聯合利華 (UL) 2010 Q4 法說會逐字稿

Welcome to Unilever's fourth quarter and full-year results 2010 conference call. This will be presented by Mr. Paul Polman, Chief Executive Officer, and Mr. Jean-Marc Huet, concluding with a Q&A session. (Operator Instructions). We will now hand over to Mr. Polman, who will be with you shortly.

(Technical difficulty) Luigi Sigismondi, who is our Chief Supply Chain Officer, Dave Lewis, President of the Americas, and Tonia Lovell, who is our Chief Legal Officer.

I would also like to make a particular mention today of Jan Zijderveld, our newly-appointed President of Western Europe. Some of you I believe have actually met Jan in Singapore last November. Until recently he was the Executive Vice President of our South East Asia and Australasian businesses. Under his leadership actually our businesses there have performed extremely strongly, growing at the 10%-plus mark in 2010 in, as you know, highly-competitive market conditions. I am certainly confident that Jan will make a great addition to the Unilever executive team.

Jan actually replaces Doug Baillie who has been appointed Chief HR Officer in succession of Sandy Ogg. Doug has done a remarkable job, steering our top European business to strong results in extremely challenging conditions once more. In fact, under his leadership we have started to grow share again in Western Europe, after many years of decline. I am convinced that he will bring to HR his considerable business experience and passionate focus on the consumer and customer, as well as a deep commitment to develop our people and our organization. In fact I believe that Doug is just the man that we need to take the performance culture in Unilever again to the next level.

Both Jan and Doug have, unfortunately, important commitments. The truth is I'd rather have them sell (inaudible) than being here and they will not be able to join us. Also unable to be here with us today are Harish Manwani, who is the President of Asia, Africa and CEE, and Keith Weed, who is the Chief Marketing and Communications Officer.

So I will start this presentation by saying a few words about the highlights of the year before I hand it over to Jean-marc, who will actually cover the more recent business performance in more depth. After that I will reflect on some of the changes that we have made to the business over the last couple of years, those areas where I believe Unilever is now fully fit to compete and also frankly those areas where I believe we still have some more work to do.

I will also look forward to the year ahead. We are entering certainly a period of greater volatility. I don't have to tell you that. You can open the newspapers every day and see that. There is geopolitical uncertainty and it's on the rise. There are currencies continuing to fluctuate sharply and there is the return, as you are aware, of the commodity cost inflation. As I have said many times before, we do not expect the competitive environment to be any different either in the year ahead.

So 2011 will be demanding but I am convinced that the Unilever of today is well-placed to meet these challenges and to continue the track record of the consistent delivery we are starting to build and hopefully you are getting more and more used to.

I will conclude my comments by reconfirming the long-term objectives we have for our business before we'll open the floor to questions.

So let's get going. First of all I have to draw your attention to the usual disclaimer related to the forward-looking statements and the non-GAAP measures.

The results we have reported today demonstrate in my opinion once more the progress we're making in transforming Unilever. We've had a strong year, particularly given the sluggish markets that we have to deal with and the intensity of the competition that worried many of you.

Yes, volume growth of 5.8% is actually the best that Unilever has achieved for more than 30 years. In fact I read Charlie Mills' quick report this morning and he said it's the best ever. I don't know. We don't have that many data, unfortunately. We set out two years ago to reignite the volume growth in Unilever and to grow ahead of our market. And that's exactly what we have done, at the same time laying the platform for the long-term health of Unilever.

Our share performance is increasingly healthier throughout the business. In all regions and in most of our categories our volume share over the last year has grown from the previous year. Our value share performance is equally encouraging. Overall our value share are slightly down, but this is due mainly to the decline in spread. Here our shares have been hit by the high butter prices, although within the margarine market, if you would look at that alone, we continue to gain share.

Elsewhere in our Food business, our value shares are up. Particularly pleasing to see that happening in dressings, in ice cream and increasingly in more parts of our savory business, as I mentioned to you.

In Home Care, despite all the competitive pressures that you read about and that you've seen for some of you who went to the markets, our value shares are flat and starting to move into positive territory.

And in Personal Care, we are seeing strong gains in value share in deodorants, skin cleansing and yes, even hair. Our hair business, after years of decline, is seeing value shares growing again in places like North America and the important key emerging markets like China and India that are obviously well-placed for the future.

In our emerging market business, we grew volumes by a whopping 10% over the year as a whole, with key businesses of China, India, Turkey all delivering growth well in the double digits. Only in Central and Eastern Europe did we see more subdued growth, in line with these markets, overall market situations there. Although even here, in those markets, volumes were comfortably up, in what I would describe difficult markets in that part of the world.

In the developed world where, as you know, growth has been very hard to achieve for many of our competitors as well, over the recent past, our volumes are actually up by 2%, ahead of the market, as far as we can read it.

And let's not forget that these results have been achieved against a much stronger base. For you, as some of the memories, we have fourth quarter 2009 that was extremely strong. The environment also has reached new levels of competitive intensity, versus last year.

So all in all I am pretty positive with these results. Even more encouraging is the fact that we have proved ourselves able to step up the top line whilst, at the same time, continuing to expand our margins, just as we told you. Underlying operating margins for the year as a whole was up 20 basis points.

At the same time we have been able to substantially increase the investment behind our brand. In fact it's up by EUR300m for the year. And this came after an even bigger increase in 2009, which in the end means a cumulative increase in our support behind our brand of well over EUR700m. That's obviously building the equity over the last two years and driving the growth I am talking about. And it will continue to be a key driver for long-term success. Investing in our brand is the livelihood of our business.

I'm also delighted with our continuous cash discipline throughout the year once more. Average working capital was again below zero. That's now five successive quarters and I'm sure this is a trend that will continue in the year ahead.

I'm pleased to be able to reflect from 2010 as increasingly firm evidence of the progress we have made in transforming this Company to consistent performance. We've undoubtedly raised the bar once more on performance that we are expecting here. The significant gaps to competition that we faced a couple of years ago have I believe been closed. That's what we said we would do and now I believe we've more or less done it.

And as you know, this is the way I like to work. We've changed our approach to innovation. We set out to launch fewer bigger innovations, to reach more markets more quickly and to improve the product quality throughout our portfolio. All supported again once more with better quality and higher levels of advertising. That's what we said and that's exactly what we have done.

The chart shows you just a few examples of the major projects which have fuelled our growth in 2010. I could go on because the list is quite long, but you are well familiar with Dove Men+Care, Dove Damage Therapy, massively successful Magnum Gold launch, Knorr Stock Pot, Axe Twist, and the extensive global re-launch of the Dirt is Good brand.

You are familiar with these because they have quickly become major successes in multiple markets. Yes, we're starting to get comfortable with hitting 30 or 40 markets in quick succession now as the norm behind these innovations. These are strong innovations based on tangible product improvements relevant to the consumer. Pricing action might be seen as innovative by some of our competitors but let me be clear, not in our definition.

It is not only in our innovation programs where a transformation is underway. Our cost effectiveness in market execution and speed of action are all much improved as well. We are showing that we are now fit to compete. But as I said we have raised the bar now and we need to set it higher again. This is about Unilever starting to set the agenda, establishing the sustainable competitive advantages that will help us win consistently in the long term.

I will return to these themes a little bit later, also to the reasons why I feel quite confident about our prospects in 2011. But for now let me just pass over to Jean-Marc, who will cover the performance of the quarter in a little bit more detail. Jean-Marc.

Thank you very much Paul and good morning to everybody. In my review I will discuss our performance in the fourth quarter and in the year as a whole. Let me begin by looking at our sales performance.

Underlying sales growth for the quarter was 5.1%, driven entirely by volume. Against a strong comparator and with in-quarter pricing turning positive we saw volume growth step up slightly from the level seen in the third quarter. If we compare volumes in the fourth quarter of 2008 we see growth over this two-year period of more than 10%. The weak euro resulted in a strongly positive ForEx effect of 8%. Turnover for the quarter was EUR10.8b, up 12%.

For the year as a whole, turnover was up by 11%, reaching a total of EUR44.3b. That's EUR4.5b added to the top line in the last year. Underlying sales growth was 4.1% with volume growth of 5.8%. ForEx was again a significant positive at 7.3%. In 2010 the impact of disposals on turnover slightly exceeded that of acquisitions. In 2011, however, we will see a boost to our growth from our stepped up M&A program. For the first time in many years M&A will add to the business.

As Paul has explained, our volume growth is broad based, across regions and categories and volume share momentum is consistently strong. The virtuous circle of growth that we often talk about is starting to work for us and it is innovation more than any other factor that has triggered this positive change in our Business.

Most fundamentally, our innovations are getting bigger. We can now think realistically about projects that will deliver more than EUR50m of incremental turnover in their first year. That's more than 10 basis points of growth for Unilever as a whole from a single innovation project. As you can see, we have built on the success of Axe Hair in 2009, with P.F. Chang's in savory, the White Now concept in oral and Dove Men for Care in 2010. All these are comfortably in EUR50m-plus territory and we are confident of more to come.

Taking a longer-term perspective, we also see encouraging signs of an increasingly robust innovation program. Our Clear brand, for example, now has turnover of more than EUR0.5b across 38 countries. In deodorants, the annual new variant we launched under the Axe brand set new standards with Dark Temptation, which delivered more than EUR100m in 2009. We have followed this success with the Twist variant in 2010 and now Excite in 2011. Our Dove [Defi Liquids] range in skin has reached well over EUR100m in just 18 months after its first launch. And in Foods, our AdeS brand in Latin America, specifically Brazil, has quickly grown to more than EUR300m.

Let's now take a look at some of the highlights of our innovation program over the last quarter.

In hair, the latest phase of TIGI's Bed Head Wash and Care innovation program has just been launched, the fade-fighting, color-combat range. And in deodorants and skin cleansing, the new Axe Excite variant I just mentioned was launched in November of 2010, showing once again the speed of action of the new Unilever. This range will be in more than 80 markets by the end of Q1.

In fabric cleaning, the global re-launch of our Dirt is Good range continued in the fourth quarter, with successful launches in China, Turkey and Australasia. And in household care, Sunlight Dishwash was re-launched with a new one wipe concept. Fourth quarter launches include South Africa and South East Asia, with encouraging early results.

Turning to ice cream, our test of the Caf Zero concept in Italy had results well ahead of expectations. So we're now rolling this out elsewhere in Western Europe. There are samples of this great new product available for you to try after this presentation.

And in savory, our successful Knorr Season and Shake range was launched in the UK and Ireland under the Coleman brand.

In addition to all these innovations, as we turn to chart 16, the fourth quarter also saw us build further on the momentum we have established in taking our brand into new markets. For example, we launched the Clear anti-dandruff brand into Chile and other Latin American countries, making 38 markets in total, and took the Dove Hair range into the Chinese market.

In our Foods business, we introduced Knorr Soups to Bangladesh and launched Magnum into Indonesia, with plans announced to enter the US later this month or the month thereafter. Both very exciting opportunities, as I am sure you can imagine.

Let me now move on to discuss our pricing. The trend in underlying price growth has continued to improve to the extent that it reached zero for the fourth quarter as a whole. In-quarter pricing for Q4 was positive after being flattish for the previous three quarters.

In our results today we have for the first time shared our underlying price growth by category. This is linked to the move to quarterly trading statements that we announced recently, which I am pleased to say have been very well-received by you and our investors. You can clearly see from this category price data that much of the negative UPG, underlying price growth, for the year as a whole, is concentrated in our Home Care business, where price competition has been particularly intense.

Here also we see positive trends with fourth quarter price growth only modestly negative and volume share gains continuing. We remain determined to continue these trends and to grow our share further. We expect prices overall to be comfortably higher in 2011. Paul will discuss the outlook for pricing a little later in the presentation.

Turning now to margins, I report that gross margin for the year as a whole was modestly higher, by around 10 basis points, chart 19. The fourth quarter was similar to the third, with commodity cost increases driving gross margin lower by around 140 basis points.

Pricing is no longer constraining margins, however, and will become a positive as we enter this year, 2011. We will continue to dynamically manage the levers by which we can control gross margin. Prices will certainly be higher but this is only part of the story. Our savings program will be more important than ever and we will also ensure we maximize the benefits that we get from operational leverage as well as mix.

Indeed, when talking about savings, we see strong delivery from our savings program, both in supply chain as well as in our indirect overheads cost base. Total savings for 2010 were EUR1.4b, well ahead of the EUR1b we were targeting at the start of the year. This comes after savings of a further EUR1.4b in 2009, nearly EUR3b taken out of our cost base over the last two years. With this strong track record behind us we are confident to continue delivery in savings. We expect at least EUR1b in 2011.

Turning to our favorite topic of commodity costs, after a modest tailwind in the first half of 2010, we saw a sharp step up in commodity costs in the second half. For the full year commodity costs were around EUR350m higher. This is net of currency effect.

The key drivers of this increase were edible oils, petrochemicals, packaging, as well as tea, to a certain extent. In 2011 we see this trend of rising commodity costs accelerating sharply, as we have seen in Q4. To give you a few examples, palm oil, currently has a spot price of around $1,250 per metric tonne. A year ago that was just over $700. Sunflower oil, the increase is similar, from $930 a year ago to around $1,500 today. And Brent Crude, as you know, is back over $100 plus or minus and a year ago it was around $70.

At this moment in time we anticipate commodity cost inflation in 2011 of around 400 basis points of turnover. The overall impact is hard to quantify, however, because market volatility in both the commodities themselves and in currency, mean that forecasts can move rapidly from week-to-week. Although this is not as extreme in 2008, it's certainly significant. Our intention is to recover this on cost through a combination of one, responsible pricing, two, stepped up cost savings, three, operational leverage and mix. Most importantly, we are much fitter to compete, as Paul mentioned, than we were in 2008. Paul will return to this subject later in the presentation, again.

Turning to A&P, up 30 basis points for 2010. As we indicated in the last quarter, advertising and promotion spend was substantially up for the year as a whole, up at EUR5.6b, EUR330m more than 2009 and EUR700m more than 2008. In the second half of last year advertising and promotion spend was down by around 5%, just a little less, but that was versus very high comparator.

We have increased our support in emerging markets and in Western Europe and the US we redirected some support to competitive pricing. But nevertheless, our levels of advertising support in the developed markets were competitive and this is reflected in the strong volume performance in these markets. We are also benefiting from the many actions we are taking to improve the effectiveness and the efficiency of the investments we put behind our brands.

Underlying operating margin was up 20 basis points for the year as a whole, from 14.8% to 15%, chart 23. It was another year of steady and sustainable improvement that we have always been targeting. Aside from the gross margin increase, the key driver of this improvement was a 40 basis point reduction in our indirect costs. We believe this is a testament to the strength of our savings program and the new discipline we are exerting in all areas of our cost base.

As well as having a leaner organization, we are benefiting from significant buying savings and, with our work to build the new Unilever Enterprise Support Organization, are laying the foundations for further improvements in the future. We are fit to compete.

In the fourth quarter specifically, underlying operating margin was down by 20 basis points, as you can see on this slide.

Let me now turn to double-digit diluted earnings per share growth. Fully diluted earnings per share for the year were EUR1.46, which represents an increase of 25%. Operational performance accounted for 7% of this increase. A further 10% came from lower restructuring, with positive currency effect and lower pension costs also significant.

Looking ahead, EPS movements for 2011 are likely to be quite different. Ongoing restructuring costs will be similar to the 2010 level, as we continue to accelerate cost saving activities in response to the challenging competitive environment. However, restructuring activities to access the synergies from the recently acquired Sara Lee Personal Care business will come over and above this.

In addition, the disposal profits of 2010 are not expected to be repeated. Frozen foods on the same scale and currency is unlikely to drive earnings higher as it did last year. We've said in the past that we would call any significant, one-off items in our reported EPS. On this occasion the 2010 figure you see on the chart includes, one, one-off costs of EUR0.02 associated with M&A activity, two, other one-off costs of EUR0.04 related to European Commission investigations into potential competition law infringement and, three, an added contribution of EUR0.16 from the profit on disposal of the Italian Frozen Food business. You see -- if you go back one slide you see that in the box on the right, EUR0.02 negative, EUR0.04 negative and positive EUR0.16.

Turning to the next slide, trade working capital was negative for the fifth successive quarter. Pleasing progress and getting close to best in class, specifically for payables and receivables. Our average cash conversion cycle actually improved 17 days, from 20 in '09 down to three in 2010. This was another year of strong performance after the reduction of 14 days that we achieved two years ago.

Having said that, we still see good, significant, further improvement in inventories, which at an average of 61 days is still too high. So we have the opportunity, as Paul said, to continue to lower our working capital still further. Although we must admit the incremental benefits are likely to be more modest in the future.

Turning to cash flow, this strong performance in the working capital management was reflected in free cash flow, which again was very healthy at EUR3.4b. Over the last two years our combined free cash flow of EUR7.4b represents around 90% of our net profit. This is robust performance, particularly at a time when we are investing heavily in the future growth of the business. We see this in stepped up investments, particularly in CapEx, as we talked about in Singapore. As we build new capacity to support our rapid volume growth in emerging markets.

Against '09, free cash flow was lowered by around EUR700m. This reflects a smaller inflow from working capital in 2010, after the exceptional EUR1.7b benefit in 2009. And this impact was only partially offset by lower cash contributions to our pensions.

Turning to the balance sheet, net debt at year end was EUR6.7b, which is slightly up from the end of 2009, when it was at EUR6.4b. With the euro weaker over the year as a whole, ForEx was the key driver of this modest increase.

The pension deficit fell significantly in the fourth quarter to reach EUR2.1b at year end. This compares with EUR2.6b at the end of '09 and EUR4b at the end of the first half, as you will recall in 2010. So over the year as a whole stronger asset returns increased scheme assets by EUR1.6b, but this was partly offset by the impact of lower corporate double A bond rates, which lead to an increase in liabilities of around EUR1.1b. Cash contributions to pensions were in line with expectations, of just over EUR700m. This compares to EUR1.3b in '09. And for 2011 we expect contributions, cash contributions, of around EUR550m.

The effective tax rate for the year as a whole was 25.5% and on an underlying basis the tax rate was slightly higher, just above 27%, which is broadly in line with our long-term guidance, which as you know remains at around 26%.

Finally, I can confirm that the next quarterly interim dividend will be EUR0.208, which will be paid in March.

And with that, let me hand over to Paul. Thank you.

Thank you Jean-Marc. So, as you have heard, a good set of results and another major step towards the consistent top and bottom line growth that we have been targeting, this despite the difficult environment that continued throughout the year much as we frankly had expected. You have heard me say many times that this new Unilever is now fully fit to compete. These results are further evidence of this and we are certainly pleased with the results of 2010. We're starting to get into this groove of this virtuous cycle of growth and all our intentions are obviously to stay there. But perhaps many of you are more focused on what lies ahead better than what has been achieved over the past year so let's look at 2011 for the next few minutes.

Yes, we do expect the environment to continue to be volatile. With austerity measures just starting to take hold across much of the developed world and unemployment remaining stubbornly high, there will be considerable pressure on consumer spending. Emerging market growth, which for the last year certainly has been a bright spot of the global economy, it continued to be robust, although here are also signs, as I have said before, of modest slowdown starting to appear. But the most significant challenge facing the industry today is the return of inflationary pressures after some years of deflation. And we'll see it happening now again with the global economy and in particular obviously the rapid rise of commodities.

I understand the questions you're asking. Can we protect margins in such an environment? Do we have the firepower and confidence to price where we need? And, if we do, what will happen to our hard-won volume gains and market share and overall competitiveness? Does the new Unilever really have the discipline to drive out cost as ruthlessly as the environment demands? And can we continue to build our brands for the long term in these conditions?

Yes, these are challenging issues and tackling them effectively will not be easy for us nor for any of our peers in the industry, for that matter. But I believe that you are looking at a very different Unilever today, one that can rise to these challenges, with confidence and credibility.

Jean-Marc has mentioned that today's commodity cost escalation has some similarities to what we saw in 2008. That certainly is the case, but there are also some important differences. The global economy, though subdued, is in a more robust state than it was in 2008. Crude oil prices peaked in July 2008, just as the sub-prime mortgage crisis was getting into its flight. The Lehman's collapse that really triggered the start of the financial crisis was also in September 2008.

Today's climate of austerity, though difficult for many around the world, at least offers relative stability and certainty; elements that were lacking in the crisis of 2008. Also in our industry we see a trend towards a more rational approach to moving prices up when cost pressures makes those moves unavoidable and we're starting to see them already in the marketplace, as we thought.

Now let me also put some perspective on what I think is making Unilever a stronger and better place to tackle this cost inflation now versus the 2008 situation. The Unilever of today is aligned around a clear and simple strategic framework. We call it the Compass. Because we have this alignment in place, we can now start to leverage our global scale much more effectively than we have been able to do before.

The Compass sets out an ambitious and motivating vision for the business, doubling the size of our business, whilst reducing our overall environmental footprint. I believe that this is a new model for growth and, done well, it will reward us as well as our shareholders highly. This vision is supported by a 12-point action plan, which guides our day-to-day activity. It sets out clearly where we will win, how we will win and which challenging KPIs we will use to monitor the progress.

The key area in which the Compass is making us stronger is in sharper portfolio choices that we are now making. Many of you heard Mike and Genevieve talk about this in Singapore. Yes, we aim to grow everywhere. But our categories are not all the same and the way we grow will certainly reflect that. Most importantly we are clear on the categories where we can and will excel globally.

We've also accelerated portfolio changes through the M&A activity, divesting the lower growth area acquiring more strategically relevant businesses. Just to remind you, just over the last year alone we've completed the acquisition of the personal care portfolio of Sara Lee, signed a merger agreement with Alberto Culver to significantly strengthen our hair and skin businesses, and announced global acquisitions, especially in the European ice cream businesses, Denmark, Belgium, Greece. We acquired the rights of the Toni&Guy brand globally, and we disposed of our frozen business in Italy and reached agreement to dispose of our Brazilian tomato business.

With the Compass to guide us, Unilever is much more competitive today than it was in 2008. Take our share performance, for example. Yes, for too many years we accepted the gradual decline in our market share as being normal. It frankly had become a bad habit. It was something that the business just accepted. Today, as you know, things are very different. Our volume share performance has been positive for more than a year now, a fundamental turnaround. Critically this is broad-based across the business, whether you look at it by region or by category.

And let's look briefly at what lies behind these improvements. I will do so to the length of our Compass and its four headline areas, starting with what we call winning with brands and innovation, our most important driver. The key driver of the improved top line performance is the step change we've made in the innovation program. We now see around 33% of our turnover coming from products launched in the last two years. In recent years we have been at much lower levels than that. It's a dramatic improvement of step change and a key area in which the Unilever of today has grown stronger.

In 2010 we've built further on the momentum we started the previous year, with a clear focus on fewer, bigger innovation that we roll out quicker to more markets. Our innovation capability, I believe, is now becoming competitive and it's becoming a competitive advantage, rather than the weakness it once was. Our pipeline of projects is increasingly healthy. Our new organization in R&D is in place and working well. Open innovation is being accelerated and under Mike Polk's leadership the categories are setting the bar higher as well.

As you have heard, we have substantially increased our advertising spend as well over the last three years. But it's not just the quantity of investment behind our brand that improved. It's also the quality. Besides that the quantity is higher than any of our competitive set as far as we can see, the metrics we use to assess the strength of our brand communication continue to trend upwards as well.

At the same time we have been investing strongly in improving the quality of our products. We have invested in that. So a powerful combination of more advertising, delivering better and more effective messages and the support behind that as well as a step up in the quality of our products.

Here are just a few great pieces of advertising. As a marketing man, I cannot help put some advertising in our presentation. But I hope you enjoy those. These are just some of the advertisements that were aired or are currently airing across the world. Off you go.

(Video playing).

Okay, it gives you a flavor. We had the angels in the building yesterday just at the same time as our Board meeting and I can tell you it was very hard to concentrate on the business for some point.

Another clear standard we've seen is the strength of our portfolio. With the share gains we've achieved over the last 18 months, our category positions are obviously strengthened. In our core categories, we are number one in markets representing about 60% of our turnover and that figure was less than 50% in 2005. If you actually take the number one and number two positions, that would be 80% of our business that would qualify for that. And again that's significantly higher than any, as far as we can see, our major peers in either Food or Homes and Personal Care, so strong share position.

And the need for pricing, as it becomes essential, this category strength is the key competitive advantage for us as is the increasing strength of our brand. Now we aim to protect our consumers as far as we can from the impact of higher costs, but in the current environment the responsible thing to do is to price realistically and to act promptly in making any changes that are needed. This is what we will do, pricing responsibly. But let me be very clear, remaining mindful at all times of the competitive context that we face. We will not, we will not, compromise in the face of predatory pricing from our competitors. We will defend the market positions we have robustly.

Another positive development in the business is the more rapid and confident introduction of the brands in new market where we're not yet present. As we do this, we typically both develop the markets in question and take shares from our competitors. As you can see from the chart, the scale of our activities over the last year has truly been impressive, more than 100 new launches of our brand into new markets, probably more than we've done in the whole decade before.

Some of these have been significant in their scale, such as Dove Hair in China, Axe deos in Japan, both off to a tremendous start. Others more modest, such as Lifebuoy in Kenya and Pepsodent in Cambodia. But all have made a contribution to the improved volume momentum that we have established and made us more competitive business as a result.

We've also made substantial progress in our second thrust of the contest, which is winning in the marketplace. This is particularly so in our emerging market business, which is now a whopping 53% of our global turnover, and as you have seen, growing very fast, a record 10%-plus in 2010 alone. We are encouraged that our market-development machine is starting to work well in these emerging markets, especially our repeatable business model concept. Our ice cream business, for example, in Asia, is a great example as is our brush twice daily campaign in oral care, which is now making the difference in numerous emerging markets.

Those of you once more who joined us in Singapore recently witnessed many other examples of our market development successes. Be it in soups in China, fabric conditioners in Vietnam, detergents in Bangladesh, we are stimulating responsible market growth across our categories in a wide range of countries.

I am encouraged with our progress. But I'm not yet satisfied. There is certainly much more we can still do, plenty of juice for further growth.

Let me now turn to the first area, which is winning through continuous improvement. Firstly, let's take a quick look at our supply chain, which has changed dramatically over the last few years. Yes, we are fortunate in having Pier Luigi in place with executive responsibilities for the global supply chain. It has made a big difference. Remember, this is a new model for Unilever, quite a difference from the way we managed this part of the business in 2008 or before. Under Pier Luigi's leadership we've seen a steady transformation in our supply chain capability.

We now have a globally-led supply chain organization, with executive buying power at a global level. Our systems and processes are much more improved, allowing for quicker and higher quality information availability and decision-making. In Asia, Africa, CEE for example, the ambitious what we call U2K2 projects to harmonize our systems and processes on single platforms is nearing a successful conclusion. So we can start to leverage that moving forward.

We've also been building capabilities in other key areas where they were lacking. For example, engineering. We have centralized our operations in India as we develop expertise in driving the capital that we need for the repeatable model initiative to support our growth. Also our new and for life commodity risk management team leaves us better place globally to deal with the volatility we're currently experiencing in input costs.

In addition to these many changes, and I could go on, we've also brought our new performance culture to bear on our cost base. We are faster, more disciplined and more aggressive than we've ever been before. You can see this in our saving numbers. Nearly EUR3b, as Jean-Marc was saying, over the last two years, with confident expectation of at least a further EUR1b in 2011. Our indirect structure is also far leaner. Our cost discipline is much improved.

The mindset is right and now the structure also. With the Unilever Enterprise Support Organization fully in place, we can even start to drive these things to cycle. Most impressive in my opinion of all of this has been the work and discipline that you see in working capital. Now I believe close to best-in-class levels and we certainly plan to keep it there.

The final area where the Unilever of today is stronger is in the performance culture we are steadily but surely building. Confidence is back, the mindset in Unilever is once again a winning one. The consumer and customer are back at the heart of our business.

In making changes in these areas, we have been certainly respectful of the long-term heritage that we have in this great Company. Our business has always been based on clear and strong values. We will not waver from that. But we have added a sharper performance to these values. I think it's a powerful combination, and again, a key area where the Unilever of today is stronger and better able to withstand the pressures of a more challenging environment.

As I draw the talk to close I think it's clear that there has been much positive change in Unilever over the last three years. Business is set to compete and the results are good. But to return to where we started, there is no denying in the fact that 2011 is likely to challenge us once again. The next year will tell us a lot about how deep the transformation to this business really has been.

As you've heard Jean-Marc describe, the key challenge that lies ahead of us is to strike the right balance in managing our margins in this inflationary environment. Costs will be significantly higher. There's no doubt about that. But as I said once more before, we are better placed than ever to tackle this. Yes, through pricing partly -- this will be higher in the year to come - but equally importantly through savings program that we are driving with the same passion, but increasingly with speed and energy with the operational leverage that we're getting on top of that from our hard-won volume momentum.

No CEO in my opinion in this world can currently responsibly give you cast-iron assurances, as the world's incredibly uncertain and volatile. But I'm confident in the actions we're taking and in our ability to manage the resources as dynamically as the environment demands. The risk of the unexpected is of course high in these times. But I believe that we've given ourselves every chance with the action that we have in place to manage this successfully.

Finally, let me be clear on one key point. Brands are our most important asset, next to people, and we will not take action that will damage or could damage their health for the long term. We have certainly no intentions of slowing down our pace of innovation or support of our brands or our new market launches. We will stay competitive with the competitive environment that is out there. Where we need to be flexible and pragmatic or responsive to competitive activities, we will not hesitate to do so, as you have seen in this year. In some of our markets this may mean balancing longer term investments with the shorter term spend needed to protect our market position.

We are far from complacent. We know that competition will remain intense, that consumers will be more demanding than ever before, but our success in transforming this business over the last couple of years and the results we are seeing, leave us modestly optimistic. Despite the many uncertainties we are faced, we look forward to another strong year for Unilever. I therefore can say that our long-term focus continues to be on the achievement of volume growth ahead of the market, strong cash flow, and modest but steady margin expansion.

And with that, ladies and gentlemen, we will now move to the questions. Thanks for your attention.

Okay, so it's the usual format in the room. If you want to ask a question you put your hand up. If you are selected, then please press the little red button on your console. That will activate the microphone. Please tell us who you are, who you represent, and please no more than two questions. And don't forget to turn off the button after you've finished. If you have -- if you're listening on the telephone and you want to poll for a question, then press 'star 1' on your telephone. And if the question has already been asked and you want to withdraw it then just press 'star 2'. We're also taking questions online and if we don't get back to you live, then the IR team will get back to you later on in the day.

So let's start in the room and Warren, you had your hand up first.

Morning. It's Warren Ackerman of Evolution. Question for Jean-Marc. Can I just come back on to the 400 basis point impact on margins from higher input costs for 2010? Obviously that's a very big number. If my maths is right, that seems low double digit increases on your overall basket of input costs. When I look at that versus P&G, they were saying 130 basis point impact. I appreciate very different portfolios, but I'm surprised the gap is so different, 400bps versus 130 basis points. So the question is, what assumptions lie behind the 400bps and what forward cover do you have on input? Thank you.

Jean?

You can imagine we're not going to make comments about competition when it comes to this point. And this is today advantage point where we see an impact of 400 basis points on our turnover. So make sure that it's absolutely crystal clear that we're talking about on our turnover and not on our cost base. But we think that this is the right way to look at it.

Point one, as Paul mentioned, we're in a very volatile environment. So this can change quite quickly from week to week. Where we have a reasonable confidence is over the first half of the year, be it through covers, hedging and our inventory levels, we have a very good view on how this will pan out for our P&L for the first half. But let me just underline, given this volatility, less clear for the second half of the year. As it is today, 400 basis points is our best guess on what the impact will be on our P&L for 2011.

Sara?

Just in terms of the emerging markets, you refer to the fact that they might -- that they're starting to slow down. Can you give us a little bit more clarity on that? Is it volume-led? Is it price-led?

No, it's -- I've said that before and I don't know why you all refer to me to give you the answers. Because if you look at the IMF and OECD, they give the forecast that we look at and they say the same thing. So China has been very good and continues to be very good, but the government has continued to look at taking measures to secure that there's no over-heating. And you'll see that coming in. And the same thing in India, we've seen two or three interest rate increases for the same reason. So the forecasts that are out there officially now, it's a slightly lower growth.

Now having said that, these markets are growing healthy, and obviously it's becoming an increasing part of our business. Within that, companies that do well can grow faster. It's very clear that the population of a country needs to grow and the first products that these people go to are usually the products that we sell. So I don't see there's any reason for us to have a worse performance, but I'm just realistic about the economic environment. If you don't see reality in the eye you cannot make the right business decisions to run your business. And we've done that in 2010 and I think it's proven to be right and helped us tremendously get these special results and we'll do it also in 2011.

Now I'd be the first one that would love to be proven wrong and have economies even more robust than they are, the better for our business, if so. But we are taking a prudent outlook. And the same for the developed market where you see a significant burden being transferred to the public at large, to the consumer away from the government, as some of these issues of government debt just need to be addressed. No better example of that than here in the UK, but increasingly the rest of Europe as well. So we have to be mindful of what is happening there.

Michael?

Good morning. Michael Steib from Morgan Stanley. I have a couple of questions please. The first one is on the commodity cost management again. It's not clear to me why managing commodity costs on a global basis necessarily enables you to deal with the volatility better. Can you give us a few examples perhaps of what you've specifically changed that makes you confident that you can manage this volatility better?

And then secondly, if we look at the overall level of A&P spending, if we eliminate the quarterly volatility, on a full-year basis are you confident that you're spending the right amount on A&P both in absolute and in (inaudible) terms of sales, or is this going to be another substantial headwind to margins next year?

Thanks Michael. No, I appreciate both questions. Let me turn the commodity, what has changed specifically, to [Taylor Ritchie] and then I'll come back on the A&P.

First of all, what we do is, we have a very strong view on the covers that we have for the next three to six months so we can actually protect our margin by understanding precisely how the market is moving. So I think we have a very strong team who has actually a very big understanding of how the market is moving. So that's for number one. Number two is there is a lot of information that actually is communicated to the market very quickly. So the responsiveness that we have in the business is actually quite high. So by doing those two I think we are quite fit to compete now.

We're able to -- if you look at it over a two-year period of time, for example, because of the global organization that [Taylor Ritchie] is leading, we're able to aggregate more. We actually have fewer suppliers. We have a better penetration of the supply chain and a better knowledge of the global supply chain. We were in a situation that we would, when we were to decentralized, would take opposite decisions against certain materials across the world, if I may be honest. That all is finished now.

So that discipline, that responsiveness that he's referring to is giving us a better opportunity to manage it. In a more volatile market it requires a lot of skill, but to better manage it. And we now have discussions at the Board level as an example, every month on what positions we take and how far we help and what we cover, what we don't cover. So that transparency is there as well. Earlier feedback to the market to take action, so discovering and explaining. So there's a lot of things that have improved in the way we manage the business that make us feel confident.

Turning to the A&P very briefly, I think we're confident with the absolute levels are strong versus our competitors in the categories that we compete in. We have had probably the strongest increase certainly in our history but also versus our competitors over the last two years with EUR700m. And I appreciate, and I want to repeat that, that you take a broader view than just the famous 90 days and get excited about that.

But even take the last period. What we've seen in Europe, for example, is the need for us to be competitive on the pricing and promotions of our products as our competitors continue to put fuel there. Very strong growth as a result, not giving an inch. I don't think some of our competitors get a very good return on their heavy investment. And at the same time increase in the absolute -- the A&P in the emerging market where we are driving our volume further. And you see a very strong quarter, in fact the strongest quarter of the year coming out of that.

I think next year the absolute levels -- we will stay competitive. So I cannot -- it's a moving thing. We will stay competitive. But I think the absolute level more or less fine also going into next year. I think there's a little bit of a reduction in promotional pressures because of the input costs inflation so we take that into account. And we have a major effort of savings rolled out across the company, which we call return on marketing invest, which really looks at that big bucket and drives efficiency. The big (inaudible) word digital is part of that, but it's much more than that.

So I think with the efficiency drives that we have, with investing smartly behind the brand where we grow and where we have our (inaudible) more selectively, we're happy at least with the overall absolute level of A&P that we're seeing right now.

[Bob]?

Just staying on the point of cost development, you've got visibility as you've mentioned on the next say three to six months. We've mentioned some phasing in terms of the A&P that we've seen in Q4 as well. Can you discuss a little bit about the phasing of the cost that you can see, both commodities first half versus second half, A&P to support new product launches?

And then lastly, you've also mentioned one-third of turnover, I believe, is being generated from innovations. Is that the right number? Is that going to go up or down? I couldn't really see that.

let's start with the key driver innovations for a second. I have said before that the 30%, 33% that's recorded now, is about the right number. What you want is, because you want to have it stick with the consumer and take some time to make it really work. Like Dove Men+Care, it's a multi-year program to drive the business across the world. So I think 33% is about right.

What we'll focus on is the quality of the innovation and continue to drive the quality higher. And what we're focused on is launching in more countries. We now have significant amount of projects that have given us EUR50m of turnover or more. Just two years ago you were challenging us on that, if we could ever do that. Right now many of the initiatives that we have in the market on Dove Men+Care, on Dove Damage Repair, on Magnum Gold or Knorr Stockpot, or the Clear re-launch, they are all EUR50m or more.

The second thing is launching in more countries at the same time. We, in 2008, nine, from memory, about nine countries, we had big initiatives. Now we are launching them in 40 -- we have 40 initiatives that we're launching -- sorry, nine initiatives that we were launching in 10 countries or more. Now there are 40 initiatives that we're launching in 10 countries or more. So the robustness of our innovation is really what drives our business. And we feel very confident about the pipeline that we have. Obviously all relative to competition again, but we feel confident about that. And our business is clearly driven by innovation.

Then in terms of the year, I think we have to be careful in terms of making forecasts in a very volatile environment. Frankly the effects of climate change and the influence on the short-term supply are higher than I've seen in the 30 years. You open the paper every day and there is a hurricane here or a drought there, or a climate change there. Then you add to this the volatility geopolitically, be it places like the Ivory Coast on cocoa or what you now see happening in the Middle East. It is a more uncertain world.

But the pressures on the real underlying demand is only 2%. So what you see here is short-term uncertainty reflected in a lot of these prices. I personally think that will be the case for the next six months for which we have reasonably covered and forecast outlook with the coverage that we have. And then hopefully seeing some easing to normality over the second half. We've priced now. We see the market moving up and we think there will be a modest pricing again somewhere in the midst of this year. And again once more I stress, we want to stay competitive as a guiding principle.

So the first half, where we are also against a proper base, will be tougher than the second half in my opinion, if I may think out loud. But we're not going to do the spreadsheet for you there. But that is what we are dealing with.

One more in the room and then we go to the phones.

Julian Hardwick from RBS. I just wondered if you could give us a little bit of color on what sort of pricing you are seeing as we now move into 2011, and how you see pricing evolve, if your assumptions of a 400 basis point commodity increase are correct?

And if in a year's time we're all sitting here and you're reporting on 2011, and you've not been able to deliver the objectives that you've set, what factor as you sit here today, do you think would account for a shortfall? What's concerning you most about life?

If you want to do a discussion what concerns me the most of life, will actually deviate quite sharply from the purpose of this press conference. And so I won't go that direction. I'm pretty happy the way it's going.

We -- let me just put it in perspective again once more. Because I understand the concerns and obviously you should always be worried about uncertainty moving forward. That is always uncomfortable for everybody. But the equivalent cost inflation that we now see with the best of our knowledge is about 4% of total turnover.

In 2008, when we dealt with that, it was about 6.5% of turnover, if you go back. And the 6.5% of turnover we were able to do whilst keeping volumes flat wasn't a performance we were particularly pleased about. I think we overshot a little bit on pricing then. But at the end of the day, we came through this with 6.5% pricing and flat volume. Our brands are much stronger, our innovations are stronger, we have more volume momentum and we're only seeing a 4% equivalent.

But we don't think that 4% equivalent is all the pricing that will play out in the market to your point, Julian. We think that with what we're trying to do with the savings programs and what we've set up, with capturing the efficiencies of the volume momentum that we have, that obviously the consumer pays significantly less.

If you want my best guess regards to the function of many factors, including competition, it's probably half of that you'll see in the market. And what will happen in the dynamics that we'll hear a year from now that you might see an overall growth in line with our ambition with a slightly different mix between volume and pricing. And that you already started to see coming through in the last quarter. We're just tremendously strong on volume, 5.1%, but started to have already 8.5% positive pricing in the quarter. So that is how the year is going to evolve.

Thank you. We're going to go to the telephones now, Paul. So we've got Marco Gulpers on the line. Marco, can you come through?

Yes, good morning, all. A follow up question actually on the pricing side, but a little bit different, the angle. On the retail environment, what are you actually seeing? Is it tougher these days to pass on these price increases than maybe two years ago? That is the first question.

And the second question is on your cost savings. A positive surprise there, EUR1.4b compared to EUR1.3b. Part of that is coming in the supply chain savings or buying savings, I would say. How does this affect basically your gross margin reporting in the fourth quarter, i.e. if we were to strip out that additional EUR100m, how would gross margins have looked like in the fourth quarter? Thank you.

Since I couldn't understand the first question I'll hand it over to Jean-Marc to answer. But I'm not sure that we understand it fully.

I'll give the second question to Paul.

The line was pretty bad so I don't --

Can I repeat it?

I think the question was about from the retailing perspective. I just heard the word retail, that's it.

Marco, just to do justice to this, could you just repeat the first question again because it didn't come through.

Yes, sure. Sure. Another way of asking the pricing question is, what are you seeing actually currently in the retail environment? You made the analogy basically with the commodity, with 2007/2008 period. Could you help us out on the retail environment? What are you seeing there? Is it easier today to pass on prices or would you say it's more difficult?

We've got it.

In that case, we change the flip-over who answers the question. It's always dangerous to have the CFO answer retailer questions. The good thing is we are seeing some movement in prices at the retail level as well. Don't forget in the developed markets you have to really look at it more granularly. But in the developed markets, where you have a more concentrated and developed retail environment, their own label have a much higher percentage of their cost in their selling price, if you want to, and as a result they are more subject to these strong increases when people like us.

For us, the product cost in total is about 30% of our turnover. For many of the retailers catering to the lower part of the economic spectrum, if you want to, with their private label, it can be as higher as 70%, 60%, 70%, in some cases even higher. So when there is input cost inflation, I think they will see more of that coming through than we do. On top of that, our innovation programs and again our brand strength will give us better opportunities. So I've always said a certain level of inflation - I know not everybody agrees with that - but a certain level of inflation is healthy.

But then people are worried and say if this is happening, is there an acceleration of private label growth? The reality is there is no private label really in the emerging markets where we have a very big part of our business. In the developed markets it's anywhere around 15% to 20% on average in the markets that we compete in. And we have not seen that trend significantly change, not in 2007, 2008, not after that, not now. We get monthly reports that have little movement and people get excited of that, but that trend is fundamentally not changing. Brands that do their work well, that innovate, that support, can continue to grow in any environment. And that's where we plan to be.

The second part of the question?

Again, if I understood it correctly, your question was about EUR1.4b of savings which is EUR100m more than EUR1.3b, and what the impact would have been in the fourth quarter. And rather than answer that question, because we don't manage savings on a quarterly basis, let me just take a step back and say we did EUR1.4b for the year, of which the lion's share is supply chain. But don't forget there's also an important part in indirect as well as to a lesser extent media savings.

That EUR1.4b in 2010 is very similar to the EUR1.4b in 2009. And this just underlines the fact that we really are driving the business on a continuous improvement level. We are trying to do this type of work each and every year. It's not a function of performance from a quarter-to-quarter basis. And that's the reason why we are confident at the beginning of 2011 for another savings at or hopefully more than EUR1b.

We're going to go back to the room now, in case the telephones aren't working. For those people that are on the line, please contact the IR team afterwards. We'll take your questions then. Nico, you had your hand up first.

Question for you, Paul. Could you maybe take us through the decision that the Board made in terms of your long-term focus for sustainable underlying margin improvement? Is that the right target for the long-term health of the business in a year like this year where you have to probably make more aggressive positions on cost and A&P, or is that a target that the market is asking you to do, the equity market?

And could you maybe clarify, would that also be a target that you would like to achieve in the first half and the full year this year? Thank you.

In other words, when are you giving guidance? We don't. So there is a question. It's the right question, though. And that's why I want to reiterate once more, Nic, that it's very important this, we will keep our brands and our support competitive as a priority. We are building share again. We have better innovations I think than many of our competitive set. We're winning many of the battles as you saw in Singapore and we can go into at different points of time. And we want to keep that. And it's driven by innovation in our case. But we also recognize that we have to stay competitive. We saw some price movements in the last quarter in Europe and that's had to be competitive. But we will not compromise on that. And that's a moving thing.

But I also think that our overall margins are not yet best in class. And we have to be sure that if we continue to get to our virtuous cycle of growth, of continuous top- and bottom-line growth, that we keep each other honest in the quality of the growth. We don't live by quarter. We might not live by year, by 365 days, if there are good explanations. But our long-term model, such a cycle of growth should be consistent top and bottom line growth, I insist on that, especially this starting point that we have. And there's ample room to deliver on that.

In short-term situation of extreme stress or difficulty, we all have to deal with that. Now we're able to run our business now thanks to the strength of our innovation with a margin enhancement at a time when we see some of our competitors reporting 150, 200 basis points down in margin and significant negative pricing. So I think it points out again the strength of our model and what we are doing and what drives that.

And we will continue to focus on that. Our innovations will be up next year. Our support behind that will be up. We will put selective pricing in, but never be uncompetitive. And at the end of the day, I believe that we can continue to stick to our long-term objective and run the business on that basis of healthy top-line growth above the market and steady but consistent margin expansion.

Susanne?

Thank you. Suzanne Siebel here. Further to your pricing strategy, could you elaborate a little bit how you're going to flex that between the geographies, between developed and developing markets considering the inflation that's there?

And also how you're going to do that between Food and HPC, given that they're different dynamics and different competitive dynamics, in particular behind those category. Thank you.

Absolutely. And I'm glad you're asking the question because we have to really look at it at a granular level. And even at the emerging markets, that doesn't, that work doesn't exist any more. There are nascent ones. There are emerging. There are already some quite developed in there. You need to be really looking at country by country. There are currency effects coming in next to input costs effects.

Let me give a macro picture to keep it short. In the Food area, where we see more inflation, our emerging market business is only 25% food more or less and 75% HPC. And the growth that we're seeing is more coming from HPC than from Food. I think there will be some challenges. There is no doubt about that. But putting them in perspective of where we are, we feel that we can manage that. You will see some prices going up. It's happening as we talk. We'll see some prices going up, perhaps a little bit lower volume than what we showed. But the overall should be healthy, in my opinion.

In the developed market, it's actually the Food part of our business is a very small part of people's overall spending pattern, 10%, 15% at maximum, but it's less. And I think the developed market, we should be able to pass on at least a part of these 400 basis points that Jean-Marc talks about provided we also back that up with innovation and continue to improve the quality of things that we do.

So the consumer might be paying more, but he gets a significantly better product. Don't forget that when we launched for example Knorr Stockpot last year, with this rapidly exceeding the EUR100m stock turnover, it's actually 70% more expensive than the granule cube that we sold. But it's such a better --- that we're selling. But it's such a better product and a better experience. Dove Men+Care, Magnum Gold or [Futera], these are products that provide a better value. So that is how we look at pricing and you should not underestimate that. If consumers -- not just the price increase, try minimize that, but give consumers also a better product.

So we're looking at it category by category, country by country and I think it is not something that is more challenging than it was in 2007/2008. And I am encouraged by some of the price movements I already see happening in some of the markets or reductions in promotional spending. And increasingly we've only had a few of our competitive set report results. But I think what I read in those results at least was that there was an intention to reflect some of that in the pricing, which is a little bit better noise than I've heard in the last two years from some of them.

Okay, two more. Martin and then one more.

Thank you, Martin Deboo, Investec. Simple question. What was input cost inflation in Q4 in basis points of turnover?

It was 7% up in the second half.

(Technical difficulty) but take the second half.

Yes, so the second half of the year there was --- our input costs were up about 7%.

For the whole year around 2.5% to 3% --

Net of FX, H2 7%.

One more? Jon.

Full year 2.5% to 3%.

I think we've beaten the input costs to death. I know there are worries about your own share of wallet. So let's move to some other topics because the business is run by broader factors than this.

Jon?

Jon Cox with Kepler. Moving along, what about the topline? I think consensus at the moment is for over 5% organic growth this year. You delivered that in Q4. You seem to saying that's where you want it to be. How confident should we be that you'll be able to maintain that pace through 2011? Thank you.

Our goal is to get -- the market's globally are growing at about 4%, as we read it, for our weighted basket of products. We've said that before. I was just looking at it coming in today. It's still more or less the case, 7%, 8% emerging markets, flat in the developed markets. And that's where we are.

I think the -- our goal continues to be to grow ahead of that. I'm talking value here. So our goal is to continue to grow ahead of that and increasingly get into the 4% to 6% range that we are in. I feel comfortable with that and we're doing that now. In extreme cases of inflation, if this would continue, then you might even be above that. But to be in the 4% to 6% range, I think this Company can deliver on now despite having some drag on some parts of the portfolio.

So we feel that we are showing that increasing consistency. But I also want to be clear, I am more interested in delivering it than promising it. So I want to be clear there. But I think we are getting in an increasingly comfortable relationship with our investor base that we can get to that consistency.

But it's also clear to me that two years alone is not enough to get that confidence yet and there is always some people that look at some of these uncertainties and not look at the positives. And I always quote Stephen Covey, 'you cannot talk yourself out of things you've behaved yourself into'. So we go very steadily into delivering that model and hopefully win the skeptics with (inaudible). But we should be doing 4% to 6%, yes.

Do we still have time to take some more.

Yes, absolutely.

Let's keep going then.

Deborah?

Hi. Can you give us some insight please on your acquisitions and what you're expecting from those in 2011? So sales and anything you can give us on cost updates.

Yes. You probably want more specific data around the acquisitions if I listened to your question.

Yes.

You want to cover that?

Let me just make a couple of points. I think importantly, with a lot of acquisitions, is to look after a period of time post-integration. And if you look at assets, although they were small, but ones like PG and Inmarko a year later, a year and a half later they are really performing according to plan, be it top as well as bottom line. So increasing confidence that we can buy an asset, integrate, but then, most importantly, is let them grow. So overall we have, I think, now more and more points of reference that we're getting better at this.

When it comes to the more recent transactions, we've just closed Sara Lee in December so it's very early days. I think our proposal is to more factually come back to Sara Lee, specifically post Sanex, be it either in our Q1 or Q2 results. What we see, which I think is very promising, is given the time between announcement and closing - you'll recognize that it took a long time for us to close this deal - the brands are healthy, the momentum is good as we now know the business under our ownership. Alberto Culver, obviously we're waiting for approval to close that deal.

We'll get back to what it means in the year, and what we've said we will stick to, but what it means in a year in terms of restructuring and business effects, and we will report the business with some results so you get that transparency.

Dave is here and Dave is responsible for the Alberto Culver integration. That's obviously a very important business for us. So perhaps Dave wants to spend two words on that.

I think, to build on what Jean-Marc said, there's a lot of integration work already done, but it's the timing. The timing will be driven by (technical difficulty) perspective that asks for a second reading in the US. Best timeline indication I could give is that we would have a conclusion of that around the middle of the year.

Xavier.

Xavier Croquez, Cheuvreux. Two points of clarification. The first one is on pricing. I think you just said that you had 0.5% in-quarter pricing. Because the consumer doesn't remember flat pricing versus year-on-year, how much pricing in the quarter have you been putting in the system and keeping the volumes that you had, is my first question. Is it 0.5%?

Secondly on the savings. The nice pie that we have with the GBP1.4b, I understand that you expect more than GBP1b, but what, if it is GBP1b, would not be delivered at the same pace as it's in 2010. Because buying savings should be fairly strong, so what is missing? Where would be the shortfall when you guided at GBP1.1b or whatever.

And to clarify, all the cost synergies of restructuring are not in this pie nor in your guidance 2011. Thank you.

The last point is correct.

On the pricing, this 0.5% pricing in the quarter, so we have actually put some pricing in on the Food side already, on the Personal Care side where we -- and actually on the fabrics solution side, we've been able to do pricing as well by the way in many places across the world and still give good volume. We see prices moving up slightly in the (inaudible) and Latin America, in India now. In China there is some price movement on the laundry category.

So there are always individual countries that need to be dealt with, but broadly we see the direction going up. And us as market leaders in these emerging markets have to show the initiative in many of these cases, and we're starting to do that. But we will be very mindful to keep our brands competitive. So you will see the positive pricing increasingly coming through in the quarters ahead of us more and more and more.

We have made some price adjustments down as well to stay competitive. On fabric softeners in the UK someone was taking share with predatory pricing. In laundry in France, your country, the same person was taking share with predatory pricing. That has to stop and increasingly I think we make that very clear. But we're able to do that in a model that gives overall better results.

So we have now put pricing in across our categories in most of our countries to be honest, without going into the details. And we also have closed with the retailers, to the best of my knowledge, all the agreements for 2011, which is quite exceptional because sometimes that can drag to well into the year with loss of support. Now it's actually the opposite. So I feel moderately realistic. I don't want to use the word optimistic. I feel moderately realistic that common sense is a little bit more prevailing in more places than it perhaps was over the last two years on this. And that's how we will do it, but we will run it very, very tight.

And we, because of our increased transparency, because of our business model now, because of the Compass, we're able to get that feedback from the markets very quickly. And although we have the P&L in the market, we are able to take very quick actions when needed to take correction. An example of that is India where we saw irresponsible price increases in some categories. We took immediate action and our business now is growing double-digit, including in laundry, already for the last two or three quarters, and we're happy about that. So we will continue to do that.

In answer to your second question on savings, I wouldn't use the word shortfall when comparing GBP1.4b with GBP1b. Take a step back. We did GBP1.4b in '09. GBP1.4b in '10. That's close to GBP3b. So from that backdrop we feel confident, with continuous improvement, with the mindset, to achieve another GBP1b on 2011. So I think that it's important to recognize that backdrop, plus the fact that we are at the beginning of the year and we will do what's possible within 12 months.

But the fact that Xavier is asking for more shows that he has potential to work for Unilever so I appreciate that.

Okay, one final question Paul? Last question, Simon.

Hello. Simon Marshall-Lockyer from Jefferies. Just can you give us a little bit more on what you're seeing in China given the inflationary -- anti-inflationary measures taken by the government? Your expectation of maybe some slightly slower growth out of developing and emerging market, are you actually seeing that already now or is this your expectation? And are you actually seeing that these anti-inflationary measures taken by the government in China are beginning to have an effect, are beginning to slow things down. Can you give us some sort of views on that? Thank you.

Yes. With some modesty I have to say we have good results in China. We are growing well into the double-digit, the upper double-digits. We are growing at more than two times, if not close to three times the GDP. We're moving share in all categories bar one. So our performance under Alan Jope's leadership in China has been a very, very strong performance and he should be definitely congratulated on that. We are closing in on many of our competitors. Very strong growth, in laundry for example, as an example of that that we shared with you in Singapore, but I can go into any of the categories.

But I have to say we were late starters. So our business is far smaller and we continue to invest in China to close that gap. And in fact responsibly here as well very fast top-line growth, but also bottom-line growth. And our shares are moving up in all categories except oral care which we are now working on and are starting to see to move that as well. So that's the full transparent story.

What we do see is, because of the increased attention to China and the market leader losing share across most of the categories, we see the cost of competition going up. So we have tremendous opportunities as a company to extend our distribution network, to go to the B and C cities, and that is what we are doing. We are adding tremendous amounts of funds for distribution. And, two, in a better position to expand our portfolio. We just launched the Dove hair care brand which is off to a great start. That's a big initiative. Our Lipton, the Lipton tea, we launched and now we're expanding the Lipton ready-to-drink. Those are big initiatives. So we see a lot of upside and there are still some categories that we're not in yet.

We see a lot of upside as a company in China itself, but I think it is going to be in a context where some of these trends might not be all the same. I give you a micro-example why you need to understand that carefully. Many people are focused on the big cities and rightfully so. But with the incredible cost increases of real estate, the trend towards urbanization is actually slowing down because a lot of people can't afford it. It's just too expensive to buy an apartment. So the growth in these cities, which has been driving the growth of many of the companies, is going to be less because of that. So you have to expand and reach these consumers in different ways. You have to understand the changes that are happening in China to adapt your business model.

I don't see any reason for us why we cannot continue to grow double-digit. But the environment is definitely more competitive. The economy I think will always be try -- they probably don't want to have it grow too much more than the 8% to 10% range, and we saw some of these things pushing into the 10%/12% at points in time. And if that is driven by bubbles that cause problems on this side of the world, I think they will be hesitant to take that perceived wealth which results in actual standing, to take that away from the consumer. So there will be a little bit of pressure on that. I've seen that.

And don't get sidetracked by luxury companies announcing record sales because that's just a small group. What we deal with is the population at large that actually don't buy those products and that's really what drives the core of the consumption pattern in China. And I think you'll see in 2011, not a drastic change, but a slight reduction in what you've seen in 2010. That is my best estimate and that is supported by what -- again I was in Davos last week, what the sentiment is from people that have a little bit more opinion.

But let me end by this very simple thing. When I graduated in economics from Groningen University in the Netherlands, my father who didn't have much money gave me a little tile, a ceramic tile. And I still have it in my desk. And it kept me humble because that tile said very simply remember an economist is someone who doesn't know it either. That's probably the best way to end. Thanks.

Thank you.