RNS No 1333d
UNILEVER PLC
UNILEVER NV
7th November 1997
UNILEVER RECORDS #934 MILLION PRE-TAX PROFIT FOR THIRD QUARTER
-- PLC Interim Dividend Increases 9% --
THIRD QUARTER NINE MONTHS
# #
8,253 million -4% Turnover 25,071 million +1%
8,253 million +4% continuing operations 23,667 million +3%
discontinued operations 1,404 million
921 million +5% Operating Profit 2,393 million +14%
1,054 million +16% before exceptional items 2,599 million +16%
934 million +15% Pre-Tax Profit 5,330 million +177%
Net Profit
590 million +18% - at constant rates 3,859 million +229%
524 million +4% - at current rates 3,333 million +180%
7.00p +4% Earnings per share 44.55p +180%
Interim Dividends: per 1.25p ordinary PLC share: 2.80p +9%
per Fl. 1 ordinary N.V. share:Fl. 0.74 +32%
OVERVIEW OF THIRD QUARTER
Sales and operating profits of continuing operations (i.e.
excluding the speciality chemicals businesses disposed in July
1997) improved over the corresponding period 1996. Underlying
volume was up by five per cent. In Europe, ongoing restructuring
and reshaping of portfolio are driving further margin
improvement. Strong growth in sales and profits in developing
and emerging markets. Overall, there was a strong improvement in
operating margins.
BUSINESS PERFORMANCE
Europe: modest sales growth reflects selective sale and closure
of non-priority operations; ice cream sales well ahead of last
year, profits advanced strongly; good results in margarine and
olive oil. Sales rose in homecare categories but increased
marketing restrained profits growth. Sales and profits in
personal care grew strongly, driven by prestige (fragrances) and
deodorants. Expansion in Central and Eastern Europe continued;
ongoing restructuring and portfolio rationalisation delivered
further margin improvement in Western Europe.
North America: sales in most food operations remained weak but
profits improved due to lower level of marketing investment.
Profits in homecare increased due to improved margins resulting
from earlier restructuring. Good personal wash results partly
offset by slightly weaker performance in prestige.
Africa and Middle East: good results primarily reflect strong
South Africa performance, mainly driven by home and personal care
categories. Businesses in Egypt and Arabia also made good
progress; continued recovery in Turkey.
Asia and Pacific: marked increase in sales and profit driven by
excellent growth in India and South East Asia. Markets responded
well to new product activities in personal care categories,
particularly hair, oral and skincare.
Latin America: sales in most categories well ahead of last year.
Profits increased, most notably in Chile and Mexico, despite
higher marketing investments in region.
EXCEPTIONAL ITEMS
During the first nine months, net exceptional charges in
operating profit amounted to #206 million (1996: #139m). It is
intended to accelerate the pace of restructuring and to complete
some further portfolio rationalisation, which will lead to net
losses on the disposal of non-priority businesses. These actions
together are expected to result in net exceptional charges in
operating profit for 1997 of approximately #600 million (1996:
#237m).
Additionally, an ongoing review of fixed assets undertaken in the
light of a sharper category and regional focus is identifying
certain surplus and obsolete plant and equipment no longer in
use. An exceptional charge of up to #200 million is expected to
be taken below operating profit in the fourth quarter to
recognise the loss on disposal of these assets.
Enquiries
Telephone: Press Office 0171 822 6805
E-mail: Press-Office.London@Unilever.com
Internet: http://www.unilever.com
UNILEVER RESULTS
Third Quarter 1997 and Interim Dividends
The directors of Unilever announce the Group's unaudited
consolidated results for the third quarter and first nine
months of 1997, and the interim Ordinary dividends for 1997.
THIRD QUARTER
This is the first quarter that the 1997 results are being
reported excluding the operating results of the international
speciality chemicals businesses, the sale of which was
completed on the 8th of July 1997. These disposed-of
businesses are hereafter referred to as discontinued
operations.
Sales, at constant rates of exchange, fell by 4%, but
operating profit rose by 5%. Before exceptional items,
operating profit increased by 16%. Net profit was 18% ahead of
last year, benefiting from a positive swing in net interest
costs and lower tax rates.
At exchange rates current for each period, net profit
increased by 4% in sterling, 27% in guilders and 9% in
dollars. Earnings rose to 7.00 pence per share of 1.25p.
Comparing the results of the continuing operations with the
same period last year, sales, at constant rates of exchange,
rose by 4% to #8,253 million. Operating profit rose by 17% to
#921 million. Before exceptional items, operating profit
improved by 29%.
Business Performance
To explain the trends in the business performance, the
following commentary on the regions deals with the continuing
businesses, and is based on operating profit before
exceptional items and at constant rates of exchange.
In Europe, the modest sales growth overall reflects selective
sale and closure of non-priority operations. Sales of ice
cream were well ahead of last year following a successful
summer season and profits advanced strongly. Profits increased
in oil and dairy based foods due to good results in margarine and olive
oil. Sales rose in all homecare categories but increased
marketing investment restrained profit growth. In personal
care, however, sales and profits grew strongly, driven by
prestige and deodorants. The expansion of our operations in
Central and Eastern Europe continued whilst in Western Europe
ongoing restructuring and portfolio rationalisation delivered
further margin improvement.
In North America sales in most of our food operations remained
weak but profits improved as a result of a lower level of
marketing investment as compared with last year. In homecare,
profits were up due to improved margins as the benefits from
earlier restructuring continued to come through. Good results
in personal wash were partly offset by a slightly weaker
performance in prestige.
In Africa and Middle East the good results primarily reflect
another strong performance in South Africa, mainly driven by
home and personal care categories. Our businesses in Egypt and
Arabia also made good progress and there was continued
recovery in Turkey.
In Asia and Pacific the marked increase in both sales and
profit was driven by excellent growth in India and the
countries in South East Asia. The markets have responded well
to new product activities in a number of personal care
categories, particularly in hair, oral, and skincare.
Latin American sales in most categories were well ahead of
last year. Profits increased, most notably in Chile and
Mexico, despite higher marketing investments in the region.
NINE MONTHS
The nine month comparisons with 1996 are on the basis that the
third quarter for 1997 excludes the discontinued operations.
At constant rates of exchange, sales rose by 1% over the first
nine months last year to #25,071 million and operating profit
increased by 14% to #2,393 million. Excluding the profit on
the disposal of the international speciality chemicals
businesses, net profit rose by 22% to #1,433 million.
At exchange rates current for each period and excluding the
profit on the disposal of the international speciality
chemicals businesses, net profit increased by 9% in sterling,
32% in guilders and 16% in dollars over the corresponding
period last year.
Comparing the results of the continuing operations with the
same period last year, sales, at constant rates of exchange,
increased by 3%. Operating profit rose by 21%. Before
exceptional items, operating profit improved by 23%.
EXCEPTIONAL ITEMS
During the first nine months, net exceptional charges in
operating profit, at constant rates of exchange, amount to
#206 million (1996: #139 million). We are encouraged by the
level of savings we are obtaining from earlier restructuring
initiatives. This gives us confidence to accelerate the pace
of our restructuring and to complete some further portfolio
rationalisation, which will lead to net losses on the disposal
of non-priority businesses. These actions together are expected to
result in net exceptional charges in operating profit for 1997
of approximately #600 million (1996: #237 million).
In addition, we are concluding a review of fixed assets in the
light of the sharper category and regional focus of our
strategy. This review identifies certain surplus and obsolete
plant and equipment no longer in use in the business. An
exceptional charge of up to #200 million is expected to be
taken below operating profit in the fourth quarter to
recognise the loss on disposal of these assets.
These exceptional charges are before the exceptional profit of
#3 billion arising from the sale of the Chemicals businesses.
NET DEBT AND GEARING
Net funds, at closing rates of exchange, were #3.9 billion at
the end of the third quarter, compared to a net debt of #2.5
billion at the same time last year. This significant
improvement reflects the disposal of the international
speciality chemicals businesses, together with continued
strong cash generation. Net gearing, at zero, compares to a
net gearing of 24% at the end of December 1996, and 28% at the
end of September 1996.
INTERIM DIVIDEND
In accordance with the previously announced policy the interim
dividend has been set at 35% of last year's total dividend,
based on the stronger of our two reporting currencies over the
first nine months, which for this period was sterling. The
interim dividend, to be paid on 19 December 1997, is therefore
fixed at 2.80p per 1.25p ordinary share of Unilever PLC, an
increase of 9% from last year. The Unilever PLC and Unilever
N.V. shares will go ex-dividend on 17 November 1997.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited)
Third Quarter # millions Nine Months
Incr./ Incr./
1997 1996 (Decr.) 1997 1996 (Decr.)
8,253 8,631 (4)% TURNOVER 25,071 24,945 1 %
8,253 7,967 Continuing operations 23,667 22,945
- 664 Discontinued operations 1,404 2,000
921 873 5 % OPERATING PROFIT 2,393 2,104 14 %
921 785 Continuing operations 2,212 1,827
- 88 Discontinued operations 181 277
1,054 906 16 % Operating profit BEI 2,599 2,243 16 %
- - Profit on sale of 3,022 -
chemicals businesses
8 6 Income from fixed 18 19
investments
5 (65) Interest (net) (103) (197)
934 814 15 % PROFIT BEFORE TAXATION 5,330 1,926 177 %
(306) (285) Taxation (801) (692)
Taxation of profit on
sale of chemicals
- - businesses (573) -
628 529 19 % PROFIT AFTER TAXATION 3,956 1,234 221 %
(38) (29) Minority Interests (97) (59)
NET PROFIT AT CONSTANT
590 500 18 % 1996 EXCHANGE RATES 3,859 1,175 229 %
NET PROFIT AT EXCHANGE
RATES CURRENT IN EACH
524 505 4 % PERIOD 3,333 1,189 180 %
COMBINED EARNINGS PER
7.00p 6.75p 4 % SHARE- 44.55p 15.87p 180 %
per 1.25p of ordinary
capital
ADDITIONAL INFORMATION (unaudited)
CONSOLIDATED RESULTS EXCLUDING PROFIT ON SALE OF CHEMICALS
BUSINESSES
The undernoted analysis provides supplementary information, for
comparative purposes only, on the consolidated results, excluding
the profit on sale of the international speciality chemicals
businesses.
Third Quarter # millions Nine Months
at constant 1996
1997 1996 Increase exchange rates 1997 1996 Increase
934 814 15 % Profit before tax 2,308 1,926 20 %
590 500 18 % Net Profit 1,433 1,175 22 %
at exchange rates
current in each
period
524 505 4 % Net Profit 1,293 1,189 9 %
EXCHANGE RATES
For reporting at constant 1996 exchange rates, the profit on the
sale of the international speciality chemicals businesses and
related taxation has been translated at the annual average exchange
rates for 1996.
In arriving at the net profit at exchange rates current in each
period, the profit on the sale of the international speciality
chemicals businesses and associated taxation have been translated
at the exchange rates prevailing on the 8th of July 1997.
SALE OF CHEMICALS BUSINESSES
As explained in the half year results announcement all figures
quoted relating to the profit and loss on disposal of the
speciality chemicals businesses are provisional, and are subject to
change as final adjustments are made under the terms of the Sale
and Purchase Agreement.
GEOGRAPHICAL ANALYSIS
# million
Third Quarter Nine Months
1997 1996 1997 1996
Turnover
3,976 3,946 Europe 11,559 11,505
1,516 1,588 North America 4,366 4,324
570 530 Africa and Middle East 1,540 1,506
1,327 1,118 Asia and Pacific 3,671 3,255
864 785 Latin America 2,531 2,355
8,253 7,967 Sub-total 23,667 22,945
- 664 Discontinued Operations 1,404 2,000
8,253 8,631 TURNOVER 25,071 24,945
Operating Profit BEI
582 459 Europe 1,383 1,054
204 136 North America 360 292
62 51 Africa and Middle East 119 116
119 95 Asia and Pacific 317 256
87 74 Latin America 239 246
1,054 815 Sub-total 2,418 1,964
- 91 Discontinued Operations 181 279
(133) (33) Exceptional items (206) (139)
921 873 OPERATING PROFIT 2,393 2,104
% % Operating Margin BEI % %
14.6 11.7 Europe 12.0 9.2
13.4 8.6 North America 8.2 6.8
10.9 9.6 Africa and Middle East 7.7 7.7
9.0 8.4 Asia and Pacific 8.6 7.9
10.1 9.5 Latin America 9.4 10.5
12.8 10.2 Sub-total 10.2 8.6
- 13.6 Discontinued Operations 12.9 13.9
12.8 10.5 OPERATING MARGIN BEI 10.4 9.0
11.2 10.1 OPERATING MARGIN 9.5 8.4
NOTES
Acquisitions and Discontinued Operations
In the first nine months of 1997 the effect on turnover and
operating profit of acquisitions made in the period was #92 million
and #14 million respectively. In the first nine months, the
speciality chemicals businesses were discontinued as at the 8th
July 1997. There were no discontinued operations in the first nine
months of 1996.
Exchange Rates
The results for 1997 and the comparative figures for 1996 have been
translated at constant average rates of exchange, being the annual
average rates for 1996. For our reporting currencies these were #1
= Fl. 2.62 = US $1.56. In addition, the net profit and earnings
per share have been translated at rates current in each period. In
arriving at those current rate figures, results for the continuing
operations were translated at the average rates current in each
period (see below), operational results for the discontinued
businesses were translated at the average rates prevailing up to
the date of disposal, and the profit on the sale of the
international speciality chemicals businesses and associated
taxation have been translated at the exchange rates prevailing on
the 8th of July.
The rates prevailing for the third quarter and nine months are:
Third Quarter Nine Months
1997 #1 = Fl. 3.18 = US $1.63 #1 = Fl. 3.16 = US $1.63
1996 #1 = Fl. 2.60 = US $1.55 #1 = Fl. 2.58 = US $1.54
INTERIM DIVIDENDS
The Boards today declared interim dividends in respect of 1997 on
the Ordinary capitals at the following rates which are equivalent
in value at the rate of exchange applied under the terms of the
Equalisation Agreement between the two companies:
PLC
Per 1.25p of Ordinary capital - 2.80p (1996: 2.57p)
N.V.
Per Fl. 1 of Ordinary capital - Fl. 0.74 (1996: Fl. 0.56)
The PLC interim dividend will be paid on 19 December 1997, to
shareholders registered on 21 November 1997.
The N.V. interim dividend will be payable as from 19 December 1997.
For the purpose of equalising N.V.'s and PLC's dividends under the
Equalisation Agreement, the Advance Corporation Tax ("ACT") in
respect of any dividend paid by PLC has to be treated as part of
the dividend. PLC's 1997 interim dividend now announced has been
calculated by reference to the current rate of ACT
(twenty/eightieths); if the effective rate applicable to payment of
the dividend is different, the amount will be adjusted accordingly
and a further announcement made.
DATES
The provisional results for the fourth quarter and for the year
1997, and the proposed final dividends in respect of 1997, will be
published on Tuesday 10 February 1998.
Results advertisements will appear in the Financial Times and Daily
Telegraph on Saturday 8 November 1997.
ENQUIRIES: UNILEVER PRESS OFFICE 0171 822 6805
email: press-office.london@unilever.com
Internet: http://www.unilever.com
END
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