Unilever PLC

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Thank you. Good morning and welcome to Unilever's first quarter 2023 trading statement. We expect prepared remarks to be around 25 minutes, followed by Q&A for around 30 minutes. Given that it's a busy reporting period, we will end with a hard stop by 9 a.m. All of today's webcast is available live transcribed on the screen. First, can I draw your attention to the disclaimer related to forward-looking statements and non-gap measures? And with that said, straight over to Alan.

Well, thanks, Richard. And good morning, everyone. In the next few minutes, I'll give an overview of the quarter one trading performance and also a short update on our progress against our strategic priorities. In our usual format, Graham will then provide more details on the results and cover the outlook. And then, of course, we'll take some questions. Before that, I would like to acknowledge that this will be the last time that I'll present Unilever's quarterly performance. By the time that we release the half-year results in July, Hein will have taken over as the CEO of Unilever. However, that's still two long months away and I remain fully focused on executing our strategic priorities and driving performance. The handover to Hein will take place during June. Until then, it's business as usual. Right, we made a good start to the year and again delivered double digit underlying sales growth and the growth is very broad based across all business groups and geographies. Although pricing remains elevated, volume performance has improved strongly. In part, this reflects some pre-planned one-offs, and in part, better than expected elasticities. Our billion euro brands grew faster than the rest of the portfolio. We saw particularly strong performances from Hellmann's, from Omo, and from Rexona. We do continue to prioritize our investment behind our billion euro brands, which are also benefiting from the strongest innovation lineup that we've had for many years. And I'll give some examples of that shortly. The new organization has landed well. It's continuing to deliver the impact that we designed for. Sharp prioritization, differentiated expertise between the business groups, speed in tackling difficult decisions and pockets of underperformance, and actually greater leverage of Unilever's scale in our business operations team. We delivered underlying sales growth of 10.5% in the first quarter, driven by price at 10.7% with underlying volume down slightly at minus 0.2%. We continue to take pricing responsibly and with precision. As we expected, the inflationary pressures continue, especially in nutrition and ice cream, driven by sustained high material prices, energy costs, the impact of climate change and agricultural yield and rising wages. And this has required further price increases to protect our ability to invest behind our brands. But I must say the picture is now quite different by business group, and Graham will show those details. As we start to anniversary pricing action taken in the early part of last year, price growth has started to moderate versus the previous quarter. The stronger than expected volume performance in the quarter includes some planned benefit from strengthened customer service levels and the associated pipeline refill, especially in Europe deodorants and across our North American business. Our overall outlook for improved volume in the full year versus 2022 has not changed, but getting there will probably not be a straight line. Business winning was 48% in line with our expectations as we take these necessary pricing actions and streamline our product portfolio. We're not going to get drawn on quarter-by-quarter business winning projections. However, competitiveness remains a key focus in the business, and our ambition is to see business winning get back above 50% as the pricing environment normalizes and as we continue to invest behind our brands. We've made good progress executing against our strategic priorities, starting with brands and innovation. The billion euro brands, as I mentioned, they now represent 54% of our turnover and are growing 12% well ahead of the Unilever average. We saw further progress against our strategy to move the portfolio into higher growth spaces, both organically and through M&A. I do want to stress that premiumization is an explicit part of the organic growth strategies of all five business groups. And on top, Prestige Beauty and Health and Wellbeing have both now achieved, get this, nine consecutive quarters of volume-led, double-digit growth. And we aim to continue this momentum. For example, just this week, we've launched Tatcha Skincare in China. The acquisition of Nutrafol and the disposal of the tea business, both completed in July of last year, and the recent announcement of our agreement to sell the Suave brand in North America, all reflect our strategic and financially disciplined approach to capital allocation and to portfolio evolution. And although it's not yet reflected in our USG measure, Nutrafol continues to do extremely well. Coming to our geographic priorities, the US maintained a good growth momentum with underlying sales growth at 8%. Volumes were positive and underlying price growth was 7% down from 10.3 in quarter four. We saw notable improvements in customer service levels, particularly in nutrition and ice cream, as well as deodorants, as I mentioned earlier. We still have more to do, but the trend is very much in the right direction. India reported another quarter of double-digit growth at 11.3%, with price at 7.3%, volume up 3.7%. The results were driven by another standout performance from home care and were delivered against a challenging operating environment, particularly in rural areas where market volumes continue to be quite depressed. China reported positive underlying sales growth, with performance improving as the quarter progressed. Actually, the initial recovery was slow, but then gained pace in March. Emerging markets growth overall was 11.7%, with volumes only slightly negative, and Graham will give more details on performance through the geographic lens as well. Moving on to the channels of the future, the contribution of our turnover coming from digital commerce was 15% and we also saw underlying sales growth of 15%. Our digital marketing media and e-commerce hubs, the DMCs, really are delivering leading edge digital capabilities to help capture these opportunities in high growth channels like social commerce and quick commerce. Most of our retail channels are becoming media platforms and many media platforms are becoming retail channels and it's our DMCs that are giving us the ability to take advantage of this secular trend towards convergence. Our other strategic priority, of course, is to land the full benefits of our new organization and to continue to strengthen Unilever's culture. The five new business groups are bringing the category focus and expertise that we want. We're seeing a determination to confront difficult decisions. For example, the work to simplify product portfolios or to recognize when innovation have not met their action standards. And decisions are being taken very quickly. I'd like to share three quick examples with you. First, SKU rationalization, personal care and nutrition have continued to optimize their product range and simplify the business. We're tracking well versus the reduction targets and the drive to simplify is evident in all of our business groups. The second illustration is how we're resetting unattractive parts of the business. For example, the decisive actions taken by the home care business group in West Africa or in beauty and well-being where we've been resetting the unprofitable duty-free channel for our AHC skincare brand in North Asia. And in procurement, we're seeing benefits already from what's actually a follow-on evolution of the Compass organization. It's a change that we've just made to give dedicated procurement leaders to each of the business groups and that's helping us to navigate the volatile commodity markets with good agility. So these many other examples give us confidence that we're on the right track and the right course with a new organization being able to continue to deliver faster and better execution. Now, I mentioned earlier that our performance is underpinned by some strong innovation. Let's take a look at some examples. And first up is Dove Body Wash, where we've introduced our best ever skin cleansing technology. This product contains nano moisture technology, millions of moisturizing micro droplets that go into the skin to lock in more moisture for longer. The formulation happens also to be 98% biodegradable, and the bottle's a modernized design, easier to use. It uses less plastic, and it's made from plastic that's 100% post-consumer use recycled material. Performance and purpose together in lockstep technology. Omo has relaunched its next generation capsules, for example under Purcell the UK or Skip in France. As well as delivering winning stain removal at low wash temperatures, we've replaced the plastic outer packaging with a plastic free paperboard box which is more sustainable, it's lower cost and it delivers a superior product experience. So real technology in the product and clever design in the packaging. Rexona's 72-hour non-stop protection uses new science, which offers significantly improved protection against sweat and odor. You've heard us talk about this technology before, and you will hear about it again. This is a multi-year investment priority behind superior antiperspirant technology. And as well as using this innovation to drive Rexona, we're extending the technology into our other deodorant brands with very good initial results. Hellmann's has a successful track record in combining great tasting innovation with the ongoing Make Taste Not Waste campaign, pitting Hellman's as part of the fight against food waste in a light-hearted way. And that's really driving sales with particularly strong impact in the US around the Super Bowl campaign. On top of that, the brand is extending into the intense flavor segment with new Hellmann spicy, so deliciously spicy chilies that extends our powerhouse Hellmann's brand into this fast-growing market segment. And after last year's success with the Classics remix, Magnum has now struck out in a new direction. Two new limited edition sensorial treats, Magnum Star Chaser, combining thick cracking chocolate with popcorn pieces, caramel sauce while Magnum Sun Lover combines coconut pieces and mango sauce and I will be very interested to learn over time whether the capital market investors and analysts on this call comprise of more Sun lovers or more star chasers and last but by no means least clear has introduced a premium range that tackles an important consumer need that of hair loss the new range has been carefully formulated with denoxydil it's a proprietary combination of two powerful active materials that together are clinically proven to reduce hair fall in just one month. So innovation, of course, is a fundamental capability of a successful consumer goods business and underpins the pricing power that we're discovering around 30% of Unilever's turnover comes from products that have been launched in the last two years, and that's up from 20% in 2021. Our focused innovation strategies combined with increased investment in R&D are providing our brands with the innovation firepower that they need. Fewer, bigger innovations launched in more countries. But the step up in performance that you're seeing, while it's critically dependent on innovation, and that's the reason I've taken some time to talk about it, requires more. Success in this business doesn't just come from getting one element right. It requires multiple variables to come together to produce a winning performance. Clear strategic priorities. disciplined execution, strong brands, competitively superior products, consumer-relevant innovation, competitive investment levels, the right organization, and so on. And these strands are converging for Unilever, and that's what gives us confidence that we're well-placed to navigate the inevitable challenges that the world is going to continue to throw at us. And with that, let me hand over to Graeme to provide some more color to the trading performance. Graeme.