Operating Review Unilever

Operating review by region

Europe

Report of the Directors

Unilever Annual Report and Accounts 2005 27

Operating review by region

The Americas

2005 results compared with 2004 Ђ million Ђ million Ђ million Ђ million % %

(continuing operations) Exchange Change at Change at

2005 at rate 2005 at 2004 at actual constant

2005 rates effects 2004 rates 2004 rates current rates 2004 rates

Turnover 13 179 (464) 12 715 12 296 7.2% 3.4%

Operating profit 1 719 (75) 1 644 896 91.9% 83.6%

After charging:

Impairment of Slim*Fast (363) (12) (375) (791)

Provision for Brazilian sales tax - - (169)

Operating margin 13.0% 12.9% 7.3%

Restructuring, business disposals and impairment

charges included in operating margin (3.4)% (3.4)% (9.2)%

Turnover and underlying sales growth 2005

(at constant 2004 rates) vs 2004

Underlying sales growth (%) 4.1

Effect of acquisitions (%) 0.0

Effect of disposals (%) (0.7)

Turnover growth (%) 3.4

Turnover at current rates of exchange rose by 7.2%, including a

positive impact from currency movements of 3.8%. Operating

profit at current rates of exchange was 92% higher than in 2004,

including a favourable impact from currency movements of 8.3%.

The underlying performance of the business after eliminating

these exchange translation effects and the impact of disposals is

discussed below at constant exchange rates.

Underlying sales grew by 4%, all coming from volume gains,

broadly based across the region, underpinned by a successful

innovation programme.

Consumer demand in the US showed a sustained recovery. Our

sales in the US grew by 3.2%, accelerating through the year, and

we gained market share in aggregate.

In Brazil and Mexico, a strong first half was followed by relatively

weaker demand in the second half of the year. We grew in line

with our markets in Home and Personal Care, but saw some share

loss in Foods.

Growth in Personal Care across the region has been driven by

good consumer response to our initiatives, including vitality

innovation and consistent support. This has been particularly

evident in the deodorants and personal wash categories, with

strong double-digit growth for Axe, now the number one

deodorant in the US, and for the Dove and Rexona brands.

Another strong Foods performance in the US was driven by

further share gains in ice cream, continued good results from the

extension of the Country Crock and Bertolli brands into new

categories, and from Lipton ready-to-drink and speciality teas.

Slim*Fast continued to regain share, but in a much contracted

weight management market and sales were well below the

previous year.

New launches in the US included the well received Dove Cool

Moisture range and the extension of Axe into male shower gels.

In Latin America our brands have also been very successful in

connecting with younger consumers through Rexona 'teens' and

innovative communication for Axe.

In the US we introduced all Small & Mighty laundry detergent,

offering the convenience of the same cleaning power in a smaller

bottle. We have invested in communication of our Omo laundry

brands, under the 'Dirt is Good' campaign in southern Latin

America.

In Foods, we strengthened the vitality credentials of our brands in

the US with Promise heart health spread, RagÑŠ organic and

support for the anti-oxidant properties of Lipton teas. AdeS

continued to build across Latin America with the distinctive

nutrition benefits of 'soy with fruit'.

The operating margin at current rates of exchange was 13.0%,

5.7 percentage points higher than in 2004. Net charges for

restructuring, disposal and impairment were 3.4%, which was

5.8 percentage points lower than in the prior year. Cost savings

offset a higher level of advertising and promotions and increased

input costs. There were also gains from the sale of an office in

the US, in US healthcare plans and from currency effects on

capital reductions.

28 Unilever Annual Report and Accounts 2005

Operating review by region

Asia Africa

2005