Unilever PLC

Good morning and welcome to Unilever's third quarter trading statement and CEO update. Today's agenda will run as follows. Firstly, Graham will update you on our quarter three performance and the outlook. I will then share my action plan to lift Unilever's performance to achieve our full potential. We will leave plenty of time to take your questions at the end. Before I hand over to Graham, let me share a few key messages with you. The quarter reflected solid progress. Price growth moderated as expected and three of the business groups, beauty and well-being, personal care and home care, delivered volume growth. Nutrition and ice cream, however, continued to see volume declines and weaker overall performance. In part, this reflects the fact that these business groups are later in the commodity cost inflationary cycle and had to price in the first half of the year. But our performance in nutrition and ice cream needs to improve from here. Overall growth remained above our 3 to 5% long-term range. It was driven by the biggest brands and the largest innovations. More of these themes later. I'm not happy with our overall competitiveness. And although there are positions where we are fully competitive and some areas where we have made conscious choices to delist unprofitable volume, there are still too many situations where we are losing share because, for example, competition is premiumizing faster or executing better than we are. This is a focus area for my action plan. Overall, we remain on track to deliver our full year guidance and our outlook remains unchanged. Let me hand over to Graham who will take you through the third quarter trading performance.

Thank you very much, Hein. We delivered underlying sales growth of 5.2%, driven by 5.8% of price with volumes down 0.6%. This leaves year-to-date growth after nine months at 7.7%, with price up by 8.1% and volumes down 0.4%. Price growth has continued to moderate as expected, and as Hein just indicated, beauty and wellbeing and personal care are now delivering balanced volume growth, and home care moved into positive volumes in Q3. Nutrition and ice cream are still responding to high input cost inflation and also working on portfolio improvement, especially in Europe, and this has resulted in continued negative volumes for those two business groups. I'll provide more detail in a few minutes, but although the landscape remains volatile, we do see the path back to positive overall volumes at group level as pricing moderates, and this gives us the confidence to maintain our outlook for the full year. Business winning came in at 38%. Now that's a drop versus the half year. Our competitiveness is simply not good enough and Hein will lay out our action plan to address this in just a few minutes. Here is our third quarter underlying sales growth in perspective against the last four quarters. It shows that price growth has moderated as cost inflation eases. Volumes, whilst remaining negative overall, were positive in beauty and wellbeing, in personal care and in home care. They were negative in nutrition and ice cream which, as I said, are later in the inflation cycle with a larger footprint in Europe where we have not yet recovered the full extent of the cost of inflation. Now this is important because our profitability in Europe has declined quite significantly and European margins are now well below the Unilever average. The billion euro plus brands accounted for 56% of turnover and continue to outperform with 7.2% growth in the third quarter. And the e-commerce channel grew by 17%, and it now represents 16% of the total business. Beauty and Wellbeing reported 7.4% growth in the quarter, which was nicely balanced between volume and price, which both came in at 3.6%. This is, in fact, the third quarter of volume growth from beauty and well-being. The growth there was driven by prestige, beauty, and health and well-being, with brands like Liquid IV, Nutrafol, Oli, Dermalogica, Paula's Choice, Hourglass, and Tatcha all performing strongly. Growth in prestige, beauty, and health and well-being was volume-led and ahead of their markets, so it was competitive. Sunsilk grew well in here, helped by the success of the core relaunch. whilst the premium Nexus brand performed strongly, combining professional salon heritage with molecular protein science. Core Skin, which is our skincare business outside the Prestige Beauty unit, grew through Vaseline, which continues to reflect the success of the multi-year Glutahaya innovation in Southeast Asia. The AHC brand in North Asia continued to decline due to the channel reset we're undertaking for that brand. Personal care reported 8% growth in the quarter, again well balanced with 3.9% volume and 4% price. Here again, volume was positive for the third quarter. Deodorants delivered double-digit growth driven by Europe and Latin America. Rexona continues to invest strongly behind our 72-hour non-stop protection technology and Dove deodorant grew well through a global brand relaunch. Both of these are large, multi-year, big-scale innovation programs. Skin Cleansing delivered balanced growth with improving volumes as pricing moderated. The Luxe brand benefited from a superior product relaunch which offers clinically proven skin care benefits. And we also relaunched Dove Men Plus Care in the US and in the UK. Together with the strong performance in deodorants, this led to the Dove brand overall delivering double-digit growth for personal care. Home care growth was 5.3%, with a return to volume growth of 0.4% and price up 4.8%. Volumes were positive in most regions, with the exception of Europe, where we saw pricing largely offset by reduced volumes. Fabric cleaning grew well. OMO benefited from a relaunch with naturally derived stain removers delivered through our EasyLift technology. Surf also grew strongly, whilst in fabric enhancers, which is a more discretionary category, we had a mixed picture with strong growth in Turkey but more muted growth elsewhere. Home and Hygiene saw good performance from Sunlight Dishwash and strong growth from both the SIF and Domestos brands. Nutrition grew by 5.6%, with price at 9.8%, as we responded to continued material cost inflation. Volume was down by 3.8% in nutrition, with Europe the main driver, reflecting the impact of both pricing and portfolio reshaping to exit unprofitable SKUs. This also impacted the headline competitiveness of nutrition, and as Hein said earlier, we are very, very focused on building this back. At global brand level, we saw good growth from both Knorr and Hellmann's. Knorr benefited from the launch of snacking cups in the US, whilst Hellmann's vegan and flavoured mayonnaise ranges continue to supplement our core make-taste-not-waste campaigns. Unilever Food Solutions also delivered good growth with a return to out-of-home eating in China. Ice cream had a very challenging Q3, reporting negative 2.8% growth in the quarter, with price up by 8.2%, but volumes down 10.1%. The main drivers of the volume reduction are our in-home ice cream businesses in Europe and in North America. That's a result of the pricing we took in response to higher costs. These price increases did not recover all of the cost of inflation that we faced, but we saw meaningful price elasticity as cost-conscious consumers moved across to value brands and private label. We also had some impact from portfolio reshaping in ice cream as we reduced SKU count and exited unprofitable lines. Out-of-home ice cream grew in Q3, with a strong summer season in Turkey. However, in contrast, both Europe and China had disappointing ice cream seasons with poor weather relative to last year and some down trading to value-oriented, less premium products. We remain confident that our relatively premium ice cream business will prosper, with continued investment behind the top brands and a strong funnel of innovation to bring to the market. We've now covered all of the business groups, but let me briefly give some additional detail through a regional geography lens. Asia-Pacific Africa had underlying sales growth of 6.1% in the quarter, comprising 4.3% of price and 1.7% volume. India saw a gradual recovery in the market with growth led by urban areas, whilst the rural market remained subdued. We saw the re-entry of smaller players in the more commodity-driven categories, categories like skin cleansing. And consequently, we also saw some increased media intensity. our performance in India remains competitive, with price and volume both positive. The return of economic growth in China has been far slower than expected, with several headwinds, be it from lower exports, or higher unemployment, or lower consumer confidence. This has had an uneven impact on our categories, with, for example, food service growing strongly as people return to restaurants, but the beauty categories in decline. Our China business declined mid-single digit in the quarter, pulling the year-to-date growth down to mid-single digits. Indonesian market growth shows weak value growth and negative volumes. Our competitive reset of Indonesia is showing good progress, and we're seeing a return to share gains in six of our 13 product categories, and also volume share gains in the aggregate. we have significantly adjusted pricing for key brands and continue to invest behind superior products with a strong innovation program. For example, in skincare, we relaunched the entire core Ponds range and introduced premium serums. And in hair, we strengthened our position in the growing anti-dandruff segment by relaunching Clear and introducing an anti-dandruff variant for the Sunsilk brand. In Latin America, Underlying sales growth at 14% reflected a good balance between price and volume. Inflation is falling in Brazil with consumers moving to smaller formats and lower priced products. And our growth there pivoted from being price led to volume led. Our business in Argentina is navigating a difficult economic situation very well. with a very weak currency and price controls in place. Our team on the ground there is hugely experienced, but the situation is tough and we have some concern that the pressure on consumers will result in lower consumption levels before things improve. Mexico is benefiting from a much more positive economic backdrop and delivered double-digit growth. In North America, growth was 1.7%, with 1.9% of price and minus 0.2% volume. Consumer sentiment remains strong overall, although we do see signs of more caution with a trend towards larger pack sizes and a little more volume on deal as consumers seek value. Our large prestige beauty and health and well-being businesses in the US perform strongly. We did see, however, a decline in ice cream, as I mentioned earlier, and growth in dressings was muted as we lapped a strong prior year. Europe delivered 1.1% growth with price of 13.2% and volumes down 10.7%. Although inflation is slowing, consumers remain under pressure and we see downtrading, the growth of discounters and a move to smaller basket sizes. The extent of price increases, whilst historically high, has still not been enough to cover the cost of inflation that we've experienced and as a result, Europe's margins remain well below the Unilever average. The main drag on our European volume came from ice cream and nutrition, as I've already explained. We saw good growth from personal care, with brands responding well to new innovation. Turnover for the quarter was €15.8 billion, down 3.8% against last year. The underlying sales growth of 5.2% was offset by acquisitions and disposals, with the sale of the Suave brand being the main factor there. Currency impact was a negative 8%, which comprises a negative impact of minus 10.3% from the euro strengthening against our key currencies, and 2.6% of extreme price growth from hyperinflationary markets. Based on spot rates today, we now expect an exchange rate effect of around minus 5.5% on full-year turnover. On the same spot rate basis, the currency impact on full-year underlying selling per share will be around minus 9%. Our outlook for the year remains unchanged. We expect underlying sales growth to be above 5%, with price growth continuing to moderate. We will continue our top-line momentum by investing for growth in BMI, in R&D and in CAPEX, whilst further embedding the new organisation of our five business groups and Unilever business operations. Net material inflation for the year is expected to be around €2 billion, and we're confident that we will deliver a modest improvement in underlying operating margin for full year 2023, with a recovery in gross margin, reinvested in marketing spend behind our brands. And with that, let me hand you back to Hein.

Thank you, Graham. When I spoke to you in July, just a few weeks after taking up the role, I said that I would come back to you in October with a more considered view of the business. And I'm delighted to have that opportunity today. Over the course of the next 40 minutes or so, I will set out my initial reflections, look at the strengths and in particular the opportunities as I see them, outline how those opportunities are being captured in a targeted action plan And finally, set out what all this means in terms of value creation. And of course, I will leave plenty of time at the end for questions and comments. The last three months have been very intense, but also, I believe, productive. And in that time, I have followed up my earlier trips to the US, China and India with visits to other important Unilever markets in Southeast Asia, Africa and parts of Europe. I heard the views of our own people through a highly structured listening and engagement program, which has enabled me to connect with or hear the views of several hundred Unilever employees. I engaged extensively with the Unilever leadership executive and with a wider group of the company's most senior leaders, including through a number of specific work streams, the relevance of which I will come back to later. gone through an annual strategy review exercise with the Unilever Board of Directors, and followed up my earlier engagement with investors by meeting with key business partners, including customers, banks, agencies, and suppliers. And finally, I had the privilege to engage on Unilever's sustainability agenda with policymakers and with some of our NGO partners at last month's UN General Assembly meeting in New York. And throughout this time, I've listened openly Intently and respectfully. I'm now a little over 90 days a CEO of a company that has been around, just in its present form, for over 90 years. I stand before you here today, therefore, with humility. But also with real conviction. The conviction that there is potential to be realized and value to be unlocked. All the activity of the last three months has reaffirmed my initial view of the business, namely that Unilever is a company of many strengths. Whether in the strength of its category positions, with 80% of the business in number one or two positions, in the penetration of its brands, with over 3.4 billion daily users of Unilever products, in the depth and sophistication of its channel footprint, in the caliber of its people, In the scale of its reach, especially in future growth markets. In the quality of its R&D capabilities, with 20,000 patented innovations. And in its leadership and know-how on sustainability. And these strengths and qualities are felt across all of the five business groups. I've reviewed the business groups in some detail over the last three months, assessing the contribution each can make to Unilever. And from all this, I am clear that the best value creation opportunity we have comes from driving accelerated levels of growth, quality organic growth, across all of these businesses. In the interests of time, I don't intend to dwell further on our strengths today. Not because they aren't important. They are, of course. But from all my engagements so far, I feel that these strengths are widely recognized, understood, and obviously a tribute to all who have built this business over a long period of time. But the best way to honor the past is to be honest about the present. And that means recognizing that across a number of important metrics, the quality of performance has fallen short. Taken over the last six years, volume growth has been lagging. Competitiveness has struggled to get to and stay at the levels expected, and that's not good enough. Gross margin has been in decline and EPS growth stagnant. And we see this reflected in the TSR performance on a three-year basis that falls below the company's stated ambition. Remedying that and returning Unilever to the top third of its TSR peer group is a top priority. And we know what it will take. Stepped up volume growth, the rebuilding of gross margin, consistent delivery and generating strong cash and attractive returns. And I'm confident that we can do that. But it does mean confronting some harsh realities. For example, we have outstanding science and technology capabilities. Yet I see them dissipated across too many small projects and not leveraged sufficiently across big multi-category platforms. Our product superiority scores are good and actually improving. But we need to be brilliant at executing across all consumer benefits. And we're not there yet. And this means going from technical product superiority to a consumer perceived overall brand superiority. Let's turn to our work on sustainability, which is truly pioneering. Unilever's reputation in this area is well deserved. But again, our efforts are being spread too thinly. We have too many long-term commitments that fail to make a sufficient short-term impact. And the latter is what the world needs right now. We have a modern, globally connected supply chain. but not yet the disciplined focus on net productivity that I would expect. In other words, we need gross margins to improve faster than the trajectory we are currently on. We have an outstanding global talent base, but not the performance culture to match. And converting the talent of our people to stepped-up performance could be one of our biggest unlocks. And I have great passion for that. We have incredible global reach, and a wonderful portfolio of brands, as I said. But insufficient discrimination when it comes to prioritizing the biggest brands and the biggest opportunities. Our focus on purpose is laudable, and it inspires many people to join and stay with Unilever. So we must never lose it. But I don't think we advance the cause of purpose by force-fitting it across every brand. These are the realities. And it is important to confront them early on and head on. Not least because they are not only resolvable, but actually represent our biggest opportunity. And that brings me neatly to the crux of what I want to cover today. The actions we propose to take over the months ahead to unlock those opportunities. And these actions are the output of an intense program of work undertaken over the last few months, and they are all predicated on the idea of growth acceleration. Where can we accelerate in order to better exploit what is working well? And where do we need to accelerate to close gaps and swiftly improve our trajectory? And taken together, they add up to three significant shifts in the way we think about the priorities of the business. Shifts we are capturing under the headings faster growth, productivity and simplicity, performance culture. Underpinning all of them is the need to focus on fewer things done better with greater impact. Let me take them in turn, highlighting some of the principal actions we will take under each. And I'm starting with faster growth. This is built around five levers. First and foremost, an unrelenting initial focus on our top 30 power brands. Then, driving unmissable brand superiority, scaling multi-year innovations, and increasing brand investments and returns, and selectively optimizing the portfolio. Let me start with prioritizing our power brands. Now, what do I mean by a power brand? These include our biggest brands by turnover, the 14 in the 1 billion euro club, like Dove, Magnum and Hellmann's, whose growth has been accretive to Unilever, delivering higher volume and price. There are then 16 other brands which have the most potential to join them, like Sif, Vaseline, Nutrafol and Liquid IV. Prioritizing these 30 brands, which represent more than 70% of our turnover, gives us a real opportunity to improve Unilever's growth profile. Hence, these brands will have the first call on capital and resources. They represent our biggest value creation opportunity. Which means they need to be brilliantly executed and consistently supported before anything else. And this doesn't mean other brands are not important or will be sold or underinvested. But it does mean We can address the issue I referred to earlier. Too many projects competing for in-market execution and brand support. Let me come now to the growth levers, all designed to give these top brands the best chance of success. Starting with what we are calling driving, unmissable brand superiority. Consumers today view our products in an increasingly rounded and sophisticated way. We have to be ready to respond. It starts with product superiority, and we've made good progress here, with 70% of measured turnover now superior to competitors. However, winning the hearts, minds and pockets of consumers requires us to broaden the way we measure and deliver superiority. We already have a proven concept on how to do this, as well as some great examples of where it is working well in practice, including the Masters Power Foam and Dove Deep Moisture Body Wash. In both cases, the focus on product superiority has been expanded to a quantitatively measured composite score of how brands perform against each of their key attributes. and that is unmissable superiority. And by including the other key attributes alongside product and price, we can give proper weight to increasingly important determinants, like desirable packaging, and to sustainability, which is key now for many consumers. That's why we'll continue to convert our strong know-how in this area into products that mitigate, or even better, eliminate environmental impact. We know that consumers are increasingly prepared to pay a premium for this. And this revised way of thinking about superiority will allow us to identify the distinct drivers of superiority for different brands with real precision, enabling our business leaders to improve overall performance by addressing those attributes that make the difference. Our next step is to embed the approach across all business groups in a rigorous and systematic way, using clear and measurable KPIs. And I'm excited about these fundamentals of consumer products. Details matter. It all needs to come together. The next growth acceleration lever relates to innovation, the lifeblood of a company like Unilever. And again, I see good progress of late. The average project size is two to three times larger than it was in 2020, boosting our in-market incremental turnover from innovation by the same factor. However, as mentioned before, we are still spread thinly, prohibiting consistent execution. We're also behind our best peers when it comes both to the size and time horizon of our innovation programs. Our acceleration plan will therefore be built around the following objectives. Prioritizing multi-year scalable programs that drive category growth. Extending the time horizon and focusing more on new benefits and formats as opposed to relaunches. Making better use of strong science and technology platforms. The aim will be another doubling of the average project size to over five times the 2020 figure. And as category leaders, we will give increased priority to ensuring our innovation is driving market development. This is a capability, frankly, that has not been used to its full potential in recent years. This is especially true in the super premium segment, in which we under-index in four out of five business groups. I have gone particularly deep into this area of the business over the last few months. In fact, some of my first visits around Unilever were to our key global R&D labs around the world. And from all this, I am convinced we can leverage our science and technology capabilities and platforms even more effectively and across brands. We actually do have good examples of this, such as the use of micro-technology in DIOS, applied across the Rexona, DAF and X brands, or eco-design technology for outstanding cleaning in both laundry and dishwash. But in keeping with the other elements of this plan, the time is right to commit to a smaller number of bigger opportunities to maximize impact. This will also mean leveraging our strengths in key relevant cross-category platforms such as biotechnology and specific relevant spaces within microbiome science. These are examples of science and technology platforms with direct relevance to our business and where we already have advanced capabilities. Now we need to get the maximum benefit. And done well, this will help us to drive category growth and will be the most effective and sustainable way through which to deliver increased competitiveness. We will support this part of the plan with consistently growing our R&D investment. Turning to the next growth lever, increased brand and marketing investment and return. In short, we will increase the absolute level of brand and marketing investment just as we did in 2022 and are on course to do in 2023. This is a must. But we will also ensure that our brand and marketing investment spend is more focused with deliberate allocation behind bigger platforms, more consistent, fully funding our power brands, more digital, and more effective increasing returns of marketing spend. Taken together, these levers driving unmissable superiority Scaling multi-year innovations and increasing brand investment can positively impact our growth profile. And as I said, we will maximize their effectiveness by prioritizing their application across our top 30 power brands. The next element of our faster growth plan is the selective optimization of the portfolio. The reshaping of the portfolio through M&A since 2015 has undoubtedly benefited Unilever overall. The portfolio today is structurally more attractive than it was. In total, some 20% of the portfolio has been rotated over the last eight years, with sizable lower growth businesses divested and 22 businesses added. And these have included some great acquisitions, such as Dermalogica, Paula's Choice, Liquid IV and Nutrafol. All of which are growing strongly and are supporting the development of prestige beauty and health and well-being. And are poised to make an ever more meaningful contribution to Unilever as a whole. But equally, we have to accept that not all acquisitions have delivered in the way that was hoped or expected. The likes of Blue Air or Dollar Shave Club were unsuccessful attempts to move away from our core. And we need to learn the lessons from what has worked and what hasn't, and be open in the way we share relative successes and failures. And we will. In the case specifically of one of our biggest and most important acquisitions, Horlicks, while the value creation case has been met, the business is not yet growing at the level that we expect. However, we are committed to ensuring that it will. Since 2019, our acquisitions performed better because the deals have been fewer in number, they are more strategically aligned, and where the opportunity for Unilever to add value was very clear. And based on these lessons, there are some M&A criteria that will guide and inform the way we think about the evolution of the portfolio in the future, enabling us to set an even higher and clearer bar for acquisitions. So let me sum up this section by being crystal clear. Our approach to optimizing the portfolio will be based on a recognition that there is more pruning to be done, A continuation of bold on acquisitions with a higher bar for acquiring in line with the criteria I have outlined. No major or transformational acquisitions in the foreseeable future. Let me turn now to the second shift we are making, what we are describing here as productivity and simplicity. In other words, fewer things done better and with greater impact at lower cost. This won't just be an action list, but rather a guiding philosophy for the way in which I think we should run the business. And for today, let me tell you about three important and accelerated actions that we will take, each of which demonstrates this philosophy. They are build back gross margin, a more focused sustainability agenda, and driving more benefits from the new organization. First, build back gross margin. This is the source of funds for our organic investments. That is why I like to think of it as the bank of gross margin. I've already spoken about the gross margin decline over the past few years. Rebuilding gross margin is an opportunity and a necessity. The recovery started in the first half of 2023, driven by a more balanced cost-price equation and positive mix from SQU rationalization and portfolio change. Under this plan, we now have to accelerate the gross margin recovery through working the cost side harder. We will shift our focus from a gross savings approach to net productivity to shine the light on what's actually landing in the P&L and filling our gross margin bank. This focus extends across all P&L lines. Starting with material costs, which comprise raw and packed materials as well as products bought from third parties. It is our biggest cost line, and we have an ambitious programme to beat market inflation and contribute to gross margin progression through competitive buying, value chain interventions and product reformulations. For production and logistics costs, we have done extensive benchmarking and set challenging productivity targets to reduce the costs per unit produced. We will deliver these through an end-to-end network optimization, such as the supply chain network reset that we announced for North America, personal care and beauty and well-being this year, and which we will invest in over the coming years. We will also deliver through operational improvements with crystal clear targets set for labor productivity, energy efficiency, warehouse and truck utilization, and material waste reduction. And these are stretching targets, but I'm confident we can deliver them. We have best-in-class manufacturing and logistics efficiencies in emerging markets and will apply investment and knowledge to achieve the same in our developed markets. Each business group has developed specific implementation plans for cost and mix improvement. To deliver these plans, we will step up capital expenditures from 2.4% in the 2019-2022 period to above 3% of turnover. We will deploy a very disciplined approach to restructuring, expecting costs of around 1% of turnover for the next three years, down from an average of 1.6% over the past four years. The second action we are taking under the heading of productivity and simplicity relates to our sustainability agenda. And of course, sustainability permeates all aspects of the business. It gets to the heart of what the company stands for. It was a key factor in my own decision to rejoin Unilever. And its importance to the business and the world at large is only going to grow in the years ahead. You may be surprised, therefore, to see it appear under the heading of productivity and simplicity, but for me, that just underlines how important and how integral it is. Everything we do in this area must have material impact, for the benefit of Unilever, as well as for the environment and the societies we serve. I've concluded that the best way we can do that is by radically focusing our sustainability efforts. Our desire to play our part across the piece has led to efforts being spread increasingly thinly, with the very real risk of the law of marginal returns setting in. By contrast, Unilever's work in those areas of most critical importance to the business has been industry-leading. We will now accelerate that industry-leading work by focusing our Unilever-wide efforts and resources on four key pillars. That is climate, nature, plastics and livelihoods. This is a huge agenda by itself. The need for focus is vital. And let me be clear, we are not walking away from sustainability. Rather, we are stepping into it in a different and, I believe, even more impactful way. And we will do that not by setting a lot of aspirational goals that are so long-term that none of us will be around to be held to account for them. But instead, by short-terming our work, that is by making real, steady, meaningful progress on the big issues, quarter on quarter, year on year, time-bound, costed roadmaps will ensure we stay on track. and we will hold ourselves accountable to targets that are explicit, stretching, transparent and measurable. And I'm excited to be leading for this next phase of the sustainability journey, building on the great traditions of the company and the fantastic work of my predecessors. But I also want to take the process of simplification here further, by simplifying what it all means for our brands. In recent years, the debate around brands' sustainability and purpose has arguably generated more heat than light. The topics have been conflated and the business case has got confused. My approach is simple. All of our brands or businesses will be expected to be full and active participants in delivering Unilever's four big sustainability priorities. Some priorities, of course, will apply to certain business groups and brands more than others. For example, our home care business has a larger plastic footprint than attrition. But this is an enterprise-wide endeavor. Some brands will want to include the work they are doing on sustainability as part of their brand proposition to drive unmissable superiority. That could be through the use of recycled plastic packaging or a sustainable sourcing claim. Many are already doing this. And that will continue as I explained earlier. In fact, I expect it to increase in line with the acceleration of our work on the big four pillars. And then some brands will also want to go beyond the four areas, leveraging their expertise and insights in other areas of social and environmental concern. and make this a part of their brand proposition, what has become known as brand purpose. And when done well, and with credibility, this can be highly effective. Unilever knows how to do it well, brilliantly in fact. Think of Lifebuoy, Domestos, or of course, Dove's campaign for real beauty. For these brands and others like them in our stable, they will receive every encouragement to go on developing a social or environmental purpose as a part of their overall brand proposition. But we will not force fit this across the entire portfolio. For some brands, it simply won't be relevant and that's okay. Again, the approach here is based on being simpler, going deeper, maximizing impact. This is what will characterize the next stage of the sustainability journey. I hope that makes the thinking clear. The third action under productivity and simplicity is driving the benefits of the new organization. In all my meetings so far with investors and others, I found widespread support for the new organizational structure, and I can see why. It is working well and is already increasing speed and accountability. However, this was a significant change introduced just over a year ago. The speed with which it has been adopted is impressive. But inevitably, there is more to do to finalize the changes and ensure we reap the full benefits. We can't yet say, job done. Hence, I have, together with the leadership team, given priority to ensuring that we eliminate remaining points of ambiguity in order to drive single-point accountability. This is essentially done. We take the opportunities that are certainly there to simplify further. And we strengthen frontline roles, especially in the area of customer development, where we have a clear program for the next 12 months. This level of organizational change only happens very occasionally. This one can be of significant long-term benefit to Unilever. But for that reason, it's vital we get it right in all respects. That is why I'm calling it out as an important part of driving productivity and simplicity, and why I intend to stay close to this area personally as we finalize the new structure. Let me turn now to the third shift, dialing up our performance edge. Of course, this starts at the top with me and with the leadership team. A good moment, therefore, to share with you the details of the new team that will lead for this agenda. You will have seen the announcement this morning of a number of changes to the Unilever Leadership Executive. Let me share them briefly with you again now. Following a very thorough and open search process, Fernando Fernandez, Currently, President Beauty and Wellbeing will succeed Graham as Chief Financial Officer. I couldn't be more pleased with this appointment. As I indicated in the announcement, Fernando brings the full range of financial, strategic and operational know-how that is vital to the role and which I believe will mark him out as an outstanding CFO of Unilever and a great partner to me as we go about executing this plan. You will have also seen that Hanneke Faber, President Nutrition, and Matt Close, President Ice Cream, have both decided it is the right moment for them to move on. They have each made an outstanding contribution to Unilever. In Matt's case, over a 31-year career with the company. I want to thank them for what they have done and wish them every happiness and success in the future. Hanneke's successor as President Nutrition will be announced shortly. Peter Terkoven, who many of you will know, will move from President Homecare to President Ice Cream. As such, he will be returning to a part of the business he knows well and where he has enjoyed considerable success in the past. Peter is an exceptional business executive with a proven performance record and I'm delighted to have him on the team in this role. Less known to you perhaps at this stage is the next generation of leaders who are joining the Unilever executive. Priya Nair. who succeeds Fernando as president beauty and well-being. Eduardo Campanella, who takes over from Peter as president home care. And AC Eggleton Bracey, who takes on the new role of chief growth and marketing officer. All great talents with impressive performance track records to match. And all now part of what I hope and expect will be a great team to lead the next stage of Unilever's development. Leadership throughout any organization is always key, but the organizational changes Unilever has gone through over recent times have highlighted the need for our leaders to have real breadth and depth. In other words, own the whole P&L. That is the inevitable consequence of a structure predicated, quite rightly, on delivering higher levels of speed, expertise, and accountability than ever before. To help our leaders and to support them in delivering this plan, we are therefore going to make some important shifts in the way we think about and systemize our approach to performance culture. And again, it is all about simplicity and impact. For example, there will be fewer, clearer priorities, more single-point accountability, simpler, more visible in-year targets, More differentiated reward. New, streamlined standards of leadership to help set expectations and guide behaviors. And we will be putting forward a new reward framework linked more overtly to value creation. Measures such as underlying sales growth, ROIC and TSR will be included in our long-term incentive program. The new framework is designed to sharpen the link between actual performance and reward, as well as strengthening alignment with shareholders' expectations. These are important changes in their own right, but they will also send a clear signal of what we expect of our leaders and how, in return, we intend to support and reward them. This is a wide-ranging action plan, based on some important changes and some significant shifts of emphasis. You are going to want time to digest the detail. You are also going to want to know when you can expect to see the benefits. Well, we have moved with real speed over the last few months to get to this point, and this sense of urgency and momentum will continue. I can assure you of that. There is real hunger among the senior leaders in Unilever who have all contributed to this plan to press on now and make it happen. But just to give you a flavor on how we see different elements being adopted over the next 12 to 18 months. The new leadership team will be in place by the 1st of January, but will start to transition from today. Our new unmissable brand superiority framework will be in place and fully operational across all the business groups by the middle of next year. A similar timetable will apply to the way we embed our new approach to innovation. The changes to the new organizational structure will be complete by the end of this year. The new standards of leadership that will underpin the changes we want to make to performance culture will be rolled out by the end of the year. The radical focus we are bringing to our work on sustainability will be reflected as part of the Climate Transition Action Plan we will be presenting to you at the next AGM. Time-bound actions for each of our business group to help reduce our footprint on our journey to net zero. Next year's AGM will also be the occasion to get agreement on our new remuneration policy, another important plank in driving enhanced performance. This is all illustrative. but will, I hope, will give you a sense of the urgency with which we will intend to introduce these changes. Let me try to bring this all together, and first by reconfirming what this plan means in relation to capital allocation. As I have said, we are prioritizing organic growth, and this is reflected in how we deploy our capital. Our first priority is what I call organic investment, to grow what we own. Hence, we will always invest in our business first, as this creates the platforms for value creation in the future. We will further increase brand and marketing support focused on our 30 power brands to ensure strong execution. R&D investment will grow consistently in order to support bigger innovations. Capital expenditure will increase from around 2.4% to above 3% of turnover to create leading-edge manufacturing, distribution and technology assets. We will fund this organic investment by building back our gross margin. Second, we have significantly reshaped our portfolio since 2015. Looking ahead, we will continue to prune the portfolio in areas that are less strategically attractive. This will be accompanied by selective, bold acquisitions, focused in specific high-growth areas, provided they meet the higher bar for M&A criteria and parameters for value creation. This is particularly relevant in a world where financing costs have sharply moved up. And third, we will continue to return capital to shareholders. This will be done primarily through an attractive and sustainable dividend. we expect our dividend payout ratio to remain above 60% of our underlying earnings. Surplus capital will be returned via share buybacks, as we have done through the recently completed 2022-2023 share buyback program. Summing up, the fundamentals of the business are strong. These strong fundamentals are now coupled with a focused 10-point action plan to step up performance and deliver fully on Unilever's potential. To repeat, we will do that by, first, aiming for faster, high-quality growth. This will be through bigger innovations that are backed by unmissable brand superiority and increased support with a focus on the top 30 power brands. Second, by driving greater simplicity and productivity, funding investments by building back the gross margin bank. and creating impact through a focus on the most impactful sustainability commitments and by driving the benefits from the new organization. And third, we will sharpen our approach to performance, to a renewed team that drives and rewards our performance. This combination of strong fundamentals and accelerated action plan will enable us to solidify our ambitions and deliver consistent value creation through innovation, underlying sales growth of 3-5%, modest margin expansion, 100% cash conversion, mid-teens ROIC, EPS growth and attractive dividend, and top third TSR. Hence, this is not about communicating a new ambition or setting out a new strategy. This is an action plan for delivering performance in line with our ambition. If you do it well and consistently, then the business will be better positioned for the future and shareholder returns will improve. Thank you for listening and I look forward now to taking your questions.