Unilever Plc · LSE:ULVR
Unilever — Investor Day (November 2024)
39 slides from Unilever's investor day presentation, Nov 22, 2024
Slide 1: Unilever Investor Event – Fernando Fernandez, CFO
Unilever Investor Event 22 November 2024 FERNANDO FERNANDEZ CHIEF FINANCIAL OFFICER
Slide 2: Safe harbour statement
Unilever Investor Event 22 November 2024 Safe harbour statement This presentation may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995, concerning the financial condition, results of op
Slide 3: Key messages
INTRODUCTION Key messages The Growth Action Plan 2030 is driving change in Unilever We are stepping up execution and accelerating our transformation Our value creation will be anchored in 2%+ volume growth, consistent gross margin expansion and absolute profit growth in hard currency Still more to d
Slide 4: Accelerating
ACCELERATING OUR TRANSFORMATION
Slide 5: Becoming a simpler, more focused and more efficient company
ACCELERATING OUR TRANSFORMATION Becoming a simpler, more focused and more efficient company Business Group-led Ice Cream Productivity and 1UL markets separation programme A simpler company A more focused company A more efficient company 1UL markets 15% B&W 25% HC 800 24% 26% 25% € m 85% PC Foods 24
Slide 6: Ice Cream is an attractive business with an advantaged portfolio
ACCELERATING OUR TRANSFORMATION Ice Cream is an attractive business with an advantaged portfolio Ice Cream part of €1tn snacking and refreshment market, growing 4% p.a. Unilever global No. 1 with #1 or #2 Developed 40% Emerging positions in top 10 markets Markets 60% Markets Focused portfolio with 4
Slide 7: Ice Cream has low complementarity with the other Business Groups
ACCELERATING OUR TRANSFORMATION Ice Cream has low complementarity with the other Business Groups Synergies with Unilever Post separation IC will be set up to Innovation/R&D • Pursue a distinct strategy and financial model Marketing for a capital-intensive category with seasonality Route-to-market •
Slide 8: Ice Cream historic underperformance but making progress in 2024
ACCELERATING OUR TRANSFORMATION Ice Cream historic underperformance but making progress in 2024 Ice Cream underperformance (2019-23) Making improvements in 2024 +5.0 Underlying sales growth +3.8% % Bigger innovations • A stepped-up brand investment on Power Brands CAGR 2019-2023 Ice Cream Unilever •
Slide 9: Ice Cream separation on track
ACCELERATING OUR TRANSFORMATION Ice Cream separation on track Workstreams progressing as planned Key milestones • Establishment of 80+ legal entities and tax models Detailed separation update in Q1 2025 • Set up of transitional service agreements • Design of standalone operating model incl. ERP syst
Slide 10: Key leadership appointments
ACCELERATING OUR TRANSFORMATION Key leadership appointments CFO Abhijit Bhattacharya CHRO Ronald Schellekens • Joining in December • Joined in August • Served as CFO at Royal Philips N.V. since 2015 • Prior roles include CHRO at PepsiCo and Vodafone • Led previous successful separation processes • O
Slide 11: Clearly defined profiles for each Business Group in our portfolio
ACCELERATING OUR TRANSFORMATION Clearly defined profiles for each Business Group in our portfolio All Business Groups will deliver absolute profit growth consistently Beauty & Wellbeing Home Care Investment priority for industry- beating topline growth 25% 24% Exposure to superior volume growth from
Slide 12: Unilever excl. Ice Cream relative to Unilever Group
ACCELERATING OUR TRANSFORMATION Unilever excl. Ice Cream relative to Unilever Group +130bps Gross margin +20bps Underlying sales growth CAGR 2019-2023 2023 Underlying operating margin +90bps 2023 +20bps Underlying volume growth +90bps CAGR 2019-2023 Underlying ROIC 2023 Unilever excl. Ice Cream base
Slide 13: Foods is attractive and complementary to Unilever
ACCELERATING OUR TRANSFORMATION Foods is attractive and complementary to Unilever Strong foundations Role of FoodsStrong and contribution economicsto Unilever • Leadership in 3 attractive verticals • A business with scale: €13bn+ turnover - Condiments - Cooking aids & mini-meals • Growth and margin
Slide 14: Time to attack root causes of inefficiencies
ACCELERATING OUR TRANSFORMATION Time to attack root causes of inefficiencies Cost base has expanded post Covid-19 Significant geographical complexity Limited use of business process outsourcing and offshoring Misaligned turnover and cost footprint – creating currency exposure 14
Slide 15: We are creating a leaner, more accountable organisation
ACCELERATING OUR TRANSFORMATION We are creating a leaner, more accountable organisation End-to-end BG ownership from Productivity Accountable product development to sales force programme Targeted cost savings 800 Reduce process complexity Simplified and duplication € m Efficient More than offset ope
Slide 16: Following three clear principles
ACCELERATING OUR TRANSFORMATION Following three clear principles Geographical Organisational Technology segmentation simplification transformation • 24 Business Group-led markets • Reduce layers, increase spans of • Differentiated tech platforms for with end-to-end accountability control and elimina
Slide 17: Programme is progressing at pace
ACCELERATING OUR TRANSFORMATION Programme is progressing at pace Phase 1: Europe Q2’24 Europe design 1 Jan 2025 New org and Q4’24 Implementing in markets operating model in place €800m where local consultation programme concluded announced Q3’24 European works council consultation complete March Now
Slide 18: Value creation
VALUE CREATIONS
Slide 19: Looking back at the last decade: 10-year trends
10-year trends VALUE CREATION Looking back at the last decade Avg UVG 0.9% vs best-in-class at 2.3% and real GDP growth at 2.9% Significant margin decline post Covid-19 Underlying volume growth, % Gross margin, % 1.0% 2.1% 0.9% Volume 0.8% 1.9% 1.2% 1.6% 1.6% Gross margin 42.7% 43.1% 43.7% 44.0% 43.
Slide 20: Looking back at the last decade: volume growth
10-year trends VALUE CREATION Looking back at the last decade Average UVG 0.9% vs best-in-class at 2.3% and real GDP growth at 2.9% Underlying volume growth, % 2.1% 1.9% 1.6% 1.6% 0.9% 1.2% 1.0% 0.8% 0.2% -2.1% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 20
Slide 21: Significant margin decline post Covid-19
10-year trends VALUE CREATION Looking back at the last decade Significant margin decline post Covid-19 Gross margin, % 43.7% 44.0% 43.5% 43.1% 42.7% 42.2% 42.3% 41.4% 42.2% 40.2% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 21
Slide 22: Uncompetitive levels of brand investment
10-year trends VALUE CREATION Looking back at the last decade Uncompetitive levels of brand investment Brand & marketing investment as % of turnover 14.8% 15.0% 14.7% 14.1% 14.0% 14.0% 14.0% 14.3% 13.1% 13.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 22
Slide 23: Profit stagnation from 2017 onwards
10-year trends VALUE CREATION Looking back at the last decade Profit stagnation from 2017 onwards Underlying operating profit, € billion 9.9 9.9 9.5 9.5 9.4 9.6 9.7 8.6 8.3 7.5 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 23
Slide 24: Our Value Creation Plan 2030: multi-year framework
Multi-year framework VALUE CREATION OUR VALUE CREATION PLAN 2030 DELIVER ABSOLUTE PROFIT GROWTH IN LINE WITH TOP 1/3rd TSR AMBITION Mid-single Modest margin Top 1/3rd ALGORITHM GROWTH digit growth (USG) improvement (UOM) shareholder UVG of at least 2% Fuelled by gross margin returns GENERATION Cash
Slide 25: Our Value Creation Plan 2030: growth algorithm
VALUE CREATION OUR VALUE CREATION PLAN 2030 DELIVER ABSOLUTE PROFIT GROWTH IN LINE WITH TOP 1/3rd TSR AMBITION GROWTH ALGORITHM 2%+ Gross margin Profit ALGORITHM GROWTH volume growth expansion growth GENERATION Cash conversion CASH ALLOCATION Capital allocation CAPITAL 25
Slide 26: Demographics and wealth expansion enable volume growth in Emerging Markets
Volume growth VALUE CREATION Demographics and wealth expansion are enablers for market development and volume growth in Emerging Markets Differentiated growth outlooks Unilever priorities % of TO Favourable demographics, urbanisation and rising affluence drive strong economic growth Unblinking commi
Slide 27: Portfolio transformation and premiumisation in Developed Markets
Volume growth VALUE CREATION Portfolio transformation and premiumisation are key for volume growth in Developed Markets North Europe America 21% 18% of Group of Group turnover turnover *% of Group turnover excluding Ice Cream, 9M 2024 27
Slide 28: Portfolio transformation and premiumisation: North America
Volume growth VALUE CREATION Portfolio transformation and premiumisation: North America Significant portfolio transformation % of turnover The results tell the story +2.5 FY 2019 9M 2024 9M 2024 excl. Ice Cream 6% % UVG 23% 28% FY 2023 94% 77% 72% Prestige + Wellbeing North America* +3.4 % UVG 9M 20
Slide 29: Premiumisation and investment step-up: Europe
Volume growth VALUE CREATION Premiumisation and investment step-up: Europe Strong premium innovation programme across Business Groups First signals of success – need to sustain +2.9 % UVG 9M 2024 Fuelled by a significant step up in brand & marketing investment Incremental turnover from innovation +2
Slide 30: Gross margin expansion is the backbone of our financial plan
Gross margin VALUE CREATION Gross margin expansion is the backbone of our financial plan Driven by structural levers and tailwinds First milestone achieved: GM back to pre-Covid level Increased volume leverage and positive mix 44% 44.5% Net productivity gains from 42% interventions in procurement an
Slide 31: Key drivers of structural gross margin improvement
Gross margin VALUE CREATION Key drivers of structural gross margin improvement 2%+ volume Fixed cost leverage Consistent and positive mix gross margin expansion is key Procurement Beat market inflation interventions in materials by ~1% to ensure competitive brand investment levels Higher capex & 2%
Slide 32: Material cost savings driven by enhanced procurement
Gross margin VALUE CREATION Material cost savings driven by enhanced procurement and selective value chain interventions ~1 % 1 Competitive buying Enhanced procurement insights, buyer skills, and AI- powered tech to unlock benefits of Unilever scale material cost savings p.a. Value chain 2 vs market
Slide 33: Cost per unit reduction is our key metric for productivity
Gross margin VALUE CREATION Cost per unit reduction is our key metric for productivity 2 Production savings 1 - Network optimization - Production automation % - Labour productivity Distribution savings 2 - Network transformation - Travel less, load more programme - Operational and buying efficiencie
Slide 34: Allocating 55%+ capex towards margin expansion initiatives
Gross margin VALUE CREATION Underpinned by allocating 55%+ capex towards margin expansion initiatives Capex split* Productivity Capacity Other 55%+ 30% 42%+ 2019-22 2023-2024e 2025+ Concentration of capex in hard currency markets *SC Capex excl. IC cabinets 34
Slide 35: Converting profit into cash
Cash conversion VALUE CREATION Converting profit into cash Sustaining cash conversion of around 100% over time Negative working capital Cash generation WC % of turnover -7.3% Cash 92% 110% conversion -8.2% Free cash flow -8.5% €bn 6.5 -9.0% -9.2% 4.8 2014-18 avg. 2019-23 avg. 2019 2020 2021 2022 202
Slide 36: We are disciplined in allocating capital in line with our financial ambition
Capital allocation VALUE CREATION We are disciplined in allocating capital in line with our financial ambition Growth & productivity Portfolio reshaping Capital returns Capacity and margin expansion Bolt-on M&A focused on US, India Attractive sustainable Long-term investment in brands No transformat
Slide 37: Capital allocation
Capital allocation VALUE CREATION We are disciplined in allocating capital in line with our financial ambition Growth & productivity Portfolio reshaping Capital returns 21% 19.2bn BMI % of turnover 2021-2023 € capital returns 14.3% 15-16% 13.0% Portfolio rotated since 2017 Dividend vs share buyback,
Slide 38: Our Value Creation Plan 2030: multi-year framework
Multi-year framework VALUE CREATION OUR VALUE CREATION PLAN 2030 DELIVER ABSOLUTE PROFIT GROWTH IN LINE WITH TOP 1/3rd TSR AMBITION Mid-single Modest margin Top 1/3rd ALGORITHM GROWTH digit growth (USG) improvement (UOM) shareholder UVG of at least 2% Fuelled by gross margin returns GENERATION Cash
Slide 39: Key messages
Summary Key messages The Growth Action Plan is driving change at Unilever We are stepping up execution and accelerating our transformation Our value creation will be anchored in 2%+ volume growth, consistent gross margin expansion and absolute profit growth in hard currency Still more to do to ensur