Meeting everyday needs of people everywhere - Unilever

31 Unilever Annual Report on Form 20-F 1999 Report of the Directors
Performance review by region and category – 1998
Latin America
Fl. million 1998 1998 1997 Change
at current at constant at constant
Continuing business rates rates rates
Turnover 11 058 11 213 10 583 6%
Operating profit 1 078 1 106 896 23%
Operating profit before exceptional items 1 168 1 192 967 23%
Exceptional items (net) (90) (86) (71)
Operating margin 9.8% 9.8% 8.5%
Operating margin before exceptional items 10.6% 10.6% 9.1%
Economies in the region started to falter around mid-year.
This reduced consumption in many markets, particularly
in the south, and slowed underlying volume growth.
Nevertheless, the region again performed well. Profits and
margins moved ahead strongly, most notably in personal
care. A continuing strategy of focusing on key categories
and countries was critical to our success here, which was
underpinned by greater cost effectiveness and efficiency
in the business operations. We increased marketing
investment, improving market shares in important
categories.
In Brazil, our largest business in the region, ice cream and
personal care products led a significant profit advance.
Kibon, the ice cream company purchased towards the end
of 1997, made an important contribution to profits and
made us market leader in the region. In Foods, an
important restructuring programme began to improve
margins, whilst in laundry, higher investment in marketing
reduced profits but increased market share. Chile and
Colombia showed good sales growth and, together with
Argentina, advanced profits strongly. We made continued
progress in Mexico, where changes to our portfolio
increased the focus on core operations. We made
significant advances in profits, and underlying volumes
grew with personal care performing particularly well.
Oil and dairy based foods and bakery
Fl. million 1998 1998 1997 Change
at current at constant at constant
rates rates rates
Turnover 16 952 17 196 17 687 (3)%
Operating profit 1 474 1 498 977 53%
Operating profit before exceptional items 1 628 1 648 1 702 (3)%
Exceptional items (net) (154) (150) (725)
Operating margin 8.7% 8.7% 5.5%
Operating margin before exceptional items 9.6% 9.6% 9.6%
Globally, turnover in this product area was down slightly,
mainly due to business disposals, with underlying volume
staying flat. However, in North America we increased our
margarine market share via innovative products such as
Brummel & Brown, a new low-fat yoghurt-based
spread. We also made share gains in Western Europe,
where the initial roll-out of Bertolli, an olive oil-based
range, was successful. We have well-established
health-focused brands, such as Flora and Becel, which
remained strong.
Through much of Central and Eastern Europe, our sales
of margarine continued at the same levels as in 1997,
despite regional economic difficulties. In Russia, however,
we started the year extremely positively but sales fell
sharply after the economic crisis intensified in August. In
olive oil, Italy and France did well, but Spain experienced
another difficult year due to the competitive market place.
In bakery, to achieve greater focus in Europe, we
integrated three businesses. Speciality products, such as
Maison du Pain, are proving increasingly successful.