supply chain: the growth engine of...

SUPPLY CHAIN: THE GROWTH ENGINE OF UNILEVER

PIER LUIGI SIGISMONDICHIEF SUPPLY CHAIN OFFICER, UNILEVER

FUNDACAO GETULIO VARGAS, BRAZIL, JUNE 2013

2bnconsumers

everyday

55%sales in emerging

markets

190countries

14 € billion brands

WELL POSITIONED FOR GROWTH

BALANCED SCALE ACROSS CATEGORIES

Personal Care

35% of sales

Foods

28% of sales

Home Care

18% of sales

Refreshment

19% of sales

BALANCED SCALE ACROSS GEOGRAPHIES

Asia/Africa/RUB40% of sales

Europe27% of sales

Americas33% of sales

North

America

Europe

North

Asia

SEAASouth

Asia

NAMET &

RUB

Africa

Latin

America

IN 2009 WE SET OUT TO MAKE UNILEVER

‘FIT TO COMPETE’

Sustainable, Profitable, Growth

€40bn

€80bn

environmental impact

An inspiring visionGrowth as primary goal

GETTING UNILEVER TO GROW AGAIN:

• Drive fewer, bigger, better Innovations

• Drive basics in execution

• Make structure & organisation work

• Drive performance culture

• Drive people agenda to competitive levels

Virtuous Circle of Growth

SUSTAINABLELIVING

PROFITABLEVOLUMEGROWTH

COSTLEVERAGE +EFFICIENCY

INNOVATION +MARKETINGINVESTMENT

Underlying sales growth

120bps

2009 - 2012

€10billion

2009 - 2012

+

RESULTS SPEAK FOR THEMSELVES

Growth ahead of our markets

Core operating margin Turnover increased

3,54,1

6,5

10,5

2009 2010 2011 2012

DESPITE CHALLENGES ALONG THE WAY

Commodity Cost Inflation

Euro-zone Crisis

Slowdown in Emerging Markets

Growing Social Inequality

Threat to Planetary Boundaries

VOLATILITY & UNCERTAINTY: THE NEW NORM

Improved product quality

95% win or parity in blind tests

Innovation delivery

Average value per project up 75%

Strong in-market execution

>5M perfect stores

OUR STRATEGY IS WORKING

Perfect Stores

WE HAVE CREATED UNPRECEDENTED VALUE

FOR SHAREHOLDERS

x2

Share price double that

of early 2009

$100bn+

Added 33% & nearly $40bn over last 3 years

Share price Market capitalisation

1350

2833

2009 2012

SUPPLY CHAIN HAS BEEN THE BACKBONE

OF THIS SUCCESS...

Our contribution to sustainable & profitable growth for Unilever…

GROWTH MARGIN & CASH USLP

2009 2015

GROSS MARGIN

%TO

SA

LE

S

1 2 3

ENVIRONMENTAL IMPACT

InnovationService + Quality

Savings & Cash Sustainability

Higher perceived Quality by our consumers...

'09 '12

Incidents

- 75%

'09 '12

-28%

Complaints Product Superiority

17%

57%

Baseline '12

Win

Parity

Loss

More products on shelf = More Growth...

'08 '12

On Shelf Availability

800bps All Countries

All Channels

Joint efforts w/ Customers

OSA clearly drives tangible Top Line Growth:

Successes in D and D&E markets

2010 2012

OSA 94.3% 97.2%

Growth +3.3%

2010 2012

OSA 86.8% 95.2%

Growth +30%

Unilever is clearly ranked

No.1 in ‘Global Logistics

& Supply Chain’ 2012.

81% of respondents consider us favorably,

none consider us

unfavorably

2012 2011

2012 Advantage Global Retailer Relationships Program Ranking

Customers are rating us higher...

'08 '11

We are investing for Growth...

Focus on D&E

14 new sites built since 2008

World Class standards +76%

Capital Expenditure

‘12'08 '12

Return on Assets

+190bps

'08 '12

Powerhouse of Savings & Cash delivery...

Cash Conversion Cycle (Days)Savings Delivery (€bn)

+78%

% TO

'10 '12

1.9% 2.8%

-32 Days

'08 '12

...with less Restructuring of our asset base

Focus on Growth

Asset flexibility

Competitiveness through Manufacturing Excellence

Restructuring (€bn)

-37%

…improving Margins & Cash Flow

'09 '12

Free Cash Flow (€bn)(2009-12)

Core Operating Margin (%)

+120 bps

€15bn~

Trade Working Capital (€bn)

-1,7 -1,9 -1,6-2,6

‘09 ‘10 ‘11 ‘12

Supply Chain has played a pivotal role in Unilever’s sustainability agenda...

Taking a holistic approach to sustainability

26% 3% 2% 68% 1%GHGcontribution

- 800k tons CO2 26% energy from renewables Zero waste in 1/2 of sites

60% paper & board

certified or recycled

Over half Lipton teabags contain

Rainforest Alliance Certified™ tea

1/3 agricultural materials

sustainably sourced100% sustainable palm

Global super-sector

leader in F&B 2012-13

Our Sources of Competitive Advantage

Global Scale, Local Agility Partner to WinSpeed

USLP Talent Powerhouse

1 2 3

4 5

Global Scale

A phenomenal international operations network

GLOBAL SOURCING

Consistent Quality Standards

Cost & Speed

Capital Efficiency

LOGISTICS HUBS

Global/Regional Hubs

High Service Standards

Less Environmental impact

PROCUREMENT

€33bn spend: 95% centrally bought

Ability to absorb VUCA shocks

Industry-wide Sustainability

55%

Category

Local Agility

Unique market penetration to leverage growth opportunities

Premium Hair

Mass Hair

Geographic

Remote

Urban

Channel

Drug Channel

Mom + Pop Grocery

Portfolio

GM: 55.5%

Personal Care

Laundry Care

PC in Drugstore ChannelDrives Service, Sales Growth and

Customer SatisfactionSpecialized Distribution

1st in Advantage2011 & 2012

• Dedicated carriers and drivers• Customized picking and pallets• Special KPI´s – Perfect Delivery• Collaborative “OOS Programs”

Segmentation supply chains drive growth

Brazil Drugstore example

CCFOT:75%94%

Growth:+30%

Speed is our Currency

FASTER INNOVATIONS

Time to market: < 50%

New capabilities for speed: moulds, capacity

Innovations landing in 10+ markets: 9 in 2009 90 in 2012

Axe Apollo – 60markets in 3 months!

RAPID INDUSTRIALISATION

Ground-breaking Commissioning in 6 months Full scale production<12 months

Pre-fabricated, modular hi-tech facilities, shipped across the world- Only 20% of job done on site

Partner to Win with Suppliers

Becoming partner of choice, creating an edge.

GROWTH & INNOVATION

Suppliers engaged >74% of innovation pipeline

€1.3b investment, 40+ plants

KNOW-HOW & ASSETS

Partner of choice: 86% of suppliers

Prime access to capacity & new technologies

SUSTAINABILITY

1.3m smallholder farmers

Long-term commitments

Talent Powerhouse…ever strengthening

GLOBALLY INTER-DEPENDENT INTERNATIONAL CAREERS ADVANCED SKILLS

Highly engaged employees Integrated approach to developing skills

• Proactive recruitment• Career Roadmaps• Succession plans

…and our progress increasingly being recognised externally

Innovation Execution People

• Dove: 17 Awards

• Digital marketer of the year

• Advantage: #1

• Gartner: #4 in world , #1 FMCG

• Preferred supplier in the UK

• Linked In: #5 in demand employer

• Top employer in 27 markets

Supply Chain

Top25

We aspire to become THE BEST in the industry

STANDARDS

Strive for Perfection

Performance Culture

COMMITMENT

Determination & Discipline

Clarity of Purpose

PASSION TO WIN

Hunger for success

Winning Mindset

THANK YOU