RNS No 7887d
UNILEVER PLC & NV
10th February 1998
UNILEVER ANNOUNCES #2.9 BILLION PRE-TAX PROFIT FOR 1997
CHAIRMAN COMMENTS ON "AN ENCOURAGING YEAR FOR UNILEVER"
FULL YEAR 1997 # #
at constant at current
exchange rates exchange rates
Turnover 33,169 million - 1% 29,766 million -11%
- continuing operations 31,765 million + 3% 28,473 million - 8%
Operating Profit 2,645 million - 8% 2,386 million -17%
- continuing operations
before exceptional items 3,092 million + 13% 2,785 million + 2%
Pre-tax Profit 5,408 million +104% 4,723 million +78%
- excl. all exceptional
items 3,231 million + 12% 2,905 million -- %
Net Profit 3,872 million +141% 3,335 million +107%
- excl. all exceptional
items 1,981 million +13% 1,783 million +2%
Earnings per share
Per 1.25p ordinary PLC share 44.55p +107%
Dividends
Final dividend per 1.25p ordinary PLC share 5.62p
Total dividend per 1.25p ordinary PLC share 8.42p
COMMENT
Unilever chairman Niall FitzGerald, commented: "It was an encouraging year
for Unilever. We increased volume growth and had a strong improvement in
margins. The results in Europe were particularly good, reflecting, in part,
the benefits from restructuring and portfolio improvements. Despite the
problems in East Asia, we had excellent growth in developing and emerging
markets. We exited 1997 with a more robust business and with a very healthy
cash position. It was an outstanding team effort.
"Looking ahead, the world economy will be affected by the problems in East
Asia and economic growth is likely to be lower than in 1997. In developing
and emerging markets as a whole, we expect slower growth than in recent years
and with more variation between regions and countries. Conditions in Europe
are improving and overall growth may be ahead of 1997. North America should
again see reasonable growth. Overall we expect markets to be attractive
enough to enable us to grow and make further progress in improving underlying
profitability."
REGIONAL SUMMARY
Europe: Sales unchanged due to impact of disposals and continuing pruning of
low priority categories. Underlying volume growth was much stronger in the
year with particularly good growth in the key corporate categories. Foods
advanced overall; home and personal care recorded good progress. Marketing
investment increased substantially.
North America: Mixed performance with sales increases in laundry and mass
personal care offset by declines in tea, soups and side dishes and prestige
products. Profit increases in home and personal care reflect volume growth
and benefits of restructuring. Major reorganisation of foods and home and
personal care operations progressed during the year.
Africa & Middle East: Sales growth held back by disposals of non-core
businesses. South Africa achieved excellent results. Kenya made good
progress, but we had a setback in Nigeria. Turkey sales and profits
disappointing.
Asia and Pacific: Continued strong sales and profit growth. Results
particularly good in personal care; market share gains in most countries.
Excellent progress in India and most countries in south-east Asia. No
negative impact on results from the financial turmoil in this region in 1997.
Latin America: Important strategic acquisitions, particularly ice cream.
Strong performance in personal care. Sales and profit increases in Chile and
Mexico. Substantial increases in marketing investment, particularly in
Argentina and Brazil, and higher corporate cost contributions impacted on
profits.
EXCEPTIONAL ITEMS
The successful conclusion of the sale of the chemicals businesses in July
resulted in an exceptional profit after tax of #2.4 billion, at constant rates
of exchange. This has facilitated the acceleration of restructuring and
portfolio rationalization, with a further investment of #628 million
(1996:#237 million) in exceptional items within operating profit. In addition
we have taken a charge of #167 million below operating profit to account for
the loss on disposal of fixed assets, as already indicated at the third
quarter.
Enquiries: Telephone: Press Office 0171 822 6805
E-mail: Press-Office.London@Unilever.com
Internet: http://www.unilever.com
Fourth Quarter 1997 Full Year Final Dividends
The directors of Unilever announce the Group's unaudited
provisional results for the fourth quarter and for the year
1997, and their Ordinary dividend proposals.
Full Year 1997
Financial Results
At constant rates of exchange, sales decreased by 1%. In our
continuing operations, i.e. excluding the chemicals
businesses, sales rose by 3% to #31,765 million and
underlying volume grew by 3%, which was well up on previous
years. Operating profit before exceptional items in our
continuing operations increased by 13% and the margin
improved by nearly one percentage point, reflecting
significant progress in Europe as a result of earlier
restructuring. The priority given to corporate categories
and a differentiated approach by regions is working well.
The underlying quality of the business portfolio has been
improved.
The successful conclusion of the sale of our chemicals
businesses in July resulted in an exceptional profit after
tax of #2.4 billion, at constant rates of exchange. This has
facilitated the acceleration of restructuring and portfolio
rationalisation, with a further investment of #628 million
(1996: #237 million) in exceptional items within operating
profit. In addition, we have taken a charge of #167 million
below operating profit to account for the loss on disposal
of fixed assets, as already indicated at the third quarter.
Net profit increased by 141%; excluding all three
exceptional items mentioned above, net profit was 13% ahead
of last year.
At exchange rates current for each period, net profit before
exceptional items increased by 2% in sterling, 24% in
guilders and 7% in dollars. Earnings before exceptional
items rose to 23.78 pence per share of 1.25p.
Business Performance
World economic conditions in 1997 were good, better than
anticipated. Western Europe saw signs of improvement and in
North America steady economic growth continued. In
developing and emerging markets conditions remained
generally favourable, although east Asia was hit by
financial turmoil in the latter part of the year.
To explain the trends in the business performance, the
following commentary on the regions deals with the
continuing operations only, and is based on operating profit
before exceptional items and at constant
rates of exchange.
Overall margin developed positively, most notably in Europe.
The profitability of our business increasingly reflects the
benefits from restructuring and portfolio improvements.
In Europe, sales were unchanged due to the impact of
disposals and the continuing pruning of non-priority
categories. Underlying volume growth was much stronger in
the year, with particularly good growth in our corporate
categories. Marketing investment was increased
substantially. Profits in oil and dairy based foods were
well ahead due to good results in yellow fats and olive oil.
Ice cream profits advanced following a successful summer
season. Home and personal care recorded good progress with
strong growth particularly in deodorants and prestige
products. The performance of our laundry business was
noteworthy with increases in both volume and profit, in part
reflecting the benefit of past restructuring.
In North America the performance was mixed. Sales increases
in laundry and mass personal care were offset by declines in
tea, soups and side dishes and prestige products. Home and
personal care recorded strong profit increases reflecting
volume growth and benefits from restructuring, despite lower
profits from prestige products. Major reorganisations of our
foods and home and personal care operations were progressed
during the year.
In Africa and Middle East sales growth was held back by
disposals of noncore businesses. South Africa achieved
excellent results, mainly in home and personal care. Kenya
made good progress against the previous year, but we had a
setback in Nigeria. In Turkey sales and profits were
disappointing.
Asia and Pacific continued its strong sales and profit
growth. Results were particularly good in personal care,
where we gained market share in most countries. India and
most countries in south-east Asia made excellent progress.
Profits in Australia increased following good results in
deodorants and culinary products. There was no negative
impact on our results from the financial turmoil in the
region during 1997.
In Latin America there were a number of important strategic
acquisitions, particularly ice cream businesses in Brazil
and Mexico. There was a strong performance in personal care;
deodorants, hair and oral care all achieved double digit
volume growth. Sales and profits increased in Chile and
Mexico. There were substantial increases in marketing
investments, particularly in Argentina and Brazil; these,
together with higher corporate costs contributions, resulted
in a small decline in profits in the region.
Fourth Quarter
At constant rates of exchange, sales decreased by 6% due to
disposals, but underlying volume growth was strongly
positive. Operating profit before exceptionals in our
continuing operations declined by 12%, reflecting the
disposals and higher marketing investments. Net profit
before exceptional items was 13% below last year.
At exchange rates current for each period, net profit before
exceptional items decreased 20% in sterling, 2% guilders and
28% in dollars.
Net Debt and Gearing
Net funds, at closing rates of exchange, stood at #3.2
billion at the end of the year compared to a net debt of
#1.7 billion at the same time last year. Net gearing is
therefore zero.
Final Dividend
The Board will recommend to the Annual General Meeting, to
be held on 6th May 1998, a final dividend of 5.62p per
1.25p ordinary share of Unilever PLC, an increase of 3%
over last year, bringing the total dividend to 8.42p per
ordinary share of 1.25p an increase of 5% over last year.
Outlook
Looking ahead, the world economy will be affected by the
problems in east Asia and economic growth is likely to be
lower than in 1997. In developing and emerging markets as a
whole we expect slower growth than in recent years and with
more variation between regions and countries. Conditions in
Europe are improving and overall economic growth may be
ahead of 1997. North America should again see reasonable
growth. Overall we expect markets to be attractive enough to
enable us to grow and make further progress in improving
underlying profitability.
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CONSTANT EXCHANGE
RATES (unaudited)
In the profit and loss account given below, the results in
both years have been translated at constant exchange rates,
being the annual average exchange rates for 1996. This
reporting convention facilitates comparisons since the
impact of exchange rate fluctuations is eliminated.
Fourth Quarter # millions - constant Full Year
Incr./ Incr./
1997 1996 (Decr.) 1997 1996 (Decr.)
8,098 8,577 (6)% TURNOVER 33,169 33,522 (1)%
8,098 7,914 2 % Continuing operations 31,765 30,859 3 %
- 663 - Discontinued operations 1,404 2,663 (47)%
252 770 (67)% OPERATING PROFIT 2,645 2,874 (8)%
252 669 (62)% Continuing operations 2,464 2,496 (1)%
- 101 - Discontinued operations 181 378 (52)%
674 764 (12)% Operating profit BEI - 3,092 2,728 13%
Continuing operations
(50) - Profit on sale of chemicals 2,972 -
businesses
(167) - Loss on disposal of fixed (167) -
assets
12 15 Income from fixed investments 30 34
31 (54) Interest (net) (72) (251)
78 731 (89)% PROFIT BEFORE TAXATION 5,408 2,657 104%
(55) (274) Taxation (1,429) (966)
23 457 (95)% PROFIT AFTER TAXATION 3,979 1,691 135%
(10) (22) Minority Interests (107) (81)
NET PROFIT AT CONSTANT
13 435 (97)% 1996 EXCHANGE RATES 3,872 1,610 141%
CONSOLIDATED PROFIT AND LOSS ACCOUNT - CURRENT EXCHANGE RATES (unaudited)
The profit and loss account given below is stated
at current exchange rates, i.e. the results of each period
are translated at the exchange rates prevailing during the
appropriate period; further information is given on page 7.
The reported results are therefore impacted by exchange rate
movements between the periods.
Fourth Quarter # millions - current Full Year
Incr. Incr./
1997 1996 (Decr./) 1997 1996 (Decr.)
7,079 8,241 (14)% TURNOVER 29,766 33,522 (11)%
7,079 7,606 (7)% Continuing operations 28,473 30,859 (8)%
- 635 - Discontinued operations 1,293 2,663 (51)%
221 741 (70)% OPERATING PROFIT 2,386 2,874 (17)%
221 644 (66)% Continuing operations 2,220 2,496 (11)%
- 97 - Discontinued operations 166 378 (56)%
597 736 (19)% Operating profit BEI - 2,785 2,728 2%
Continuing operations
(47) - Profit on sale of chemicals 2,535 -
businesses
(152) - Loss on disposal of fixed (152) -
assets
11 15 Income from fixed investments 27 34
28 (51) Interest (net) (73) (251)
61 705 (91)% PROFIT BEFORE TAXATION 4,723 2,657 78%
(54) (263) Taxation (1,291) (966)
7 442 (98)% PROFIT AFTER TAXATION 3,432 1,691 103%
(5) (21) Minority Interests (97) (81)
NET PROFIT AT EXCHANGE RATES
2 421 (100)% CURRENT IN EACH PERIOD 3,335 1,610 107%
COMBINED EARNINGS PER SHARE
0.00p 5.60p (100)% - per 1.25p of ordinary 44.55p 21.47p 107%
capital
Preference dividends (5) (6)
Dividends on ordinary capital (719) (684)
PROFIT OF THE YEAR RETAINED 2,611 920
ADDITIONAL INFORMATION (unaudited)
CONSOLIDATED RESULTS BEFORE EXCEPTIONAL ITEMS
The undernoted analysis provides supplementary information
on the consolidated results for comparative purposes only.
The results shown exclude the exceptional items taken in
operating profit, the profit on sale of the international
speciality chemicals businesses and the loss arising from
the disposal of fixed assets.
# millions Full Year
Incr./
at constant rates of exchange 1997 1996 (Decr.)
Operating Profit 3,273 3,111 5%
Operating Profit - Continuing operations 3,092 2,728 13%
Profit before tax 3,231 2,894 12%
Taxation (1,161) (1,061)
Net Profit 1,981 1,752 13%
at exchange rates
current in each period
Operating Profit 2,951 3,111 (5)%
Operating Profit - Continuing operations 2,785 2,728 2%
Profit before tax 2,905 2,894 -%
Taxation (1,042) (1,061)
Net Profit 1,783 1,752 2%
EXCHANGE RATES
For reporting at constant 1996 exchange rates, the full Profit
and Loss Account 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.
For further details on exchange rates please refer to page 7
of this announcement.
SALE OF CHEMICALS BUSINESSESS
All figures quoted relating to the Profit on disposal of
speciality chemicals businesses are subject to change as final
adjustments are made under the terms of the Sale and Purchase
agreement.
GEOGRAPHICAL ANALYSIS
Fourth Quarter # millions Full Year
1997* 1996* 1997** 1997* 1996**
Turnover
3,664 3,741 Europe 13,128 15,223 15,246
1,575 1,578 North America 5,639 5,941 5,902
599 558 Africa and Middle East 1,972 2,140 2,064
1,290 1,170 Asia and Pacific 4,408 4,960 4,425
970 867 Latin America 3,326 3,501 3,222
8,098 7,914 Sub-total 28,473 31,765 30,859
- 663 Discontinued Operations 1,293 1,404 2,663
8,098 8,577 TURNOVER 29,766 33,169 33,522
Operating profit-
before exceptional items
213 304 Europe 1,402 1,596 1,358
209 194 North America 540 569 486
47 58 Africa and Middle East 149 166 174
122 120 Asia and Pacific 390 439 376
83 88 Latin America 304 322 334
674 764 Sub-total 2,785 3,092 2,728
- 104 Discontinued Operations 166 181 383
(422) (98) Exceptional Items (565) (628) (237)
252 770 OPERATING PROFIT 2,386 2,645 2,874
% % Operating margin - % % %
before exceptional items
5.8 8.1 Europe 10.7 10.5 8.9
13.2 12.3 North America 9.6 9.6 8.2
7.8 10.4 Africa and Middle East 7.5 7.8 8.4
9.5 10.3 Asia and Pacific 8.9 8.9 8.5
8.5 10.1 Latin America 9.1 9.2 10.4
8.3 9.7 Sub-total 9.8 9.7 8.8
- 15.7 Discontinued Operations 12.8 12.9 14.4
8.3 10.1 OPERATING MARGIN BEI 9.9 9.9 9.3
3.1 9.0 OPERATING MARGIN 8.0 8.0 8.6
* at constant 1996 annual average exchange rates
** at exchange rates current in each year (see page 7)
NOTES
Acquisitions and Discontinued Operations
In 1997 the effect on turnover and operating profit of
acquisitions made in the year in the continuing business was
#208 million and #23 million respectively. In 1997, the
speciality chemicals businesses were discontinued as at the
8th July 1997. There were no discontinued operations in 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 results
and earnings have been translated at rates current in each
period. In arriving at these current rate figures, results for
the continuing operations were translated at the average rates
in each period, 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 exchange rates conventions used for the chemicals results,
and the related profit on disposal significantly impact the
results for the year calculated at average current rates. The
undernoted rates for the fourth quarter and full year
therefore are for the continuing operations and exclude the
profit on disposal of chemicals. For our reporting currencies
these were:
Fourth Quarter Full Year
1997 #1 = Fl.3.39 = US $1.70 #1 = Fl.3.18= US $1.64
1996 #1 = Fl.2.74 = US $1.61 #1 = Fl.2.62 = US $1.56
Provisional Status
The profit and loss account and supplementary information
contained in this document is provisional and an abridged
version of that which will appear in the Group's full accounts
to be published on 31 March 1998. The full accounts for
Unilever N.V. and Unilever PLC have not yet been filed with
the Commercial Registry in the Netherlands, the Registrar of
Companies in the United Kingdom or the Securities and Exchange
Commission in the United States, and have not yet been
reported on by the auditors.
Dividends
The Boards have resolved to recommend to the Annual General
Meetings to be held on 6 May 1998 the declaration of final
dividends in respect of 1997 on the Ordinary capitals at the
following rates which are equivalent in value at the rate of
exchange applied in terms of the Equalisation Agreement
between the two companies:
PLC 5.62p per 1.25p Ordinary capital (1996: 5.44p), bringing
the total of PLC's dividend for 1997 to 8.42p per 1.25p
Ordinary Capital (1996: 8.01p).
N.V. Fl.1.49 per Fl.1 Ordinary capital (1996: Fl.1.19),
bringing the total of N.V's dividend for 1997 to Fl.2.23
per Fl.1 Ordinary capital (1996: Fl.1.75).
The PLC final dividend will be paid on 22 May 1998, to
shareholders registered on 24 April 1998.
The N.V. final dividend will be payable as from 22 May 1998.
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 final 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.
UNILEVER ANNUAL REVIEW AND ANNUAL ACCOUNTS 1997 AND RESULTS
FOR THE FIRST QUARTER 1998.
The Annual Review and Annual Accounts 1997 will be published
on 31 March 1998.
The results of the first quarter 1998 will be announced on
Friday 1 May 1998.
Enquiries: Unilever Press Office 0171 822 6805
e-mail: press-office.london@unilever.com
Internet: http://www.unilever.com
SUPPLEMENTARY INFORMATION ON UNILEVER GROUP RESULTS
OPERATIONAL ANALYSIS
# millions (provisional)
1997** 1997* 1996**
TURNOVER
Foods 14,838 16,762 16,739
Oil and dairy based foods and bakery 5,559 6,344 6,353
Ice cream and beverages 4,462 5,015 4,710
Culinary and frozen foods 4,817 5,403 5,676
Home Care and Professional Cleaning 6,081 6,722 6,265
Personal Care 6,852 7,543 6,940
Other Operations 702 738 915
Subtotal 28,473 31,765 30,859
Discontinued operations 1,293 1,404 2,663
TURNOVER 29,766 33,169 33,522
OPERATING PROFIT -
(before exceptional items)
Foods 1,314 1,480 1,331
Oil and dairy based foods and bakery 536 617 546
Ice cream and beverages 422 473 412
Culinary and frozen foods 356 390 373
Home Care and Professional Cleaning 538 590 516
Personal Care 857 940 809
Other Operations 76 82 72
Subtotal 2,785 3,092 2,728
Discontinued operations 166 181 383
Exceptional items (565) (628) (237)
OPERATING PROFIT 2,386 2,645 2,874
OPERATING MARGIN -
(before exceptional items)
% % %
Foods 8.9 8.8 8.0
Oil and dairy based foods and bakery 9.6 9.7 8.6
Ice cream and beverages 9.5 9.4 8.7
Culinary and frozen foods 7.4 7.2 6.6
Home Care and Professional Cleaning 8.8 8.8 8.2
Personal Care 12.5 12.5 11.7
Other Operations 10.8 11.1 7.8
Subtotal 9.8 9.7 8.8
Discontinued operations 12.8 12.9 14.4
OPERATING MARGIN BEI 9.9 9.9 9.3
OPERATING MARGIN 8.0 8.0 8.6
* at constant 1996 annual average exchange rates
** at exchange rates current in each period
# millions
EXCEPTIONAL ITEMS IN OPERATING 1997** 1997* 1996**
PROFIT
Restructuring (469) (517) (348)
Others including business disposals (96) (111) 111
(565) (628) (237)
By geographical area
Europe (270) (316) (166)
North America (254) (267) (22)
Africa and Middle East - - (1)
Asia and Pacific (19) (19) (21)
Latin America (22) (26) (27)
(565) (628) (237)
By operation
Foods (452) (510) (137)
Home Care and Professional Cleaning (57) (60) (58)
Personal Care (56) (57) (39)
Other Operations - (1) (3)
(565) (628) (237)
CAPITAL EXPENDITURE (At current average exchange rates)
1997 1996
By geographic area
Europe 420 454
North America 117 181
Africa and Middle East 63 72
Asia and Pacific 183 185
Latin America 99 113
Subtotal 882 1,005
Discontinued operations 83 164
Total 965 1,169
By operation
Foods 490 600
Home Care,Professional Cleaning and
Personal Care 338 346
Other Operations 54 59
Subtotal 882 1,005
Discontinued operations 83 164
Total 965 1,169
* at constant 1996 annual average exchange rates
** at exchange rates current in each period
The segments formerly reported separately as
detergents and personal products have been combined
into one segment, home & personal care to reflect the
changes in the organisation in 1996. Those continuing businesses
not sold but previously reported as speciality chemicals have been
reallocated to other segments.
RESEARCH AND DEVELOPMENT
EXPENDITURE 1997 1996
Continuing operations 507 492
Discontinued operations 39 108
Total 546 600
ADVERTISING AND PROMOTIONS
Continuing operations 3,624 3,778
Discontinued operations 4 8
Total 3,628 3,786
PERSONNEL NUMBERS BY GEOGRAPHICAL
AREA (Average in thousands)
(Parent and group companies) 1997 1996
Europe 91 100
North America 27 29
Africa and Middle East 63 70
Asia and Pacific 76 77
Latin America 30 30
287 306
UNILEVER PLC
NOTICE is hereby given that 24 April 1998 is the RECORD DATE for the final
ORDINARY DIVIDEND for 1997 payable on 22 May 1998.
S G WILLIAMS
Secretary
Port Sunlight
Wirral
Merseyside
L62 4ZA
In accordance with the current procedure of The London Stock Exchange, the
1.25p Ordinary Shares in Unilever PLC will be quoted ex. dividend on 20 April
1998.
American shares each representing
four 1.25p Ordinary Shares in Unilever PLC
The arrangements between Morgan Guaranty Trust Company of New York ('Morgan')
and Unilever PLC for the issue by Morgan in New York of Depositary Receipts
for American shares against the deposit with Morgan in London of 1.25p
Ordinary Shares in Unilever PLC provide that acceptance of ex. dividend shares
tendered to Morgan in London for deposit on or before the record date fixed in
New York for payment of a dividend on the American Shares, shall be deferred
until after such record date.
The record date fixed for the final dividend for 1997 on the American Shares
is 24 April 1998.
END
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