UNILEVER N.V. : THIRD QUARTER - UNILEVER N.V.

Thu. November 05, 2009; Posted: 02:00 AM

CONTINUED GOOD PROGRESS IN VOLUME, MARGIN AND CASH FLOW

Third Quarter highlights

Underlying sales growth 3.4%, with volume growth 3.6%. All regions and categories showing positive volumes.

Gross margin up 290 bps from efficiencies and lower costs.

Advertising and promotion spend increased by 130 bps, mainly additional advertising to support innovations and build brands. Overheads up by 90 bps, mainly due to phasing, with full year expected to be down.

Operating margin before RDIs up by 70 bps.

Continued progress on strategic initiatives: o Opening of new Research and Development centre in Shanghai. o Announcement of agreement to acquire the personal care business of Sara Lee. o Disposal of plantations in the Congo and announced sale of stake in JohnsonDiversey.

Nine Months Highlights

Underlying sales growth 4.1%, with volumes up 1.4%. Turnover lower by 0.7% after effects of currency movements (-1.7%) and disposals/acquisitions (-3.0%).

Operating margin before RDIs down by 10 bps (including 30 bps of margin dilution from disposals).

Operating profit in the first nine months of 2008 included profits on disposals of E1,579 million pre-tax.

Net cash flow from operating activities E1.6 billion ahead of last year driven by improved working capital.

Paul Polman, Chief Executive Officer: "We have seen further good progress across all regions and the majority of countries and categories. Our market shares are responding to stronger innovations, greater consumer value, increased marketing support and better execution. Market conditions remain challenging and in this environment we will continue to increase investment behind our brands and build long-term capabilities in research and development. We are on track towards our objective of restoring volume growth while protecting margins and cash flow for the year as a whole."

+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |                    Key Financials                    |                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|Third Quarter 2009|      |       (Unaudited, at current rates. Includes non-GAAP|Nine Months 2009|      |
+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |measures marked *, see Page 2 for further explanation)|                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |                                                      |                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|10,201            | - 2 %|                                  Turnover (E million)|          30,164| - 1 %|
+------------------+------+------------------------------------------------------+----------------+------+
|                  | + 3 %|                              Underlying sales growth*|                | + 4 %|
+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |                                                      |                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|1,494             |- 41 %|                          Operating profit (E million)|           4,048|- 29 %|
+------------------+------+------------------------------------------------------+----------------+------+
|1,715             | + 2 %|             Operating profit before RDIs* (E million)|           4,630| - 1 %|
+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |                                                      |                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|1,117             |- 35 %|                                Net profit (E million)|           2,753|- 33 %|
+------------------+------+------------------------------------------------------+----------------+------+
|1,270             | + 4 %|                   Net profit before RDIs* (E million)|           3,184| - 7 %|
+------------------+------+------------------------------------------------------+----------------+------+
|                  |      |                                                      |                |      |
+------------------+------+------------------------------------------------------+----------------+------+
|0.38              |- 36 %|                                Earnings per share (E)|            0.91|- 34 %|
+------------------+------+------------------------------------------------------+----------------+------+
|0.43              | + 5 %|                   Earnings per share before RDIs* (E)|            1.06| - 6 %|
+------------------+------+------------------------------------------------------+----------------+------+

INTERIM MANAGEMENT REPORT FOR NINE MONTHS TO SEPTEMBER 2009

In the following commentary we report underlying sales growth (abbreviated to 'USG' or 'growth') at constant exchange rates, excluding the effects of acquisitions and disposals. Turnover includes the impact of exchange rates, acquisitions and disposals. Unilever uses 'constant rate' and 'underlying' measures primarily for internal performance analysis and targeting purposes. We also comment on trends in operating margins before RDIs (restructuring, disposals, and other one-off items). We may also discuss net debt, for which we provide an analysis in the notes to the financial statements. Unilever believes that such measures provide additional information for shareholders on underlying business performance trends. Such measures are not defined under IFRS and are not intended to be a substitute for GAAP measures of turnover, operating margin, profit, EPS and cash flow. Please refer also to notes 2 to 5 to the financial statements. Further information about certain of these measures is available on our website at www.unilever.com/investorrelations

OPERATIONAL REVIEW

+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|                             |Third Quarter 2009 |      |       |Nine Months 2009 |         |      |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|                             |          Turnover |  USG |Volume |           Price |Turnover |  USG |Volume |Price |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|                             |               E m |    % |     % |               % |     E m |    % |     % |    % |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Asia Africa CEE              |             3,807 |  5.7 |   4.4 |             1.3 |  11,238 |  7.7 |   2.4 |  5.2 |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Americas                     |             3,218 |  3.9 |   3.8 |             0.2 |   9,709 |  5.2 |   1.5 |  3.6 |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Western Europe               |             3,176 |  0.2 |   2.6 |           (2.3) |   9,217 |(1.2) |   0.1 |(1.2) |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Unilever Total               |            10,201 |  3.4 |   3.6 |           (0.2) |  30,164 |  4.1 |   1.4 |  2.7 |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Savoury, dressings & spreads |             3,239 |(0.1) |       |                 |   9,783 |  0.9 |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Ice cream & beverages        |             2,182 |  4.0 |       |                 |   6,314 |  4.3 |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Personal care                |             3,029 |  5.2 |       |                 |   8,832 |  4.8 |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Home care & other            |             1,751 |  6.5 |       |                 |   5,235 |  8.7 |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+
|Unilever Total               |            10,201 |  3.4 |       |                 |  30,164 |  4.1 |       |      |
+-----------------------------+-------------------+------+-------+-----------------+---------+------+-------+------+

REGIONS

All regions showed an improving trend in both volumes and operating margins in the third quarter. There has been a consistent focus on accelerating innovations and great execution, especially in the areas of customer service and on-shelf availability. Savings programmes are delivering strongly and we are seeing the benefits of operating efficiencies and mix improvement on profitability. Pricing has been trending downwards as we come off last year's record price increases and reflect easing commodity costs and selective actions to improve competitiveness.

Asia Africa CEE - Nine months USG +7.7%, Volume +2.4%

Volume growth has improved progressively through the three quarters and was particularly strong in Asia. Economic conditions are slowly improving in several key countries but overall growth in consumer demand continues to be slower than in the past.

We have established a regional supply chain centre in Singapore, and are progressively rolling out common systems across the region. We have continued to invest in China and Russia as priority markets, with the opening of a new global R&D centre in Shanghai and the completion of the acquisition of Baltimor, the market leader in ketchup in Russia.

The operating margin before RDIs was up by 160 bps in the first nine months.

The Americas - Nine months USG +5.2%, Volume +1.5%

The positive and broad-based momentum continues. Sales in Latin America have grown at 9% in the first nine months with an improving volume trend. North America grew by 2% in the first nine months, with US volume now contributing positively. The third quarter benefited from the integration of Canada into the North American SAP platform which pulled sales forward from the fourth quarter.

Our new Customer Insight and Innovation Centre in New Jersey is driving growth and stronger business partnerships. The most recent recognition of this has been the award of 'Marketing Partner of the Year' by one of our major US customers.

The operating margin before RDIs was up by 70 bps in the first nine months.

Western Europe - Nine months USG -1.2%, Volume +0.1%

Most countries in Northern Europe showed better volume growth in the third quarter but conditions in Southern Europe remain challenging. Third quarter volume growth of 2.6% was partly flattered by one extra trading day (there will be two less trading days in the fourth quarter).

We continued to make good progress on rationalising our supply chain network, investing in more efficient production lines, leveraging our single IT system to drive regional synergies and streamlining overheads. We have announced the agreement to acquire the Personal Care business of Sara Lee which will strengthen our skin cleansing and deodorants categories.

The operating margin before RDIs was lower by 260 bps in the first nine months, but with an improving trend in the third quarter.

CATEGORIES

Across all categories, our global brands focused on developing bigger, better innovations, rolling them out faster to more countries than ever before. We stepped up our marketing investments behind these innovations, with more rigorous pre-testing with consumers and increased media weight. At the same time, we launched new initiatives to develop our markets, build consumption of our categories and convert users from alternative products.

Savoury, dressings and spreads - Nine Months USG +0.9%

We have continued to roll out Knorr bouillon gel 'stockpots', now in eleven countries, and have launched new savoury products into developing and emerging markets, such as new Knorr seasoning powders in South East Asia and Knorr rice seasonings in Latin America. Bertolli extended its pasta sauce range in Western Europe with three new variants while adding three new oven bake frozen meals in the US, offering consumers 'restaurant quality at home'. In spreads, our market shares in key markets such as Germany and the US responded well to new initiatives including the further roll-out of the 'goodness of margarine' campaign and the launch of Dorina 'whipped spreads'. Hellmann's is benefiting from the launch of 'double whisked' light mayonnaise and further roll out of the Hellmann's 'real', 'free range eggs' and '40 calories' advertising campaigns.

Ice cream and beverages - Nine Months USG +4.3%

Our tea business continued to grow strongly, driven by Lipton as we rolled out Lipton slimming teas into China and Russia, launched Lipton pyramid tea bags into Hungary, the Czech Republic and Slovakia, and made good progress with the new range of Lipton teas in the UK. In Latin America, AdeS grew at double digit rates, with the launch of AdeS Light in Argentina and a new AdeS dairy range with improved fortification in Brazil and Mexico. In ice cream, Magnum performed particularly well, with the addition of a new Temptation variant in Europe, the extension of the Temptation range into multi-packs in retail, and the re-launch of the Magnum brand in Brazil. Cornetto innovations included 'All Black' in Europe and the extension of the 'Choco Disc' to South East Asia. In the US, the launch of a range of super premium Starbucks ice creams is well on track.

Personal care - Nine Months USG +4.8%

Our personal care category delivered good growth despite weak markets, particularly in the US and Europe. Dove sales picked up with the launch of new shower gels with NutriumMoisture technology in the US, and the introduction of a new 'Dove for Men +Care' range in Italy, France, Spain and the Benelux. In the US, we also launched Vaseline Sheer Infusion skin creams. Our Lifebuoy hygiene brand grew strongly, with the re-launch of liquids in Indonesia and the brand roll-out into Sri Lanka and Pakistan. In hair care, we introduced a new Sunsilk range, co-created with leading stylists, in several key markets. Sales in China and Japan benefited from the launch of Lux Shine shampoos. The TIGI professional hair care business re-launched the Catwalk brand with a new Your Highness Volume collection. Signal White Now toothpaste is now in more than twenty countries and we have extended the range with the introduction of a new mouthwash line.

Home care and other - Nine Months USG +8.7%

Our 'Dirt is Good' brand achieved double-digit growth, driven by new initiatives such as the re-launch of Omo Auto in Greater China, the introduction of a new Dirt is Good range with Oxymax stain removal in South East Asia and new Omo Tanquinho products for semi-automatic machines in Brazil. In Latin America, we also launched premium Skip Black and Skip White variants and further rolled out Small & Mighty concentrated liquids. In Europe, we achieved good volume growth with the launch of the new Naturals range for Persil and Comfort in the UK and the introduction of new Robijn Sensation fabric softeners in the Netherlands. We have also launched a new range of Surf Twilight Sensations laundry detergents in the UK and Australia. In household cleaning, Domestos '24 hour protection' performed strongly in Turkey, South Africa and CEE, and we introduced the Cif brand in India for the first time.

ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - NINE MONTHS

Finance costs and tax

The cost of financing net borrowings was E325 million, E24 million higher than last year. The interest rate on borrowings was 4.9%, compared with 4.6% last year.

There was a net charge of E131 million for pensions financing compared with a credit of E100 million in the previous year.

The underlying tax rate, before RDIs, was 26% in the first nine months, in line with last year, and 23% in third quarter, benefiting from the favourable resolution of some one-off items. The underlying tax rate is now expected to be around 26% for the year as a whole. The effective tax rate for the nine months was 26% compared with 28% for 2008.

Joint ventures, associates and other income from non-current investments

Net profit from joint ventures and associates, together with other income from non-current investments contributed E119 million. This compares with E129 million last year, which included a one-time gain on the extension of the Pepsi/Lipton joint venture for ready-to-drink tea in the first quarter.

Earnings per share

Earnings per share before RDIs at E1.06 for the first nine months were 6% lower, principally due to the net charge for pensions financing, compared with a credit last year. In the third quarter earnings per share before RDI's grew by 5%.

Reported earnings per share of E0.91 in the first nine months were 34% lower than last year which was boosted by one-off profits on disposals of businesses.

Cash Flow

Cash flow from operating activities was E1.6 billion higher than last year. Working capital improvement has been a priority for the business and very good progress has been made. This has more than offset an increase in contributions to the group's main pensions schemes. Capital expenditure has been raised slightly in support of future growth. TIGI is the main acquisition completed this year.

Balance sheet

Net pensions liabilities have reduced by E0.1 billion since the start of the year to E3.3 billion. Asset values have risen by E1.7 billion on the back of rising capital markets, currency movements and increased contributions. Liabilities have increased by E1.6 billion due to reductions in discount rates, higher inflation rates and currency factors. During the third quarter the net pensions liability improved by E0.4 billion. In the fourth quarter it is our intention to accelerate contributions to some of our pension funds. We expect this to take the overall cash contributions to pension funds in the year to E1.3 billion.

Unilever has strengthened its funding with several bond issues in 2009 with a consequent reduction in short term debt and an increase in cash and cash equivalents. The increase in goodwill and intangibles mainly reflects currency movements and the acquisition of TIGI.

DIVIDEND

The interim dividend to be paid in December 2009 has been set at E0.2695 per share. Further details, including amounts payable in sterling and US dollars are given in note 10 on page 14, together with information about the move to quarterly dividends in 2010.

COMPETITION LAW INVESTIGATIONS

As previously reported, in June 2008 the European Commission initiated an investigation into potential competition law infringements in the European Union in relation to consumer detergents. Unilever has received a number of requests for information from the European Commission regarding the investigation and has been subject to unannounced investigations at some of its premises. No statement of objections against Unilever has been issued to date. It is too early to be able reasonably to assess the outcome or to estimate the fines which the Commission may seek to impose on Unilever as a result of this investigation, if determined against Unilever. Therefore no provision has been made. However, substantial fines can be levied as a result of European Commission investigations. Fines imposed in other sectors for violations of competition rules have amounted to hundreds of millions of euros.

Unilever is, as previously reported, involved in a number of other on-going investigations by national competition authorities within the EU in relation to potential national competition law infringements, primarily in relation to the home care and personal care sectors. It is too early to be able reasonably to assess the outcome or to estimate the fines which the authorities may seek to impose on Unilever as a result of these national investigations, if determined against Unilever. Therefore no provision has been made.

CAUTIONARY STATEMENT

This announcement may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as 'expects', 'anticipates', 'intends', 'believes', or the negative of these terms and other similar expressions of future performance or results, including any financial objectives, and their negatives are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including, among others, competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, the ability to complete planned restructuring activities, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. Further details of potential risks and uncertainties affecting the Group are described in the Group's filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report and Accounts on Form 20-F. These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

ENQUIRIES

Media: Media Relations Team UK +44 20 7822 6805 tim.johns@unilever.com or +44 20 7822 6010 trevor.gorin@unilever.com NL +31 10 217 4844 flip.dotsch@unilever.com

Investors: Investor Relations Team +44 20 7822 6830 investor.relations@unilever.com

There will be a web cast of the results presentation available at: www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp

Copyright Hugin

The appendixes relating to the press release are available on: http://www.hugingroup.com/documents_ir/PJ/CO/2009/160048_88_5S38_Q3-2009-results.pdf

This announcement is originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

[CN#160048]

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