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20 Unilever Annual Report on Form 20-F 1999 Report of the Directors
Performance review by region and category – 1999
Latin America
Fl. million 1999 1999 1998 Change
at current at constant at constant
rates rates rates
Turnover 9 538 11 546 11 058 4%
Operating profit 841 993 1 078 (8)%
Operating profit before exceptional items 936 1 097 1 168 (6)%
Exceptional items (net) (95) (104) (90)
Operating margin 8.8% 8.6% 9.8%
Operating margin before exceptional items 9.8% 9.5% 10.6%
Our Latin American business proved its resilience in a
challenging year, adapting to regional recession and
devaluation in Brazil and responding vigorously to
competitive activity.
Sales rose by 4%, at constant exchange rates; sales
declined 14% at current rates. Volumes fell, but much less
sharply than private consumption. Home care profits were
a ffected by major investments behind our market leading
position in laundry. This was mostly offset by excellent
results in personal care. Sales in Foods were generally
l o w e r, but overall margins and profits incre a s e d ,
particularly in Mexico. Overall profits declined by 6%.
We responded swiftly to the increased laundry
competition. We reformulated our leading brands, were
first to introduce tablets in Argentina and Chile and took
steps to ensure brand availability across all price ranges.
We maintained leading positions in all our key markets.
Elsewhere in home care, our new Cif floor cleaning range
met with great success following its launch in Argentina.
In personal care, innovation helped deodorants, hair and
oral to another good year. Overall personal care sales were
up and we increased our market leadership in several
categories. In particular, excellent progress was achieved in
Brazil. In Foods, volumes fell in ice cream – though market
share improved – and in yellow fats.
To counter the recession, we accelerated cost reduction
plans, focused resources on leading brands and adapted
our portfolio to offer consumers more affordable
products, such as a reformulated Ala soap. We advanced
plans to rationalise Brazilian ice cream production and
distribution and opened a low cost Mexican ice cream
factory, replacing three local facilities. Across the region,
cross-border sourcing became increasingly important.
Joint ventures and acquisitions remained central to
developing the business. In the Dominican Republic we
acquired Sociedad Industrial Dominicana, an ice cream
and home and personal care business with good
coverage in several Caribbean countries. In Colombia we
embarked on a joint venture with Varela, a leading home
care company.
Exceptional charges in 1999 relate mainly to restructuring
in our regional Foods operations.