Unilever Plc · LSE:ULVR
Unilever — Q3 2023 Earnings Presentation
48 slides from Unilever's earnings presentation, Oct 26, 2023
Slide 1: Q3 2023 Trading Statement & CEO Update
Unilever Q3 2023 Trading Statement & CEO Update Hein Schumacher & Graeme Pitkethly 26 Oct 2023
Slide 2: Safe harbour statement
Safe harbour statement This document may contain forward-looking statements within the meaning of the securities laws of certain jurisdictions, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words and terminology such
Slide 3: Agenda
1. Q3 Trading Statement 2. Action Plan 3. Q&A
Slide 4: Solid third quarter
Solid third quarter Price growth moderated as expected, now with positive volume growth in three Business Groups Growth driven by biggest brands and strong innovations Competitiveness remained challenging – major focus area for Action Plan Full year outlook remains unchanged Targeted Action Plan for
Slide 5: Unilever Q3 2023 Trading Statement
Unilever Q3 2023 Trading Statement Graeme Pitkethly
Slide 6: Solid Q3 performance
Q3 2023 TRADING STATEMENT Solid Q3 performance Q3 growth YTD growth Price and volume Competitiveness 5.2% 7.7% 38% 13.3% 12.5% 10.7% Underlying sales growth Underlying sales growth 8.2% % Business Winning MAT UPG 5.8% 5.8% 8.1% UVG UPG UPG (0.2)% (0.3)% (0.6)% (0.6)% (0.4)% (1.6)% (3.6)% UVG UVG Q3'
Slide 7: Underlying sales growth
Q3 2023 TRADING STATEMENT Underlying sales growth Third quarter UPG UVG USG 5.2% USG (0.6)% UVG 5.8% UPG 10.6% 10.5% 9.2% 7.9% Price growth moderated as inflation eased 5.2% Volume positive in Beauty & Wellbeing, Personal Care and Home Care Nutrition and Ice Cream not yet back to positive volume gro
Slide 8: Beauty & Wellbeing
Beauty & Wellbeing 7.4% USG 3.6% UVG 3.6% UPG UPG UVG USG 9.3% 8.8% 7.7% 7.4% 6.7% 4.9% 3.6% (0.6)% (0.6)% 2.6% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Continued strong growth Hair Care grew mid single- Core Skin Care grew mid driven by Prestige Beauty digit with strong growth single-digit with volume-led and
Slide 9: Personal Care
Personal Care 8.0% USG 3.9% UVG 4.0% UPG UPG UVG USG 12.7% 8.9% 9.1% 9.0% 8.0% 3.0% 3.4% 3.9% (4.1)% (3.5)% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Volume up for third Axe and Rexona led strong Dove delivered double-digit consecutive quarter Deodorants growth growth 9
Slide 10: Home Care
Home Care 5.3% USG 0.4% UVG 4.8% UPG UPG UVG USG 13.6% 12.3% 10.2% 6.7% 5.3% 0.4% (3.6)% (3.8)% (2.8)% (2.1)% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Return to positive volume as OMO and Surf delivered Cif and Domestos grew price growth moderated balanced growth double-digit 10
Slide 11: Nutrition
Nutrition 5.6% USG (3.8)% UVG 9.8% UPG UPG UVG USG 11.8% 11.9% 10.1% 8.9% 5.6% 0.1% (1.3)% (4.1)% (2.6)% (3.8)% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Nutrition growth still driven Volume decline driven by Unilever Food Solutions by pricing Europe maintained strong performance 11
Slide 12: Ice Cream
Ice Cream (2.8)% USG (10.1)% UVG 8.2% UPG UPG UVG USG 13.2% 6.0% 5.6% 2.9% 1.0% (2.8)% (9.9)% (4.1)% (5.8)% (10.1)% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Volumes impacted as Disappointing ice cream Out-of-home grew low consumers down-trade to season in Europe single-digit with a strong value brands performa
Slide 13: Regional growth by quarter
Q3 2023 TRADING STATEMENT Regional growth by quarter Asia Pacific Africa – €7bn TO North America – €3bn TO UPG UVG USG UPG UVG USG 12.5% 10.7% 9.9% 8.1% 8.3% 8.3% 6.7% 6.1% 5.7% 1.7% 22'Q3 22'Q4 23'Q1 23'Q2 23'Q3 22'Q3 22'Q4 23'Q1 23'Q2 23'Q3 Latin America – €2bn TO Europe – €3bn TO UPG UVG USG UPG
Slide 14: Q3 2023: Turnover growth
Q3 2023 TRADING STATEMENT Q3 2023: Turnover growth (3.8)% USG 5.2% A&D (0.6)% 0.2% (0.8)% (0.6)% 5.8% (8.0)% €15.8bn €15.2bn 14 * Currency includes both exchange rates changes impact of (10.3)% and extreme price growth in hyperinflationary markets impact of 2.6%.
Slide 15: 2023 outlook
Q3 2023 TRADING STATEMENT 2023 outlook Priorities Guidance Continue growth momentum in new Underlying sales growth above 5% organisation Price growth to continue to moderate throughout the year Invest for growth Increased levels of investment in BMI, R&D and Capex Net material inflation (NMI) around
Slide 16: CEO update
CEO update Hein Schumacher
Slide 17: Strength & opportunities
Strength & opportunities Action plan Value creation
Slide 18: Strength & opportunities
Strength & opportunities Action plan Value creation
Slide 19: Unilever's strong fundamentals
CEO UPDATE Unilever’s strong fundamentals Categories Geographies #1 or #2 positions for 80% of our turnover1 Most global FMCG company Well-positioned to drive category growth 60% turnover in emerging markets Brands & footprint R&D 30 power brands driving 70%+ of our business Competitive science and
Slide 20: Past performance has not been good enough
CEO UPDATE Past performance has not been good enough Quality of growth: UVG% Competitiveness: Business Winning% 53 53 1.9 1.6 1.6 0.8 1.2 47 44 44 -2.1 42 2017 18 19 20 21 22 2017 18 19 20 21 22 Productivity: Gross Margin % Underlying EPS in € 44.0 43.6 43.5 2.62 2.57 43.1 2.55 2.48 42.3 2.35 2.23 4
Slide 21: Total Shareholder Return below our top third ambition
CEO UPDATE Total Shareholder Return below our top third ambition TSR 3-year rolling rank* Top third • Volume growth behind peers Mid third Value creation gap • Gross Margin decline • Inconsistent delivery Bottom third 2017 2018 2019 2020 2021 2022 21 *ranking based on Unilever and 18 HPC and Food/Be
Slide 22: The Unilever opportunity
CEO UPDATE The Unilever opportunity What’s working What needs resolving • Strong science and technology capabilities • Innovations lack scale Science and technology not leveraged across categories • Product superiority • Not focused on all consumer benefits • Deep sustainability belief and know-how
Slide 23: Action plan
Strength & opportunities Action plan Value creation
Slide 24: Action plan
CEO UPDATE Action plan Faster growth 1. Focus first on 30 Power Brands Faster growth 2. Drive unmissable brand superiority 3. Scale multi-year innovation 4. Increase brand investment and returns 5. Selectively optimise portfolio Productivity & simplicity 6. Build back Gross Margin Performance cultur
Slide 25: Faster growth
CEO UPDATE Faster growth 1. Focus first on 30 Power Brands 2. Drive unmissable brand superiority Faster growth 3. Scale multi-year innovation 4. Increase brand investment and returns 5. Selectively optimise portfolio Performance Productivity culture & simplicity 25
Slide 26: Focus first on 30 Power Brands
CEO UPDATE Faster growth Focus first on 30 Power Brands Driving 70%+ of our business Ensuring consistent investment and brilliant execution 26
Slide 27: Drive unmissable brand superiority
CEO UPDATE Faster growth Drive unmissable brand superiority across 30 Power Brands … Today Acceleration plan Product Brand Design Power Proposition Unmissable Product Packaging Superiority superiority Score Place Market Deploy Promotion Share Pricing 70% of tested turnover superior in 2023 Expand to
Slide 28: As we did with Domestos Power Foam
CEO UPDATE Faster growth … as we did with Domestos Power Foam Today Acceleration plan: Unmissable brand superiority • Focused on Product and Price • Including Proposition, Packaging, Place, Promotion • Underpinned by clear & measurable KPIs Turkey launch ’22 Product UK launch ’23 #1 SKU Proposition
Slide 29: As we did with Dove Body Wash
CEO UPDATE Faster growth … as we did with Dove Body Wash Today Acceleration plan: Unmissable brand superiority • Upgrading all elements of the mix, with a new, lighter pack • Using proprietary nano emulsion technology US launch ’22 Product US launch ’23 Proposition #1 in % repeats within the cleansi
Slide 30: Scale multi-year innovation to be market makers
CEO UPDATE Faster growth Scale multi-year innovation to be market makers Today Acceleration plan Beauty & Personal • Prioritise our differentiated technologies and most Home Care Nutrition Ice Cream Wellbeing Care promising platforms with fewer, bigger projects • Deliver new consumer benefits and fo
Slide 31: Leveraging winning technology harder across brands
CEO UPDATE Faster growth …by leveraging winning technology harder across brands Beauty & Personal Care Home Care Nutrition Ice Cream Wellbeing Skin Care ‘Gluta-Hya‘ Deo advanced protection Home Care Nutrition & Ice Cream Glutaglow technology Microtechnology Eco-design technology Plant-based proteins
Slide 32: Investing in cross-category science & technology platforms: biotechnology
CEO UPDATE Faster growth …by investing in cross-category science & technology platforms Beauty & Personal Care Home Care Nutrition Ice Cream Wellbeing e.g. Biotechnology Biotech-derived surfactants for ultimate Bioactives for moisturisation & New plant based biotechnology dishwashing experience anti
Slide 33: Investing in cross-category science & technology platforms: microbiome
CEO UPDATE Faster growth …by investing in cross-category science & technology platforms Beauty & Personal Care Home Care Nutrition Ice Cream Wellbeing e.g. Microbiome 24 hours of silky soft skin from your Boosting skin’s defences for Skincare-boosted anti-dandruff formula shower – gentle cleansing 1
Slide 34: Increase brand investment and returns
CEO UPDATE Faster growth Increase brand investment and returns Today Acceleration plan BMI €7.6bn €7.8bn • Focus investment in areas €6.9bn that drive impact • Ensure consistent execution • Invest more in digital media 2017 2018 2019 2020 2021 2022 2023 view 2024-25 view 34
Slide 35: Reshaped portfolio since 2015
CEO UPDATE Faster growth Reshaped portfolio since 2015 M&A performance versus expectations* 2015-18 2019 onwards • Rotated 20% of portfolio and improved growth profile • Divested sizeable lower-growth businesses Above • Acquired 22 businesses but not all acquisitions met expectations • Better M&A si
Slide 36: Selectively optimise portfolio via sharpened M&A approach
CEO UPDATE Faster growth Selectively optimise portfolio via sharpened M&A approach M&A criteria M&A approach Distinctive brands, growing segments: • Strong brand equity Further pruning • Premium positioning Clear Unilever value-add: • Science Focus on value-accretive bolt-on acquisitions • Innovatio
Slide 37: Productivity & simplicity
CEO UPDATE Productivity & simplicity Faster growth 6. Build back Gross Margin Performance Productivity 7. Focus sustainability commitments culture & simplicity 8. Drive benefits of new organisation 37
Slide 38: Build back Gross Margin
CEO UPDATE Productivity & simplicity Build back Gross Margin Gross Acceleration plan Margin • Improve mix through premiumisation (300)bps +30bps • Drive volume leverage vs PY • Move from gross savings focus to net productivity - Competitive buying Price - Operational efficiencies and distribution co
Slide 39: Focus sustainability commitments
CEO UPDATE Productivity & simplicity Focus sustainability commitments Today Acceleration plan 34 ESG commitments Driving impact in 4 priority areas Climate Plastic Nature Livelihoods Aspirational end goals Shorter-term targets starting in 2024 Our commitment to sustainability leadership remains unch
Slide 40: Not all brands need a social or environmental Purpose
CEO UPDATE Productivity & simplicity Not all brands need a social or environmental Purpose Brand Only some brands need a social or environmental Purpose to differentiator support their unmissable superiority All innovation, marketing and funding will support brands’ Unmissable superiority unmissable
Slide 41: Drive benefits of new organisation
CEO UPDATE Productivity & simplicity Drive benefits of new organisation Focus of Five – Power of One Acceleration plan Unilever Corporate Centre By end of 2023, we will: Beauty & Personal Home Nutrition Ice Cream • Eliminate any outstanding ambiguity Wellbeing Care Care • Ensure single point account
Slide 42: Performance culture
CEO UPDATE Performance culture Faster growth Performance Productivity culture & simplicity 9. Renewed team 10. Drive and reward outperformance 42
Slide 43: A renewed team to lead the change
CEO UPDATE Performance culture A renewed team to lead the change Esi Eggleston Bracey Priya Nair Chief Growth and Marketing Officer Business Group President Beauty & Wellbeing Hein Nitin Paranjpe Schumacher Eduardo Campanella Chief People and Transformation Officer Chief Executive Business Group Pre
Slide 44: Drive and reward outperformance
CEO UPDATE Performance culture Drive and reward outperformance 6 elements of performance culture Examples • Fewer, clearer priorities 1 Set stretching goals • Single point accountability • Targets of Top 400 managers visible 2 Ultra transparency on performance • Basis for more differentiated reward
Slide 45: Value creation
Strength & opportunities Action plan Value creation
Slide 46: Capital allocation: Prioritising organic growth
CEO UPDATE Capital allocation: Prioritising organic growth 1 2 3 Organic investment M&A Capital returns Increased investment, focused on Portfolio pruning Attractive, sustainable dividend Power Brands Selective bolt-on acquisitions Surplus capital returned via share Higher R&D to support large scale
Slide 47: Action plan for value creation
CEO UPDATE Action plan for value creation Strong fundamentals Focused action plan Consistent delivery of financial ambition Faster growth Underlying sales growth: 3 – 5% 1. Focus first on 30 Power Brands 2. Drive unmissable brand superiority 3. Scale multi-year innovation Modest margin expansion 4.
Slide 48: Q&A
Q&A