with smaller, more affordable products. Our businesses in Côte d’Ivoire and Ghana did well and we achieved volume growth in Nigeria. 244 266 223 Throughout Africa, we focused on strengthening our distribution network by developing exclusive regional agents, and on increasing the availability of our products with a more effective sales approach. In the Middle East, our Egyptian Foods and Home & Personal Care companies were successfully merged. We developed our out-of-home tea portfolio by introducing Lipton branding into thousands of independent tea shops – creating new Unilever channels to consumers. Indicative of our ability to satisfy local tastes was the roll-out of Tasbeeka, a ready-made version of a popular tomato-based culinary product. Arabia performed strongly, particularly in tea, where we increased market share by more than 3%. As part of our strategy of making our supply chain more efficient, we opened a new tea packing factory in Dubai. We made good progress in Morocco, where strong growth in laundry reinforced our position. We made strides in Israel and built on our successful presence in Lebanon by launching operations in Jordan and Syria.
Unilever Annual Report & Accounts and Form 20-F 2000 Report of the Directors Operating review by region Asia and Pacific Group turnover € million Group operating profit BEIA (a) 2000 1999 1998 8 038 6 723 5 803 2000 2000 1999 1998 Change at constant rates at current at constant at current at current 2000 over 1999 over € million 2000 rates 1999 rates (b) 1999 rates 1998 rates 1999 1998 Group turnover 8 038 7 228 6 723 5 803 7% 10% Group operating profit BEIA (a) 901 822 669 510 23% 24% Exceptional items (109) (94) (18) (52) Amortisation of goodwill and intangibles (16) (14) (9) (1) Group operating profit 776 714 642 457 11% 33% Group operating margin 9.7% 9.9% 9.6% 7.9% Group operating margin BEIA (a) 11.2% 11.4% 9.9% 8.8% (a) Before exceptional items and amortisation of goodwill and intangibles. (b) See page 7. 2000 results compared with 1999 Sales in the year were 7% ahead of 1999, driven by excellent performances in South East Asia and Japan. Profitability rose significantly across the region, while at the same time we maintained a high level of marketing support. Our businesses in South East Asia and Japan generated double digit sales growth in each quarter. Progress was broad-based, in both category and geography. In skin care and hair care, innovation and strong marketing support levels helped us to good results. Brand successes included the performance of Dove, Pond’s, mod’s hair and Lux in Japan and Vaseline shampoo in the Philippines. In Australasia, we achieved sales growth in ice cream and gained market share in laundry. In China, a repositioned Omo and new variants of Zhonghua toothpaste helped both brands achieve volume growth above 20%. In Taiwan, Dove shampoo vied for the number one market position. We made further progress in sales of consumer brands in India as our renewed focus on building mass market share began to have an impact. At the premium end of the laundry market, Surf continued to perform well. Overall sales revenues were affected by our exit from the imported fertiliser business and by the impact of lower edible oil prices. 1999 results compared with 1998 Our Asia and Pacific business had a very good year across most countries in the region, benefiting from the recovery in South East Asia. Led by a strong showing in Home & Personal Care, we achieved excellent growth in volume and profits. Foods, however, performed less well and profits were marginally below 1998. Overall margins improved by a full percentage point and there was significantly increased investment in marketing. € million 2000 1999 1998 510 669 901 Group operating profit € million 2000 1999 1998 In India, we had another outstanding year in both volume and profit growth. Key to this growth was a powerful Home & Personal Care performance, with particularly good results in hair, laundry, mass skin and personal wash. We continued to meet consumer needs with innovation, for example, rolling out a resealable toothpaste sachet and a miniature Rexona deodorant stick for lower income consumers. Foods was less buoyant in India. The business was particularly affected by disappointing tea sales which only started to recover towards the end of the year following the withdrawal of the excise duty on packaged tea imposed in 1998. However, there was an enthusiastic reception from Indian consumers to the roll-out of our tea-based beverage Lipton Tiger. Our operations in China achieved double digit volume growth, largely due to the accelerating growth of the Hazeline range of hair products and the successful relaunch of the brand’s personal wash range. However, the business remained in loss, reflecting our continued investment. We streamlined the business, moving from joint venture based operations to a three company structure focused on the core areas of home and personal care, foods and beverages, and ice cream. Other activities included the launch of herbal based Zhonghua toothpaste, entry into the large green tea market through the purchase of Jinghua, a leading Beijing based brand, and the acquisition of Mountain Cream ice cream. In the face of last year’s economic crisis in South East Asia, the strategy of adapting our portfolio and reaching out to lower income consumers was successful, leaving us well placed to benefit from the economic recovery. In Indonesia, turnover grew by a third, and in the Philippines and Vietnam, where sales were also buoyant, we achieved double digit volume growth. 457 642 776 13
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