聯合利華 (UL) 2004 Q2 法說會逐字稿

Welcome to Unilever’s 2004 second quarter and half year results conference call. This conference will begin with a presentation by Mr. Rudy Markham, Financial Director of Unilever, followed by a question and answer session. [Operator Instructions] This conference is being recorded and will be available for a period of two weeks. Details of the replay numbers and access codes can be found on Unilever’s website. An audio webcast of the teleconference will also be available on Unilever’s website www.unilever.com. We will now hand you over to Mr. Markham.

Good morning everybody and thank you for coming. Welcome to Unilever’s second quarter and half year 2004 results presentation. Transcripts which contain the formal disclosure as to forward-looking statements, within the meaning of relevant US legislation, can be accessed via our website www.unilever.com, and, this presentation and discussions are conducted subject to that disclaimer. I’ll not read out the disclaimer, but propose we take it as read into the record for the purpose of this presentation and conference call.

I remind you, that unless otherwise stated, the financial numbers used in this presentation are in euros, at constant rates of exchange, and that’s average 2003 rates.

Before we get into the numbers, it goes without saying that we’re disappointed with our current top line performance. Whilst we’ve seen weaker markets over the last 18 months and fierce price competition, particularly in HPC, we’ve also seen in some in-market activation weaknesses in a small number of our markets. We’re not complacent about this, and we’re putting things right.

However, these short-term setbacks need to be put in the context of our longer-term strength and potential that Unilever has built up during Path to Growth. Indeed it’s the much stronger shape of our business enabled through Path to Growth that has given us the flexibility, and financial muscle, to maintain the steady bottom line performance and deliver continued cash flow growth, whilst we defend our market positions and support our leading brands to grow faster.

This is the philosophy of sustained value creation, which underpins our strategy going forward. It also enables us to maintain our outlook for EPS beia growth for 2004.

With that as a general introduction, let me turn to chart 1 and review the key features of the results. Leading brands have declined by 0.2% in the quarter, off the negative price of 30 basis points. HPC grew by 1.7%, with some 4.4 percentage points coming from underlying volume growth, whilst Foods declined by 1.6% with a 3% fall in underlying volume.

Operating margin before exceptional items and goodwill amortization at 14.9% is 10 basis points ahead of last year.

Total brand investment has increased by some 150 basis points. With continued investments in trade and consumer price related promotions up nearly 200 basis points in the quarter, partially offset by advertising and promotions, 40 basis points lower, as we reshape our investment in competitive markets.

For the half-year, operating margin beia is 14.9% up 20 basis points on last year, and, is after an overall increase in brand investment of 200 basis points, including A&P 10 basis points lower.

Net borrowing costs have reduced by €58m or by 25% in the quarter, and reflect the benefit of cash flow from operating activities and the sale of businesses, as we focus the portfolio on lower rates.

The net FRS 17 financing costs for pensions was €24m compared to €41m in the prior year. Net debt at quarter-end exchange rates is €13b. With the benefits of cash flow in the quarter, offset by payment of the final dividend and by currency movements.

For the last 12 months, progress on the key metrics within our financial strategy remains on plan. Firstly, our EBITDA interest cover is 11%, and secondly, funds from operations to lease adjusted net debt is 37%. Or, applying new SEC regulations for calculating liquidity ratios, 32%.

The beia tax rate in the quarter was 25%, 4.5 percentage points lower than last year. EPS beia is ahead by 11.2% in the quarter and by 9.6% in the half year, both after absorbing 3 percentage points of short-term dilution from disposals.

Exceptional items in operating profit were again at €3m, and include €86m of restructuring costs and €89m of net profits from disposals. EPS was ahead 36% in the quarter and 10% in the half-year, reflecting the higher after-tax profits on disposals. Current exchange rate EPS beia increases are shown on the chart.

Let me turn to chart 2, for the build-up of sales for the quarter. Underlying sales declined by 70 basis points. The difference between this and that of the leading brands, comes from our strategy of managing the tail for value. As you know, there are two aspects. Firstly, a harvesting strategy, with an underlying sales decline of 7.9% in the quarter impacting underlying sales growth by some 50 basis points.

Secondly, the sale of businesses, where the effect has been to reduce turnover by the equivalent of 250 basis points, or just over €250m in the quarter. Acquisitions, add some 30 basis points. This gives total sales in the quarter of €10.8b, some 290 basis points below last year.

Let me turn to chart 3 and get behind the growth of the leading brands, to explain the key market influences that are impacting our growth.

Firstly, as expected, SlimFast and Prestige Fragrances continue to dilute growth, given progressive share loss during 2003. Performance in the first half of this year is coming up against a tough comparator. Notwithstanding the actions we are taking to improve performance.

We are also continuing with our actions to return our Frozen Foods business to sustainable, profitable growth. Together, SlimFast, Prestige and Frozen Foods dilute the leading brand growth by around 100 basis points.

Secondly, we’ve had a poor start to the European Ice Cream season, against the strong prior year, which together with Ready-to-Drink Tea, reduced Unilever’s leading brand growth by nearly 200 basis points.

Thirdly, we continue to manage, through tough trading conditions, in a number of European markets, particularly in France, Germany and the Netherlands.

Home and Personal Care markets in Western Europe are being particularly impacted, and for both the half-year and quarter, underlying price growth is down by nearly 3%.

Whilst none of the market features are new phenomena to us, the combination across an important Unilever geography to this extent at the same time, is unusual. We also see negative pricing in the USA, leading to smaller HPC markets.

Finally, we continue to implement our plans for defense of our strong Laundry and Hair market positions in India, and to address competition to our Hair and Skin business in Japan. This has meant a short-term dilution to Asia Pacific growth of around 300 basis points, impacting a total Unilever by around 50 basis points.

Overall pricing is as a feature of our current performance, with a marginal price decline in both the quarter and the half-year, compared with positive pricing of around 1.5% in 2003.

Turning to chart 4, we look at the progress we’ve made with operating margin. And, the basis points quoted are always expressed as an effect on total Unilever.

Gross margin was 10 basis points down in the second quarter. Firstly, mix improvement of 50 basis points was lower than the 80 basis points in the first quarter, as the continuing benefits from exiting the tail, and from higher value-added innovations, were partly offset by lower Ice Cream sales, and a slower growth in Personal Care categories.

Secondly, the restructuring savings in the supply chain, contributed 20 basis points to gross margin, compared with 40 basis points in the first quarter. We expect an increase in contribution in the second-half of the year, due to the phasing of our program.

Finally, the balance of price and cost showed an under-recovery of 80 basis points in the second quarter, compared with 10 basis points in the first quarter. Within this, we continue to gain buying savings of around €100m per quarter. However, these savings are more than offset in the quarter by the impact of consumer and trade-price promotion activities in response to market conditions, and by increased commodity costs. Commodity costs have risen by about €100m or 2.5% compared with a year ago.

Advertising and promotions were 80 basis points lower in the second quarter, as we focused on brand activation and in store activity, by giving priority to above the line promotional investment, which we account for within price, and thus gross margin.

Overheads increased by 20 basis points, compared with the 60 basis points increase in the first quarter, which included an unfavorable phasing of items, such as market research and development costs. The overheads ratio continues to be impacted in the short-term by unrecovered fixed costs following earlier disposals. These are being restructured out of the business.

In total, operating margin moved ahead by 10 basis points in the quarter, and by 20 basis points in the half-year.

Turning to EPS delivery for the year, on chart 5. Our outlook continues to be for EPS beia, growth in low double-digits.

Looking at each of the drivers of EPS in turn, for leading brands we expect a slightly faster rate of growth in the second-half, despite continuation of tough market conditions in a number of geographies, but also improvements as we resolve performance issues. We expect gross margins to benefit from an accelerated restructuring program, and a slightly faster rate of buying savings from projects already identified and being actioned.

In the current environment, we expect to continue to reinvest these savings in above the line promotional and trading activities, and pricing activities. However, the under-recovery of commodity price increases in Foods, should ease in the second-half-year.

In addition, mix in the second-half of the year will be more positive, following the final exit from Indian Fertilizers, completed during the second-quarter.

Overhead savings will accelerate in the second-half, with savings from a step-up in restructuring, and the reversal of the phasing issues highlighted in the first quarter.

For the full-year, we continue to expect operating margin beia to be above 16%.

In respect of tax, we continue to benefit from the implementation of Path to Growth and the Best Foods acquisition. Projects successfully completed contribute to a beia tax rate of 25% in the quarter, and 27% in the half-year. We expect further benefits in the second-half, resulting in a beia tax rate for the full-year of around 28%, compared with 29% last year. We remain comfortable with the longer-term outlook of 30% as we described within the Unilever 2010 Financial Framework.

For the year as a whole, it’s the culmination of our improvement programs within gross margin and overheads, together with lower financing and tax costs, which enable us to fully fund our responses to the current market environment, and maintain our earnings outlook for the year. Given the nature and timing of the factors identified above, we expect the second-half delivery of EPS beia growth to be weighted to the fourth quarter.

At this point, let me comment on the step-up of overheads restructuring, which I have just mentioned, and which we indicated at the start of the year. And, the key elements are set out on chart 6.

Simplification was an important element in the Path to Growth strategy, and the benefits are already apparent from the first phases of implementation, from a more focused portfolio of brands and businesses, a streamlined supply chain and greater alignment of business processes. We’re now moving into the last phase of our simplification drive, which focuses on our administrative organization.

This part of the program is based around 3 key principles. Firstly, a common organizational design, with one operating company per country, benefiting from common systems and processes; drawing on shared business services and presenting a single Unilever face to our retail customers. We will retain focus on the market place in each country through HPC, Prestige, Foods, Ice Cream, Frozen, and Food Solutions business units, each accountable for its own P&L.

Secondly, the clustering of business support activities into shared service centers, delivering a cost optimized back office, with the front office customer oriented mindset.

Thirdly, a sharing of resources in common processes within the corporate and divisional organizations, to further strengthen the way we manage Unilever’s strategic direction and resource allocation. Put another way, we retain focus on the market place, and generate scale benefits in all our support activities.

We believe the program will improve top line growth through improved agility in the market place, and enable us to fully realize the scale benefits of Unilever from suppliers to the customer relationships. However, whilst this focus is on a sharper operational execution of business plans to deliver growth, this phase of simplification will also deliver significant cost savings. Indeed, it is now clear, based on the platform already created, and from external benchmarking, that we have the opportunity to go further and deeper than originally planned.

Planning has taken place over the last 12 months, drawing on successful trials of the approach over the last 3 years. And, the program has now commenced across Unilever. It’s expected to generate cost savings of around €700m per annum by the end of 2006. It will cost around €850m, part of which will be charged as exceptional under the Path to Growth program in 2004, with the balance within operating profit, as a normal business cost, during 2005 and 2006. And, as reminder, you will recall that within Unilever 2010 we had allowed for between 50 and 100 basis points of such costs per annum, within the financial model, and this program forms part of that.

Having shown you how we secure our earnings for the year, and how we generate more fuel for growth within Unilever 2010, let me now turn to our category review, and show the actions we’re taking to bring about a more consistent and stronger top line performance.

Starting with Personal Care on chart 7. In mass Personal Care, growth of 3.5% in the quarter shows an improvement over the first quarter. This reflects solid volume growth of nearly 5%, in spite of specific competitive challenges in Japan, India, and the US. Good volume growth has been partially offset by pricing in developed markets as referred to earlier. Against this background, we’re taking action to address the immediate competitive issues, while continuing to drive growth through innovation, on the rapid roll-out of proven successes.

Thus, in Hair Care we’re broadening the Sunsilk range in Europe, with new shampoo and conditioner variants and new treatment products. We continue to bring news to Sunsilk in Latin America and Asia, including a new anti-dandruff variant in Q3, targeting this large segment of the hair market in China.

Dove Hair in the US and Europe has been boosted by new products and presentations, including formulations specifically designed, or specially designed for colored hair.

In Japan we have a major relaunch of Lux Super Rich in October as part of our plan to recover market leadership, while innovation behind Mods Hair continues to do well. In the US, we also have an extensive program behind Suave.

In Skin Care, the relaunch of Dove firming lotion and a new firming gel have made Dove the fastest growing body care brand in Europe this year. The rollout of Dove exfoliating bar continues, and is now available in 40 countries.

Lux is performing well in Latin America, following the recent relaunch. While in Europe, a completely new range of Lux soap bars, bath and shower products has been launched in selected countries. The Ponds brand has benefited from the relaunch of the double white platform across Asia, as well as an affordable anti-ageing cream in North Latin America.

In Deodorants, Rexona is now the number one deodorant brand in over 30 countries. The brand has been successfully relaunched in Europe as Rexona Active Reserve. Elsewhere, growth has been driven by the rollout of proven mixes across Latin America and Asia, as well as products that appeal to consumers with lower disposable incomes. In Axe we’ve further strengthened our position in North America, and a new variant, Touch, is being rolled-out across the Axe world.

Lastly, in Oral Care, we have a strong number – second-half plan to defend our positions in France and Italy. Pepsodent is being relaunched in Indonesia, and in China Zhonghua will be relaunched in August with an improved formulation.

Let me turn now to chart 8, and look at our progress in Prestige Fragrances. With a new leadership team in place, we’ve continued to make good progress with our restructuring program, including moving to a single sales force in North America, reorganizing our businesses in Europe, simplifying the supply chain in North America, and reducing overheads globally.

The first phase of this year’s strengthened innovation program has sold through positively, including [Saruti CI] in Europe, Vera Wang for men in the US and a summer fragrance under the CK 1 brand. Further launches are planned for the third quarter, including the global launch of Calvin Klein Eternity Moments, endorsed by Scarlet Johnson.

The plan to focus on a limited number of stronger brands and key channels, meant some share loss over the last 12 months, but we expect to see the benefits of our actions on the top line, from the second-half of this year. Importantly, the business is profitable and continues to generate value for shareholders. Over the last 5 years, it has generated around €400m of free cash flow. €90m in 2003 alone, and we expect another year of excellent cash contribution in 2004. We will continue to ensure that we execute the appropriate strategy to maximize long-term value.

Let me now turn to Home Care on chart 9. Laundry leading brands grew by 0.4%, with good volume growth offset by lower pricing in several key markets, notably in Western Europe, the US and in India.

During Path to Growth, we have significantly strengthened our Laundry portfolio, by reducing the cost and asset base of the business, exiting from a small number of weak market positions, and focusing on our strong market positions and brands. As a result, our business has proved resilient in what are highly price competitive markets.

After some share loss in 2003 in Europe and the US, we have now stabilized our position. Elsewhere, we continue to innovate behind our leading brands, while taking the necessary tactical actions to protect our market positions.

Our OMO “Dirt is Good” campaign is being deployed across the world, including in the US on Whisk. In addition, the “Pockets” performance restage is being rolled out across Asia, Africa and the Middle East, following initial success in Latin America.

In fabric conditioners we continue to rollout new fragrance variants in Europe, and in the US, whilst also delivering an improved functionality, for example with Comfort Superior Concentrates in Thailand.

In Household Care weak market conditions in Europe, and a disappointing performance in our European dish wash brands, mask good progress in other areas. Domestos has turned round in 2004. The pink power innovation that has proved successful in the UK and Russia, will be rolled out across Europe in Q3. Domestos bleach spray is also doing well in the UK. Cif Active Gel with baking soda has been rolled out across Europe, Turkey and South Africa, and will help reinforce Cif’s tough cleaning credentials.

Let me now turn to chart 10 to look at Foods. In Savory and Dressings, we continue to build on our strong brand portfolio, and leading brand growth of 3.8% is ahead of that achieved in the first quarter. In Savory, we’re consolidating our position in the 13 new countries we entered last year, and continue to innovate in 2004, around the principles of reaching down, reaching out and reaching up. Activities include the relaunch of bouillon cubes across South East Asia and in China, new variant launches in Brazil and Mexico, and the rollout of low unit price [Cavitos] to further parts of Latin America and Africa.

Soup innovations include light soups in Taiwan and new flavors in Asia, and ambient stable varieties in Latin America, plus the rollout of Soupy Snacks in Asia, which continues.

An active program in Europe includes launches of chilled Knorr fresh soups in Italy, the Knorr liquid soup makers with olive oil in Spain. The rollout of Knorr active soups in several countries, and we have launched Knorr Creative Plus soups containing soup and a separate topping in Switzerland. Under the Unox brand in the Netherlands, we have launched a range of 7 varieties of soup in a pouch.

In Dressings, we’ve continued to build on the Good for You credentials of Hellmann’s. The successful launch of cholesterol free mayonnaise in Chile is paving the way for a regional rollout starting in Mexico.

In Q2 we launched a new wave of low-carb Dressings, including Ketchup in North America, under the broader Carb-Options range. With the personal healthiness trend has come a rise in the consumption of salads, and we continue to increase our footprint to address this. Innovations include new flavors of Hellmann’s salad dressings across markets, and the relaunch of our Calve salad dressings range in parts of Europe.

In Brazil, we have extended our Hellmann’s ketchup range to include a barbecue variant. In Canada, we’ve launched Hellmann’s creamy dijonnaise, and in Poland we’ve introduced new easy squeeze packaging.

In Food Solutions, we continue to see good broad based performance in a tough market, with underlying growth in the mid-single-digit range.

In Tea based beverages, while growth in the quarter was lower, due to the timing of price increases in Arabia, competitive markets in Pakistan and changes to how we consolidate sales of the Pepsi Lipton International JV, we have an active innovation program across the world in both Leaf and Iced Tea.

In Western Europe we continue to rollout successful innovations, including Lipton Premium Pyramid variants and Lipton Green, now available in 10 European countries with strong synergy being achieved, by a simultaneous rollout of Lipton Iced Tea Green Ready-to-Drink. In Russia, the launch of a range of Lipton Specialty Black Teas has driven strong growth. In Asia we’ve rolled out the successful Lipton Asian tea bag range and a new range of Lipton premium pyramid teas is planned for parts of the region in Q3. In the US, we have a major relaunch of the Lipton Leaf Tea range for Q3 2004.

Chart 10 also shows the performance of Health & Wellness, which is mainly SlimFast, which declined by 20% in the quarter. Let me get behind this and turn to chart 11 to look at the progress with our business plan for SlimFast, concentrating on the USA which is 80% of sales.

Against the background of a “C” change in consumer habit, our priority has been to revamp our portfolio, in a way that is true to the roots of the brand, and consistent with SlimFast’s heritage. The SlimFast plan is a clinically proven way to lose weight and to keep it off. Its credentials are based upon balanced nutrition and calorie control, underpinned by clinical studies and the support of a wide range of medical experts. In addition, there have been over 20 peer review publications, showing the value of SlimFast in the science of nutrition and weight management since 1996.

Our medical credentials have been, and will continue to be, an important differentiator. As will our practice of only making product and advertised claims based on proven benefits.

By the end of Q3 of this year, we will have replaced and redesigned every SKU in the SlimFast range. This, in culmination with a broadening of the product offering, and with improved communication and strengthened retail relationships, is expected to deliver an improving trend in the top line.

However, as we go through this process, we continue to see sales decline, and we’re up against tougher comparators from the prior year, given our end 2003 exit share position. We’re also, of course, having to manage trade inventories as we complete the SKU transformation.

Notwithstanding the reported sales decline, the leading indicators show early signs of an improving trend. We continue to be the largest brand in the weight loss category. Our market share has stabilized at around 25%, and has been at this level for the last 6 months. We continue to expect a progressive return to growth as we rebuild consumer loyalty in a market that is expected to continue to show good growth potential.

To reinforce the recovery program, there have also been management changes. In addition, operational efficiency and effectiveness have been improved, by integrating SlimFast into local operating units in each country.

I’ll carry on now with the Foods leading brands on chart 12. In Spreads and Cooking Products, we see the expected increase in innovation activity and an improved leading brand growth of 3%. Under the Family brand Crèmefine or Fine dairy cream alternatives have now been launched in 11 countries in Europe and will be rolled out to further countries in the second-half of 2004, including Poland.

We have also relaunched the core Flora Basel brand with a new visual identity, packaging, and advertising campaign and a new formulation, which includes added folic acid and B vitamins, to build on the Heart Health benefits of the products. Meanwhile, our range of proactive cholesterol lowering milk and yogurts are doing well, and are now available in 13 European countries, with extension and rollout planned for next year.

For Ice Cream, this has been a mixed first-half of the year, with 8% growth and further market share gains in the US, being more than offset by a poor performance in Europe. Notwithstanding the more difficult market, we continue to execute a wide-ranging innovation program across our key regions. And, these include in Europe, the final two flavors in our special edition Cornetto Love Potions range and new Magnum products, including Magnum Intense and Carte D’or Light.

In the US a new wave of carb-smart products, endorsed by Breyers, Klondike and Popsicle, while new flavors and range extensions were introduced to grow the core of the brands. In Brazil, we’re about to launch a [Kebon-Udes] Ice Cream, which combines [Kebon] Ice Cream expertise with the soy and fruit benefits of [Udes]. The products are a great tasting Ice Cream, it is 100% cholesterol free, lactose free and a source of vitamin C.

Finally, to Frozen Foods, well I’ll review the actions we’re taking to restore growth, and these are set out on chart 13. Our strategy is to reshape our business around faster growing market segments. After a full review of our immediate options, we’ve decided that this process of portfolio focus continues to be the best way to preserve and enhance shareholder value.

This means we are harvesting value from around 10% to 15% of our sales, in order to focus on core market segments where we have leading share positions. As a result, sales have declined at a faster rate in this quarter, not helped by slower market growth. Launches behind Knorr, SlimFast and Bertolli frozen continue to do well.

As we reshape the portfolio, we’ll be relaunching the respective master brands, Birdseye, Iglo and Findus, which are among the biggest and best known food brands in their markets, fully in line with our vitality vision. These brands will again become synonymous with great tasting food the natural way. Targeting consumers’ growing desire for the goodness of fresh food with the minimum of additives and processing. Indeed, it is freezing that can best preserve the taste and the nutrients of freshly harvested and freshly made food, better than chilled and usually better than so-called fresh food that has been transported over a number of days.

However, portfolio changes have to be managed in pace with plans to resize and restructure the business base, and this we’ve done over the last 4 years. Translating this into actions, we’ve exited businesses in 7 countries. Closed 6 factories and increased the proportion of out-sourced manufacturing to 40%, and as a result we’ve increased asset efficiency by over 500 basis points. Increased trading margins by 200 basis points, and achieved a return on capital employed of over 30%.

So, whilst sales growth has certainly not been exciting, we’ve clearly created value. Successful execution of the last phase of our strategy will prove that we can grow it. Once again, let me reassure you that we will continue to execute the appropriate strategy to maximize long-term value.

Let me summarize now on chart 14. In competitive markets we’re taking the actions necessary to protect our market position and have an innovation program with a level of activity at least as high as last year. We are sharpening up our in-market activation in the few markets where it has not been good enough. We’re addressing issues in SlimFast, Prestige and Frozen Food, and doing so in a way that enhances long-term value.

Linked to this, I think it’s important to say that we do not believe in the disposal of businesses in order to offload executional failure. If and when we determine a business is strategically disadvantaged in relation to our long-term value creation criteria, then we will take the appropriate decisions. But, we will not penalize our shareholders by disposing of businesses where we believe they can, and will be fixed.

For the final part of my presentation, I’d like to turn to chart 15 and look back on the Best Foods acquisition, and confirm that we have reached the ROIC WACC cross-over point in the fourth full-year of operation.

As you see on chart 15, the strategic rationale behind the acquisition of Best Foods was both clear and compelling. The acquisition of big market leading brands in faster growing categories, a successful well established Food Solutions business, a strong complementary presence in D&E markets, a strengthening of our position and presence in North America, and access to significant cost synergy.

Our progress against each element is given on chart 16. The acquisition of the large Best Foods brands enabled us to rationalize many of our smaller brands and strengthen our Foods portfolio. As a result, within our Savory & Dressings category we sold 18 businesses, realizing €2.9b in after-tax disposal proceeds. The improved category geography mix of the combined portfolio also raised the Foods momentum growth rate by over 100 basis points. Providing us with a more certain growth profile for both Foods going forward and an improved D&E presence.

In terms of managing the acquired brands, the combination of strong equities and complementary capabilities has enabled us to extend the geographic reach, for example Knorr has entered an additional 15 countries since the acquisition. Return brands to growth in key markets, for example, Hellmann’s in the US now has a better growth profile. Broaden the brand footprint, by expanding the category presence, for example Knorr into Frozen, or Hellmann’s in a wide range of sauces and dressings. And, we’re currently testing the blend in chilled dressings and deli products. Bringing the strength of Knorr to some of our pre-existing weaker brands and through migration and co-branding, raise their performance. Create a world-class Food Solutions business, which after integration, and with a broadened category and geographic presence has shown the ability to grow at least twice as fast as the market.

In addition, we strengthened our D&E presence by buying out Ajinomoto’s interests in South East Asia, and forming an alliance with Robertson’s in Africa and the Middle East in which we took a 60% stake. With this, the ex-Best Foods brands have grown on average at between 3% and 4% from 2001, notwithstanding, slower than historical market growth rates in the last 18 months. The current growth rate of the acquired brands is somewhat lower than we would have expected, but this has been compensated by the higher level of cost synergy achievement.

Going forward, we expect an improved rate of growth, given stronger markets, the increased level of brand investment that we have now put behind the brands, and a revitalized innovation [funnel] supported by a stronger science base.

You’ll remember that we set up an ambitious program of cost synergy, against which we have over-achieved in respect of both timing and the absolute amount of saving. The planned cost synergy of €790m was achieved at the end of 2002, compared to a plan of 2003. And, to date, the total cost synergy achieved is in excess of €1b. The cash costs of achieving this synergy were €1.1b compared to the expected €1.2b. Savings in capital employed, primarily lower working capital, are close to €0.5b.

So, now let me turn to chart 17 and show you what that means in terms of the key financial metrics that we set out for the markets in 2000. Firstly, we said that the acquisition would be cash accretive in the first full-year of operation. And, we demonstrated achievement of that with the 2001 full-year results.

Secondly, we expected the ROIC/WACC cross over point to be reached in the fourth full-year of operation, namely 2004. The calculation of the return on invested capital is shown on the chart. Invested capital of €19.7b is calculated from the consideration of $73 per share, plus the acquired net debt, deducting cash proceeds from disposals and adjusting for currency movements, based on our actual mix of debt since acquisition.

The return side of the equation, consists of the EBITDA of the acquired brands in today’s portfolio of €1.2b at current exchange rates. This number only includes half of the total cost savings synergy achieved. The other half is benefiting the ex-Unilever brands and needs to be added in to the calculation.

In total, we have thus an EBITA of €1.7b, which is €1.2b after tax. Before the reduction in working capital, this gives a return on invested capital for the last 12 months of 6.2 percentage points. Market estimates of Unilever’s weighted average cost of capital vary in the range from 6% to 8%, whilst our own estimate is roughly in the middle of this range.

Attributing the benefit of the tax shield on interest from the gearing up of the balance sheet, gives the project’s specific weighted average costs of capital at 6% and means that the ROIC/WACC cross over has been reached. Whilst based on the total Unilever WACC, it would be reached in early 2005.

Finally, in gearing up the balance sheet, we gave clear metrics within our financial strategy, which were consistent with the targeted A1/P1 credit rating. Strong cash flow has enabled a reduction in net debt, and we fully expect to achieve our financial strategy metrics on schedule, that’s by the end of 2004.

So, on top of a very strong strategic case, we’ve executed the integration of one of the largest acquisitions within the consumer goods space. Our business is stronger as a result, and we’ve achieved the financial metrics that we communicated at the time of the original transaction.

So, now let me return to our results for the quarter, and summarize, before we move to Q&A. The key points are set up on chart 18.

It has been a tough quarter, both in terms of the trading environment in some of our key markets, and because of the specific portfolio issues we’re dealing with. We’ve responded flexibly, based on the specific needs of individual markets. Importantly, our business continues to demonstrate the resilience and ability to finance the necessary investment in our brands through cost savings in every area.

We have continued to grow EPS beia 11% in this quarter, and by 10% in the half-year. And it’s also enabled us to maintain our outlook for low-double-digit EPS beia growth for the year.

That completes my presentation, and Howard and I will now be very happy to take your questions.

Thank you. Ladies and gentlemen, we will now poll for questions from analysts. [Operator Instructions]

While we’re waiting for any questions that might be – it’s Howard Green from Investor Relations. Just firstly on behalf of my 19 year old son, I’d just like to say that it is in fact Scarlet Johannson that is endorsing the fragrance brand.

And, more seriously I think on chart 4 Rudy mentioned a number of 80 basis points on advertising and promotions, I’d just like to reiterate that the number on the charts in Q2 of 40 basis points is the correct number.

Fine. Thanks Howard.

Gentlemen, your first question comes from the line of Andrew Lazar with Lehman Brothers. Please go ahead.

Good afternoon.

Hello Andrew.

Just a quick one, on some of the markets such as Northern Europe, or Germany or France, where a number of the companies in the space, as you know, have talked about the difficulty and the deflationary environment, and some of the tougher retail environment of late. I’m curious of what you’re embedding into your plans for the back half of the year, in terms of those markets. And, if there are some things whether it’s - you know – the resizing of SKUs or things like that – you know – that can potentially mitigate some of that impact, and how quickly some of those things can be – you know – some of those actions can be taken.

Yeah. In talking about the European market, we described a fairly general pattern across many of the categories when we were talking about lower market size or in some cases price deflation. And, that’s partially competitor driven, in a market that is not growing strongly. And, partly also I would say, influenced by retail price – retail competition within individual markets and – but that varies depending on the market which you’re looking at.

That’s the specific key [indiscernible] that I’m looking into.

Yeah. I can imagine. In terms of our performance in half 1, if you then sort of use it for looking at half 2; first you’ve got to take out – or just note at any rate, the impact on the first half year of the particular dimension of the Ice Cream season, and the weather that we’ve had in Europe, or Western Europe this year, compared with the same period last year. They’re quite a way apart in terms of unfavorability this year and favorability last year.

Right.

That’s had a 2% point impact on Unilever sales in the quarter, worldwide. And, obviously the impact on the Europe sales is bigger. Now, I’m not going to predict what the weather will be like for the rest of the year. But, I just – we would just flag that that is one of the features which clearly influences the second quarter for us in Europe.

If you look at the structural issues, we have a Frozen Foods business, of course, in Europe. Of which – on which I commented earlier on in my speech, talking about the steps that we’re taking.

Yeah.

We are doing two things at the same time if you like. We’re growing the – or working at re-energizing and growing the core, and of course, still maximizing the value from 10% to 15% of tail that we are in the process of getting out of. So, that sort of works in two different directions in terms of prospective top line growth going forward, and I’m not going to predict exactly how that will move.

If you look at the – our general market position, and let me take Home & Personal Care first in Europe. Then you’ll have seen for this quarter that we’ve got quite good volume growth actually in our business, also in Europe. That’s a continuation of a trend that we saw also in the first quarter. In fact in share terms, we’ve seen our Laundry position stabilize, and we’ve seen our Personal Care shares actually grow.

So, we’re quite encouraged with our positioning in terms of volume and share, having adjusted to the pricing that we’re currently experiencing. And, of course, it’s somewhat difficult to predict, given the features, or the factors that have influenced it so far, how that will go forward in the rest of the year.

In terms of our Foods business, I’ve commented already on Ice Cream. You will note from the – both from what I’ve said earlier, and also from our statement. That we’ve had a continued recovery in the performance of our Spreads business in the second quarter, and that reflects the benefit of price adjustments in our base plan, so our Family Brands, which has been – and then accompanied by some volume growth. And, we’ve seen the progressive – the progress with a number of our innovations in pro-active, particularly the rollout of yoghurts and shots, and of the – which is not a pro-active product, but another innovation, which is the Cremefine or the non-dairy cream.

So, we have, as it were, a program which is ongoing, which is beginning to underpin the Spreads activity in Europe as we go through the second quarter.

Our Savory business has grown in aggregate across the world by something like 3% also in the quarter. Position in the various markets in Europe is a bit mixed. Knorr I think we commented on as being a little bit behind that. But, in general, we see the momentum. And, if I add Food Solutions into that, as looking quite positive.

So, there are a number of sort of conflicting trends, if you look to the second-half of the year. I’m not going to express a view on where we will end up. I think we covered it with the overall outlook. Which is that we’re looking for a slightly faster level of growth with our leading brands in the second half-year compared with the first.

Okay. So, within what has – within what actions have already been taken by – sort of – your big retail counterparts, you – you’ve adjusted as well as you can and you’re seeing things start to move back. And then, it’s just a matter of what – you know – some of those counter-parts may even do going forward, which obviously we can’t predict. But, that’s one that’s –-

Indeed. And I outlined the innovation program going into the second half of the year, quite a bit of that is in Europe. The continued progress of Sunsilk of example. The launch of the – or the rollout – further rollout of Green Tea with pyramidal tea bags and so on.

So, all of these activities are continuing. But I guess the big thing that is noticeable in Q2 is the much – is the higher level of trade spend year-on-year, so customer/consumer promotional spend, and that clearly is the element which is referring to the retailer price pressure.

I think Andrew what’s important, is that in a situation like this, where you’ve got sort of – let me call them street fighter markets, but we are continuing to rollout our innovation programs to reinforce and build the core equity of the brand. And, all of those initiatives that we had in our plan at the beginning of the year, we continue to roll those out and continue to support them.

At the same time, the reality of what is happening on-shelf, means that you’ve got to be in there, making sure that you’re competitive through tactical actions, as expressed through the so-called above the line investment in the brands.

When we look back at similar situations, and there have been many similar situations like this. We see that our business has generally come out stronger – and I’m thinking particularly to the price deflation that has happened in the UK grocery retail market over a number of years.

But look at our Home & Personal Care business, because of the focus on the leading brands and the strength that those brands represent, because of the relationship with our retail partners, because of the more focused innovation program that you can build behind that smaller group of brands, we in fact have gained share and strengthened margins. But also taken – tell you a similar story about Spain.

What is slightly unusual in this quarter is the juxta position of things happening in France, the Netherlands and Germany. But – I wouldn’t want you to under-estimate the change in the strength of the Unilever portfolio that has been brought about by Path to Growth and its focus on the leading brands. The number 1 and 2 brands in the markets in which we operate, and how important those are when you get into these street fighter kind of markets.

Right. Great, thanks very much.

Thanks Andrew.

Our next question comes from the line of Ann Dylan(ph) with Lehman Brothers. Please go ahead.

Good afternoon, we are certainly tag teaming over here today. Sorry about that.

Hello Ann. Thank you.

Hello Rudy.

Good afternoon.

I was just wondering if you might give us a bit more color on the negative pricing in the HPC markets in the US that you discussed on chart 3.

Right. We talked – as you saw in the announcement, about negative pricing in Europe and North America, as the two main areas. And, the third one was where we’ve adjusted prices, was in Asia in the Indian market.

I’ll ask Howard in a minute to talk to the specifics of individual categories, but as –- Before that, let me just say that if I look at share position, which obviously is the other context in which we must look at the performance of our business, then we see a stabilization of our Laundry shares in North America, which is encouraging.

You will remember that we gave a little share up last year, while we significantly improved margins, as we further restructured the business. So, we’re very comfortable with that.

And, on the Personal Care side, we have a little bit of weakness in share in our Hair brands, which is compensated by a strong position in our Deodorant category. Let me just pass to Howard for the key details.

I mean, if I look at the over-arching sort of market growth dynamics Ann first of all. I mean, what we saw in Home & Personal Care in North America in the first quarter, was market shrinking by somewhere between 0.2% and 0.5%.

And Howard, that’s on an all channel basis?

Yes. Yeah, that’s all channel basis, so, we’re picking up 95% to 96% of the sales base.

By the end of quarter 2 on a year-to-date basis, that had increased to a decline of 60 basis points. That compares to historical trends of 3% to 4% growth.

If I look across the categories, then I have to say that we have seen negative price growth in all categories, Laundry, Skin, Deodorants, and Hair Care of anywhere between 1% and 2.5%. And, that is a major factor that is influencing the developments of those market sizes.

And Howard, is there anyway on a – on a total level like you’ve just done, just to note what whether that’s actually just a step up in promotion, or whether you’re actually seeing list price? It just seems to be contrary to what you’d expect, given raw material pricing.

No. I mean, from the numbers that we see, that is all essentially going through in consumer price promotions, and is not to do with list price movements.

The aggregate Unilever level, you’ll have heard from the presentation about the 200 basis points uplift in investment that is going at that level – or in that direction. I haven’t got the geographical split with me, but there would certainly be a bias between Western Europe and North America in those figures.

You’re right Ann. We have seen an increase in our input costs for, particularly in packaging and chemicals, also in the US.

Okay. And, just last question. I know you’re seeing this in your sales, is that also what you’re seeing in terms of what you think the retailers are seeing. Because those categories don’t seem to be pulling back quite as much at the retail level.

Well, I mean, we see various announcements that retailers make. I mean, we saw the world’s largest retailer, not – somewhat disappointing growth reflected in its latest statements. And, our categories are down at retail.

Okay. All right. Thanks very much.

Thanks very much Ann.

Your next question comes from the line of Christian Andrew with Manning Napier Advisors(ph). Please go ahead.

Hi Christian Andrew, how are you Howard and Rudy?

Hi Christian.

Good afternoon – or good morning still.

Yes, hi. A couple of quick questions if you don’t mind. I think in the past you’ve mentioned your willingness to look at all kind of options to unlock value. At current valuation levels what are your thoughts on the value that could be created by breaking the Company up into Food, Household Care and Personal Care.

Well, our position is very clear. We have a strategy of generating value over – currently with the life of Path to Growth, and then after that through 2010, through a stable of some 400 brands, which we call leading brands, integrated in the categories in which we operate around the concept of Vitality. We’ve set out our stall for that strategy and the rationale for it, and the ambitions that we have to deliver that value, which over a 6 year period is approximately €30b of free cash flow. And that is sort of scaling up from the €4b cash flow per annum that we have been delivering now for the last four years, to I guess an exit value of somewhere around €6b if you did a sort of simple arithmetic. And, at the same time, an improvement on the return of invested capital of our business during that period from 12% to 17% or so, that is a very substantial value generation.

The second thing we’ve said, is that we anticipate moving – during the course of that program – to a balance sheet structure, which would have a level of debt consistent with what we believe is a competitive balance sheet going forward. So, a geared balance sheet, and that’s with a debt level of somewhere around the €10b.

And, what we’ve said is, that when we achieve that level we will look for ways of further enhancing the value of our business to shareholders, and look at that in the light of the circumstances prevailing at that time.

The final thing I’d say in terms of value creation for our shareholders. We’ve said, we are not – we do not require an acquisition to achieve the value creation that we’re talking about. Nor do we actively seek one. Nevertheless, if an opportunity were to present itself, we would consider ourselves duty bound to our shareholders to examine whether there was any value creation which could be obtained for Unilever if we were to participate in an appropriate way with it.

So, that I hope sets out the ambition that we have in terms of value creation. And, I would just point to the strong value growth that we have delivered in the last – over a long period. I could go back 30 years and talk about the growth of our free-cash flow over that period, which has been about 12% per annum, compound. I can look at the growth of the cash flow over the last few years, which has been around the €4b, and I’ve outlined what we’re doing going forward.

Right. Thanks on that. Since you brought up the 2010 value creation, and with the focus on free cash flow. When might we see – when is your expectation for us seeing revenue growth in the – I think – 3% to 5% top line range?

Well, you’ll remember – or you may remember Christian, when we set it out, we said that we – set out our strategy which we did in the 2004 announcement. We said specifically we’re not going to worry the market with annual forecasts of the progress of individual value drivers. We shared with you the conclusion that we had from the examination of Path to Growth experience. But that, if anything, inhibited the flexibility of our business to respond to varying market circumstances, and of course to the detriment of our shareholders’ interests, in the market then reacting maybe unnecessarily to shifts in the focus on particular value drivers.

I think this year provides another good example, of why you need to ensure that you pull all the value – the levers of value creation, depending on the opportunity. We certainly didn’t anticipate that we would see a strong price deflation in a number of markets in the course of this year. That’s not the basis on which we were viewing life. Nevertheless, we have adapted our plans as we have discovered that, and seen that. And, we are responding in the way that I described in the speech this morning, and the way that we have discussed so far in talking.

So, that is the way that we are taking it going forward. Growth, of course, is a very important element of that value – value driving. That’s absolutely clear to us. And, all of the presentation that I’ve done again today, has been designed to talk about the steps that we’re taking to enhance the growth level of the business.

And, if I come back to the sort of position we’re starting from – if I take Q2. A flat leading brand growth, then just let’s remind ourselves of what’s behind that. There’s some structural things, which are the under-performing businesses, SlimFast, Prestige, Frozen. And I’ve outlined at some length the steps that we’re taking to re-energize the growth of those businesses, whilst respecting that they’re all generating significant cash flow from the profitability we already enjoy from those businesses.

The second is, that we have some temporary issues. I’ve commented on pricing development in Europe and in North America when Ann was putting her question. And, of course, the weather dimension that has affected this quarter versus the same quarter last year.

I then look at other parts of the business that have shown an improvement in growth as we’ve gone through this year. The Spreads business, which has been growing at over 3% or around 3% in the second quarter, picking up from less than that in Q1. Our Savory and Dressings business, which also has been growing at over 3%. And these are, you know, if you add them up, significant chunks of Unilever, that’s – you know – nearly 30% just in those two categories alone.

I can add the Personal Care group to that, which again has picked up a growth of around 3% in the quarter against virtually nothing, for a variety of circumstances in the first. And, again, you’ll remember we talked specifically on the big impact that our performance in Japan and India had had in the first quarter.

Now, that’s over half the business growing at around 3% as I speak. So, I hope I’ve given you a picture of two things. One: the continued commitment to growth and the bits that are growing; the determination to address the structural issues and the way in which we’re going about that, we set out the program clearly in the presentation. And, at what we believe are the temporary or one-off factors that are harder to predict that can come unexpectedly, which we deal with in whatever is the best way to deliver value creation as we go forward.

And then, finally in terms of the overall drive for growth. I set out the stall for innovation as we move through the rest of this year. And, I hope provided, and let me reiterate it, the assurance that we have from the various cost saving measures that we’ve taken and are taking, the fuel to fully support those initiatives in the market place, both in terms of A&P spend levels and in terms of trade marketing support, where it is appropriate.

Okay. Thank you.

Okay. Thanks Christian.

One more if you don’t mind?

Sure. No, of course.

On acquisitions – partly having to do with -- You painted a picture that the – or drawn a comparison between your current situation in India and the situation a few years ago in detergent in Latin America. And, I think you’ve illustrated that your shares in Latin America are no worse for the wear following that activity.

If you believe that to be an accurate or reasonable comparison, would you consider buying in the rest of [Hindestan Lever] where it is currently?

Well, again I’m not going to speculate on our shareholding in India, I would regard that as – if you like – as a financial matter. But I want to address the market issues, which is the success in developing and growing the business and our share in that market, which we’ve done for many, many years. And, there are obviously a number of issues which are involved, if one looks at the way in which our participations around the world are financed and held by our own or other shareholders.

Okay. Thank you.

Thanks very much Christian.

Your next question comes from the line of Holly Abyss(ph) with Merrill Lynch. Please go ahead.

Yeah, I have a couple of questions. I’m trying to get a better understanding, with respect to three questions I have. The first one is on the Tea portion of the Foods, that weakened quite a bit in the second quarter, and I’m just trying to get a better [sight]. I understand what happened with Frozen Food and Ice Cream, but I’d like to get a little bit elaboration on the Tea based side. And, I know you’re about to launch some products, so I’m trying to get a sense of the outlook for the second half. That’s my first question.

My second question, if you can talk a little bit about SlimFast, what percent of sales it is, and how did it do second quarter versus first quarter in terms of decline? Was it worse or was it better?

And finally, with respect to Prestige Fragrances, a slight improvement, still though a decline the second quarter versus first quarter. But, you’re going to be launching a number of new products in the second half. I’m just wondering if we should assume more of a pick-up in the fourth quarter as those launches start to get realized. Thank you.

Okay. Thanks Holly. Let me take a couple of those and I’ll share the answers with Howard. Let me say a few words about SlimFast and Prestige and then the Frozen Foods, Tea weakness across the world, although I covered a bit of that in the presentation. And, the performance of Ice Cream across the world, which is actually quite a mixed picture, I’ll ask Howard if he’ll just take that.

Let’s deal with Prestige first and quickest and SlimFast, both in the sense of the comparator with the previous year. It’s very important to remember that we suffered significant declines in both of these businesses last year, which resulted in an exit value, which as we look comparative year-on-year, gives a significant negative decline, even though the business may be stabilizing.

So, very specifically, in the case of SlimFast, which by the way is somewhere between 1% and 1.5% of our business. So, it’s a tiny portion of the business in terms of significance. But, if I take that as an example, our share of market share has remained roughly stable for the last – for the two – basically through the second quarter and some of the first quarter. So, in that sense, and this is still the biggest brand in that category by the way, and the category is still growing.

So, we’re beginning to see some stabilization of the position, even though, because of the mathematics of the comparators that isn’t yet flowing through. Our position in the quarter is the decline again SlimFast in – of 20% plus. It is – again you need to make a look at the comparators quarter-by-quarter with the previous year to see the various things that we’ve done to improve the position.

This year we launched a range of low-carb variants of Slim.Fast in the course of Q2, or the end of Q1, course of Q2 and Q3 we have more going. And those that we’ve launched to date now account for nearly 25% - heading north of that in sales. So, you’re seeing a reshaping of the portfolio as it were, as we go through the comparators. And, of course, the big story is the relaunch of the base range, Optima, which is happening actually at the moment.

So, that is the SlimFast situation. And, you will begin to see as we sort of anniversary the really bad comparators, the impact, I hope, of that market share stabilization beginning to come through.

In Prestige, the same thing applies as a basic position of course. Which is that we have high comparators for the previous year. You’ve seen also, and I think I commented on it a little earlier. But, we’ve done quite a lot to simplify and streamline the business, restructure the supply chain, reorganize the sales force, both in Europe and in North America.

We’ve launched a couple of new variants of our main – of our main brands [Girowang] Vera Wang for men, [Siruti C] in Europe and Eternity CK1 summer – sorry, CK1 summer a couple of weeks ago.

We have some – we have a big launch planned in the third quarter, which is a new Calvin Klein fragrance called Eternity Moments, and that’s the one that is endorsed by the famous Scarlet Johannson, just again using the correct name this time.

So, in terms of impact, this is of course a – has a big seasonal bias in the sales. So we would expect to see as we go through Q3 and Q4, if these launches are demonstrating in practice to be competitive in the market place, because I don’t know what everybody else is doing at the same time, we would expect to see some impact on the development of the Prestige numbers.

So, that’s in outline, I hope for your satisfaction, is the review of the position of SlimFast and Prestige. And, now maybe Howard you just want to say a word or two on Tea and [inaudible].

Can I just interrupt and ask one quick--?

Yes sure.

On the low-carb products, launched with SlimFast. How are they doing and how is the pricing versus the older product?

Well, in terms of market reception, pretty good. Because as I said, they’ve now become a significant chunk of the sales of the brand, as I said north of 25%. That’s pretty important, and in a sense not surprising, because it responds very directly to the desire of consumers for products which are just a bit lower in carbohydrate, but that in itself will not complete the re-establishment of the SlimFast business. That requires the Optima launch which is going into the market place at the moment. And, that is where the rest of the SKUs in the range are being revitalized.

In terms of pricing, yeah, I don’t have the specifics to hand. But let me sort of put it another way round, which is that the profitability of the business – as we go forward – continues to look quite satisfactory. The issue, of course, is improving the growth and from that getting the lead [indiscernible] that we’ve seen in the past.

If I handle Tea. In one particular issue that we’ve got Holly is the strong performance of Ready-to-Drink tea in the prior year. Where there was a strong program. We – if I look at the dilution between this quarter and last quarter, that accounts for almost 200 basis points of growth dilution, just because of the weaker sales this quarter with the stronger sales of last year helped by the fine weather that we were having.

The only other issues to really – of note, are the ones that we mentioned in the presentation. There are some – just timing of price increases in Arabia. And, there are also some issues about – let me call them grey imports into Arabia as well. The same in South Africa and also in Pakistan, which are normal timing issues surrounding this type of business, where you have got some exposure to commodity price movements. And, those together also total around about 200 basis points of dilution to the leading brands.

I’m sure you can see over the last four years that we’ve actually had a good rate of growth in Tea based beverages. We’re seeing nothing in the current quarter that would say that that is not going to be the case as we go forward. And, we’re certain it’s got a very strong innovation and market activity plan, both in Leaf Tea and in Ready-to-Drink Tea, throughout the rest of the year and into next year.

Just one last question. Because you mention innovation a lot. Can you give us some sense in the second half of the year, how many products you might be introducing across your portfolio?

The actual number Holly is a bit difficult to put in a meaningful way. I mean, firstly I don’t know exactly how many new SKUs are coming. But to give you a sort of a business feel for it, which is what I guess you’re looking for. The level of innovation that we have in the second half of the year, is broadly the same as the level of innovation that we had last year.

And that, repeats a pattern, if you’ll remember that we talked about in the past, when we talked about innovation, of maintaining a high level of innovation in Home & Personal Care, and we’re pretty comfortable with that level, as we’ve seen it now for a number of years. And a progressive step-up in the level of innovation for the Foods as we successfully complete the integration of the Best Foods brands into our business and complete the migration that we’ve been talking about.

So, I think you should be reassured by the level of innovation, the examples that are given in the speech, happening across a wide range of geographies, but representing all of our major brands, and therefore, within that, our major categories.

Thank you very much.

Okay. Thank you, Holly.

Gentlemen that was the last question. We will now pass back to Rudy Markham for his closing comments.

Fine. Thank you very much ladies and gentlemen. I appreciate your giving the time to listen to us. And, I hope you share our conviction and confidence in the development of our business and the steps that we’re taking to address the issues of under-performance. The issues of enhancing the growth of those parts of the business that are demonstrating good progress, both in geography and in category, and the initiatives that we’re taking to continue to underpin the strength of our outlook for performance of low double-digit EPS beia with another year of free cash flow growth.

I’d like to finish by just noting that this is Howard’s – Howard Green’s last virtual appearance I guess, in this context as the Head of IR on this call. I’m sure you’d agree he’s made a tremendous contribution to the content, framework, clarity of IR communication. And, he’s played a huge part in improving the quality of the dialogue between Unilever, it’s owners, it’s analysts and many other interested parties who follow us. And his personal integrity and consistency in quality of message that he has communicated has been of the very highest order.

I’m sure you’d agree with me that his charts, extensive booklets, and his extensive explanations are legendary, also for their length. A truly gifted professional and a fantastic colleague to have worked with.

We will miss him in his role, as you may know, he is taking over as the Chief Internal Auditor of Unilever, on which he will put his forensic analytical skills and his undoubted communication skills to new effect, again to the benefit of Unilever and its owners.

The sadness that we see with him going is only offset by the elation at the appointment of his successor, John Rothenberg(ph) who until this juncture, has been the CFO of our Home & Personal Care business in North America. He is a long-serving, very broad based and experienced Unilever man, working in four continents in his time, and all categories. And, I guess the one difference perhaps you will detect as we go forward, you will find he speaks about three times the speed of Howard and his words – choice of words are often a lot shorter than those that Howard uses, but that just reflects their different styles.

So, thank you very much for listening to us, and we look forward to seeing you on our next visit to the States. Thank you very much.

Ladies and gentlemen, this conference has been recorded. Details of the replay number and access codes can be found on Unilever’s website. An audio archive webcast will also be available on Unilever’s website www.unilever.com. Thank you for your participation today. You may now disconnect.