04 Feb 2010
Unilever - Q4 and full year results 2009

More pleasing is actually that our market shares are starting to grow again across the board and that's true of all the regions that we're operating in.

So I think they are good results.

A&P is up. We've continuously invested in A&P: last quarter alone up nearly 250 basis points, the whole year 80 basis points, and still coming out with a strong improvement in operating profit.

Our capital discipline obviously is another important element for us because it shows you the discipline we are applying to our costs and efficiencies; working capital, but also other elements of our operating structure.

If you look at the last quarter, where the pricing is a minus 3.1 percent, it really is the carryover affect of price adjustments we made over the beginning of the year.

What I always like to point out to people is that if you look at the last quarter of 2008, it might seem a long time ago, but in the last quarter of 2008 we had pricing of over 9 percent. Perhaps with the economic environment, we've been quicker to adjust that and that is what you see, but being able in the last quarter to grow our volumes 5 percent, invest nearly 250 basis points in A&P and improve our operating margins by 100 basis points, proves the point that those are good investments.

At the same time we've obviously focused on making our pipeline more robust and there I'm also pleased to see that we have some good innovations coming in.

I felt that some of our brands were under-supported and as a result, our brand equities were probably not as strong as they should have been. So last year alone we significantly invested, as you've seen 80 basis points, more in a market where the rates are actually down. And we will continue to do that over 2010 as we try to get back to sustainable top- and bottom-line growth.

The way I look at it, to be honest, is I think in this environment we should not forget what has happened over the last year and a half, two years. We do value our A+ rating, the dividends that we pay, the Sara Lee acquisition we still have to pay for and, again, the normal €1-2 billion bolt on acquisitions which I think we will maintain moving forward. So we're pretty happy with our current management of our capital structure.

The first one is get the basics right, which is customer service and on-shelf availability. Frankly, at that level we weren't competitive. We've seen significant improvement in both of these metrics and the retailers have rewarded us for that. At the same time we've rolled out what we call our customer innovation centres, where we bring the latest insights into shopper knowledge which is increasingly more important and we work with the retailers in co-operation to drive the categories etc. As you probably know, one of the biggest opportunities that we have in the business is market development. Not taking share from our competitors or any other thing. It really is market development, especially in the emerging markets and working closely with the retail environment to do that is obviously a very important area of focus for us.

We're just coming forward with a new more challenging compensation plan. It requires more investments from the individuals, a higher upside for outstanding performance and more downside, especially to drive this performance culture.

We're continuing to drive the consumer and the customer in all we do and with our 30 day plans and other things, we're injecting a sense of urgency in the organisation that has served us well for 2009.

It's very clear to many people and especially consumers to whom we cater that we cannot continue to live off more than the current planet that we're in. In fact, WWF would predict that we're currently living off 1.3 planets. With the lifestyle of the UK, we would be living off three planets already, so that's unsustainable. And I think consumers are increasingly disappointed by the role of governments and businesses in taking charge of some of the issues that we have in poverty and malnutrition, in climate change. So they want to take charge themselves.

I think the only companies that have permission to grow long-term are companies that can do that in an environmentally responsible way, i.e. growing your business whilst reducing your environmental impact.

Now we're doing that in many areas already. We've built it into our innovation programme, our brand imprint. We're taking the lead on things like sustainable tea. We're trying to move the world to sustainable palm oil; we're one of the founding members of the Roundtable on Sustainable Palm Oil. We're moving to sustainable sourcing. Then obviously with plans like in the laundry brands, our greener planet plan and many others, we're trying to change consumer behaviour to get there.

I cannot tell you how enthusiastically our employees have grabbed onto this and how motivating and energising it is for them. So I'm sure that we will get that back in the business results as well over time. It is in fact the only permissible model to grow, in my opinion, as we move forward.

At the same time, our competitors are clearly stepping up their activities as well, which is good. That's why I like fast-moving consumer goods. But we have to continue to set the bar higher. We've been fortunate as a company that we have now over half of our business in the emerging markets and what we've clearly seen and learned over the last 18 to 24 months is that there is a decoupling of these economies. I take the last quarter, Q4 for example, where you see that emerging markets have growth rates close to double-digit, 8%-9%. So these are very robust growth rates for us.

So our outlook will really be focused on driving volume growth the way we're doing it, slight improvement in operating margin and continuous management of our cashflow in a positive sense and that's what we're focused on.