The 5-S supply chain savings and zero-based budgeting programmes are delivering faster than planned, and the integration of Foods and Refreshment into a single business unit is, equally, progressing well. These actions enable reinvestment behind our brands for growth, and provide momentum towards our underlying operating margin target of 20% by 2020.
The outlook for 2017 is reconfirmed. We continue to expect underlying sales growth within the 3 to 5% range, an improvement in underlying operating margin of at least 100 basis points, and strong cash flow delivery.
Unilever’s portfolio continues to be developed at an accelerated pace to ensure the platforms are in place for long-term value creation by being in attractive market segments and sales channels. So far this year, nine acquisitions have been completed or announced. The exit from our spreads business via sale or de-merger remains fully on track.
At the same time, Unilever has also continued to simplify its capital structure and ensure it remains at the forefront of good corporate governance. This includes the acquisition of the outstanding Unilever N.V. preference shares. As previously announced, the Board is conducting a review of the dual-headed legal structure.
This review is progressing well and the Board considers that unification with a single share class would be in the best interests of Unilever and its shareholders as a whole, providing greater ongoing strategic flexibility for value-creating portfolio change.
Unilever is a geographically diversified business with a very small corporate centre compared to the scale of its global operations. Reflecting this, following any unification, we envisage one lean, agile corporate centre.
The review by the Board is continuing and the outcome will be announced in due course. Whatever the outcome, upon any unification, the Board intends to:
- Maintain listings in the Netherlands, United Kingdom and United States
- Continue to apply both the UK and Dutch corporate governance codes
- Terminate the N.V. preference shares
These actions would be subject to the appropriate approvals.