Unilever PLC

Good morning and welcome to Unilever's full year results. I'm delighted to be here today with our new Chief Financial Officer, Fernando Fernandez, who, as you know, took over the role on the 1st of January. Fernando may be new to the role, but not, of course, to Unilever, having previously served as President of our Beauty and Wellbeing Business Group and before that as Head of Unilever's business in Latin America. We expect prepared remarks to be around 45 minutes, followed by Q&A of around 30 minutes. And all of today's webcast is available live transcribed on the screen. This is how we will run today. In a moment, Fernando will take you through the details of the results and our outlook. I will then give an update of our progress against our growth action plan before we take your questions. First though, let me try to frame today's announcement with a few overall reflections of my own. The results and our performance for last year give some cause for assurance. The strengths and the resilience of the business are clear, but not enough cause for comfort. There are some real gaps that we need to close. Most of all, however, they reaffirm the importance and the relevance of the measures we are taking now at pace to accelerate Unilever's growth and to step up the quality and the consistency of our performance. Those measures were set out in the Growth Action Plan I shared with you at the end of October. But given its importance, I want to devote most of my remarks today to the plan and how we are implementing it. First though, let me highlight five important shifts that we have already made, some of which are reflected in the results we are sharing with you today. First, we returned to positive volume growth of 1.8% in Q4 and gross margin expansion of 330 basis points in the second half. Second, we tightened grip on operations and working capital leading to strong free cash flow. Third, we stepped up brand and marketing investment, focused on the 30 power brands. Fourth, we made significant changes in our ice cream business to address underperformance. And fifth, we accelerated portfolio change with the acquisition of the premium haircare brand K18 and the disposal in the value segment of Elida Beauty. I will come back to the growth action plan in more detail later, but I wanted to flag these five shifts up front, partly because they are significant in their own right, but also because they're indicative of the changes that we're making, changes that we need to make, and we know that. Our competitiveness bottomed out, but remains unacceptably low. So we are not waiting to take the action that is needed. And on that note, let me hand over to Fernando to take you through the results. Fernando, over to you.

Thank you, Jaime. I am very happy to be here with you today for the first time as Unilever Chief Financial Officer. Let me introduce myself. I joined Unilever in Argentina as an economist in the finance function. For the last 16 years, I have led some of our key operations. like the Philippines, Brazil, and Latin America. More recently, I was the president of the Beauty and Wellbeing Business Group. My long experience in high-growth businesses, particularly in volatile markets, has always been anchored in one fundamental belief, drive brand and product differentiation to grow volume, positive mix, and to expand gross margin consistently. That recipe never fails in delivering long-term competitive success, and it is the one we will ruthlessly follow. I am excited to partner Hein in embedding the Growth Action Plan to improve our financial performance, our competitiveness and drive significant value creation. That said, let's get into the 2023 results. Full year 2023 underlying sales growth was 7%, with all our business groups delivering growth. Price contributed strongly at 6.8% and volume returned to positive territory at 0.2%. The 30 power brands were growth accretive with 8.6% underlying sales growth and 1.6% volume growth. Along the year, we have seen a steady decline of price growth rates as cost inflation eased. Fourth quarter growth was 4.7%, with a significant step up in volume growth to 1.8% and with price at 2.8%. Three of our five business groups posted volume growth. beauty and well-being, personal care and home care. The 30 power brands grew 6.5% with 3.9% coming from volume. Going forward, we will be laser-focused on driving volume growth and mix as price growth returns to more normalized levels. Beauty and well-being deliver a strong full-year performance with good balance between volume and price growth. Underlined sales growth was 8.3%, 4.4% in volume, 3.8% in price. In the fourth quarter, we saw a strong acceleration in volume growth to 6.3%, underpinning sales growth of 7.9%. Our health and well-being and prestige beauty businesses, both with significant exposure to the U.S. market, continued to deliver double-digit volume-led growth. Liquid IV, Nutrafol, Dermalogica and Hourglass all performed exceptionally well. Combined health and well-being and prestige beauty now represent 27% of the business group turnover. Hair ended the year with good momentum and positive volume growth, reflecting strong performances from Sunsilk, Tresemme and Nexus, our must-teach proposition in the US premium segment. The core skin businesses saw a strong performance from Vaseline, now a billion euro brand, on the back of the Lutahaya innovation. Carver performance was weak, given a necessary reset of our Chinese route to market. Whilst we are disappointed with Carver's performance, we remain confident in the potential of the AAC brand across Asian markets. Personal care also had a strong year, driven by mid-teens growth from deodorants. Underlying sales growth was 8.9% for the year, with 3.2% in volume and 5.5% in price. Fourth quarter growth was 6.4%, with 2.5% volume and 3.8% price. The global rollout of our 72-hour non-stop protection technology across DAF, Rexona and AXE has given us significant product superiority and strong growth in all three brands. It will remain one of our major multi-year growth initiatives. Skin cleansing grew well, with positive volumes, despite the slowdowns in India and Indonesia, to which I will come back shortly. DAPH benefited from the DAPH body wash improved deep moisture innovation, and DAPH Men Plus Care enjoyed strong double-digit growth. Oral care also grew well in the fourth quarter, with solid performances in both pepsodent and close-up, particularly in our Asian strongholds. Despite the strong financial performance of our personal care business, we are disappointed with the erosion of competitiveness in the US, where we have been too slow in responding to the consumer shift to an emerging super premium segment. We are taking decisive action to address this issue, but it will not be a quick fix. Homecare saw volumes turning positive in the second half, alongside a sharp deceleration in price growth. Underlying sales growth was 5.9% for the year, with 6.8% price and 0.9% reduction in volumes. Fourth quarter growth was 1.7%, comprising positive 0.8% volume and 0.9% price. Home care has a significant exposure to emerging markets, where volatile commodities play a disproportionate role. In many Asian markets, including our largest, India, we benefited during the upward trend of commodities, with several local players in the value segment struggling. Now, with falling commodity prices, they are returning to the market, putting pressure on prices. We are, and we will, defend our position, and this explains the sharp deceleration of pricing we have seen as the year progressed. Fabric enhancers and home and hygiene also grew with good performances in Latin America, Turkey and the successful introduction of Domestos Power Foam in Europe. This is another example of premium innovation based on differentiated technology which will drive both category growth and improvement in competitiveness. Hein will come back to this theme shortly. Nutrition delivered price-led growth in 2023 as the business responded to higher input costs. Nutrition grew 7.7% in the year with price up 10.1% and volumes down 2.2%. Fourth quarter growth was 4.7% with price up 5.9% and volume down 1.1%. The main drag on volume was in Europe, where we have aggressively rationalized our assortment through the delisting of unprofitable items and where we continue to see the impact of consumer down-trading to private level. The two largest brands, Knorr and Hellmann's, which together represent 60% of the business group, grew well in the first quarter with positive volume. Knorr surpassed the 5 billion milestone for the full year, and Hellmann's benefited from the continued success of the vegan and flavor ranges across key markets. Our professional food solutions business delivered a strong double digit growth throughout the year. The business has now returned to pre-pandemic volumes with value well ahead. Ice cream grew 2.3% in the year with 8.8% price growth and a 6% decline in volume. The fourth quarter saw underlying sales growth of minus 0.4%, with price growth slowing to 0.4% and a volume decline of 0.8%. It has been a very disappointing year for ice cream, with price elasticity in the in-home channel much more negative than that seen in other categories, and with strong consumer downtrading to private label. We are taking actions to restore competitiveness in the category and we start to see benefits of a sharpened pricing and promotional strategy in the United States that brought in-home volumes back to positive territory in the fourth quarter. A difficult year calls for reflection and then action. We have put in place a new leadership team led by Peter Ter-Kulve, who has great experience in the category. This team is reviewing the end-to-end economics of the business with the goal of improving operational grip and productivity. This completes the review of the business group performance. Let me now reflect briefly on the fourth quarter performance through a regional lens. Our largest region, Asia-Pacific Africa, grew 1.9% in the quarter, with 0.7% volume and 1.1% price. It is a testament to our strength in depth in emerging markets that we have been able to deliver positive growth in the Asia-Pacific Africa region despite some headwinds in important markets like India and Indonesia. In India, Hindustan Unilever remains a powerhouse with strong brands, unrivaled distribution and exceptional talent. As has happened many times in the past, the business is navigating a commodity cycle, aiming to strengthen our long-term competitive position. We have decisively adjusted prices in categories more sensitive to commodity cost deflation, such as fabric cleaning and skin cleansing bars. The outcome was a flat top line in quarter four, but with volumes coming back to the long-term growth trajectory and improving gross margin. we will continue investing behind our brands and capabilities, even if prices expected to remain negative in the near future. In Indonesia, we saw a double-digit sales decline in the fourth quarter, as sales of several multinational companies were impacted by geopolitically focused consumer-facing campaigns. The impact was significant in December, but we are managing the situation well and began to see an improvement in our January sales. Europe grew 2.5% in the quarter, with price up 9.4% and volume down 6.3%. With a large exposure to nutrition and ice cream, we suffered from the consumer down-trading to value. We have also consciously removed a significant number of unprofitable SKUs, making us leaner and sharper. This impacted volumes and market share, but with a positive mixed contribution to gross margin. North America grew 7% in the quarter, with volume up strongly at 6.3%. This was a great performance, driven by positive volumes in all business groups, and in particular, the strong performance of the brands acquired over recent years in our health and well-being and prestige beauty businesses. I don't want to sound biased. However, let me say that Latin America remains a real Unilever stronghold. the region grew 13.4% in the quarter, successfully navigating the commodity cycle with a pivot from price-led growth to a strong volume growth of 9.1%. This reflects a well-positioned portfolio and the strengths of both our brands and our in-market execution across the region. A key feature of the financial statements in 2023 is the negative impact of currency, both at top and bottom line. This was driven by the weakness of most currencies against the euro. Not only were the emerging market currencies down, led by Argentina, India and Turkey, but the US dollar also saw a negative impact. Turnover for the year was 59.6 billion, down 0.8% versus 2022. Underlying sales growth contributed 7%, and we saw a negative impact from acquisitions and disposals of 1.7%, with the disposals of Tea and Suave partially offset by the inclusion of Nutrafol and Yasso. Currency had a negative impact of 5.7% on turnover, and if currencies remain where they were at the end of January, the currency impact on full year 2024 turnover would be around minus 2%, and around minus 5% on underlying earnings per share. This will no doubt change, and we will update you as the year unfolds. Underlying operating margin for the year was 16.7%, up 60 basis points versus 2022. The gross margin expansion of 200 basis points allowed us to significantly increase our brand and marketing investment by 130 basis points to 14.3% of turnover. That investment in our brands, focused behind strong superior innovations, is a fundamental reason behind the acceleration of volume growth in the second half. The 10 basis points increase in overheads reflect continued investment in R&D and key capabilities. Three business groups increased underlying operating margin, personal care, home care, and nutrition, whilst beauty and well-being was flat as we keep investing behind our fast-growing prestige and health and well-being businesses. Ice cream was down 90 basis points, reflecting the gross margin impact from continued cost inflation and volume deliverance. In absolute euros, underlying operating profit was up 12% in constant exchange rates and 2.6% in current, reflecting the higher than normal drag from currency on the 2023 result. Absolute profit is a metric I follow closely and something that you will hear us talk more about in the future. Both Hein and I believe deeply that continued gross margin improvement must be the backbone of our plans going forward. The return of gross margin to pre-pandemic levels is an absolute priority. We are already making good progress, with gross margin up 200 basis points in the full year to 42.2%, and a strong acceleration of 330 basis points in the second half of 2023. Net material inflation moderated in the second half, but we did not see deflation. Our price coverage improved as the year progressed, but we have not yet fully recovered the impact of cost inflation seen since 2020. We continue seeing the benefits of MIX, coming from portfolio optimisation in several areas, such as acquisitions and disposals, premiumisation and removal of unprofitable SKUs. Improvement in conversion costs will be a key priority going forward and one of the key areas where our new net productivity program will be focused. Underlying earnings per share were €2.60, up 11% in constant currency and 1.4% in current exchange rates. We saw a strong positive contribution of 10.3% from operational performance as a result of combined top-line growth and margin expansion. Finance costs made a positive contribution to underlying EPS of 2% at constant currency. Whilst we did see the impact of high interest rates on our debt, this was more than offset by higher interest income and a higher interest credit from pensions. Tax was a drag of 1.6% on underlying EPS, as we saw our underlying effective tax rate increase to 25.6%. This was primarily due to an increase in non-deductible interest payments and lower benefits from tax settlements and other one-off items. Our guidance for the underlying effective tax rate remains around 25%. The impact of our Share Buy Back program made a positive contribution, which was mainly offset by higher minority interests. The combination of the above resulted in underlying earnings per share increasing by 11% in constant currency. This strong operational performance was mostly offset by a negative currency impact of 9.6% to leave underlying EPS up 1.4%. Free cash flow for 2023 was strong at 7.1 billion euros, up 1.9 billion euros versus 2022, resulting in a cash conversion ratio of 111%. The main drivers behind this strong delivery were the operational profit and improved working capital, although we also benefited from a one-off 400 million tax refund in India. We increased capital expenditure to 2.9% of turnover and going forward we expect it around 3% as we continue to upgrade our technology and accelerate savings. Return on invested capital improved to 16.2%, slightly up against 2022 at 16%. This reflects the favorable working capital improvement, which reduced total invested capital. Finally, closing net debt was 23.7 billion euros, in line with December 22. Closing net debt to underlying EBITDA was 2.1 times, in line with our guidance of around two times. Proper capital allocation for maximization of value creation is an absolute priority for me. As laid out by Hein in October, we will allocate capital behind four key streams. First, to drive organic growth. Investment in superior R&D technologies to support multi-year innovation programs for our top 30 brands will be a key priority. R&D increased from 1.5% to 1.6% of turnover last year, and we are committed to increase spend again in 2024. Secondly, we will prioritize investment to drive net productivity. Whilst part of our capital expenditure is dedicated to align production and distribution capacity with our growth plans, we will significantly increase the proportion of our capex allocated to optimize our supply chain and unlock efficiencies. Thirdly, we focus on shareholder returns. Through an ongoing attractive dividend with payout ratios in the mid-60s, we will supplement dividends with share buybacks when we have surplus cash available. In 2023, we returned €4.4 billion through dividends and €1.5 billion through share buybacks. Finally, we will continue allocating capital to bolt-on acquisitions to further strengthen our portfolio in premium segments and faster-growing channels, particularly in the United States. During 2023, we have been active with five important transactions, the disposals of SWAF, Dollar Shave Club, and the recently announced agreement to dispose LEWT, which we expect to be completed sometime mid-2024. We also acquired two exciting premium brands, Yasso in ice cream and K18 in prestige hair care. Before moving to 2024 outlook, let me tell you how we will measure competitiveness going forward. Our current level of competitiveness is unacceptable and we are investing and improving execution to turn it around. The current metric, percentage of business winning, has fundamental flaws. It is a binary metric that does not take into account the size of share gains and losses, and it does not provide any color about our performance versus market growth. From now onwards, we will measure and inform competitiveness through turnover weighted market share, with a coverage of around 70% of our revenue. It is important to note that fast-growing parts of our portfolio, such as food solutions, prestige beauty, all are created to growth, will not be covered. As you can see, during the last two years, we have been growing above global market growth, which reflects our favorable geographical footprint. However, we will not lie to ourselves. Turnover weighted market share is the true measure of our competitive performance within the footprint in which we operate. And we are disappointed with the 75 basis point share decline. Of this, 60% is explained by Europe and 20% by the shift to super premium segments in the United States personal care market. Fixing competitiveness will take time. We don't expect to see an improvement in the first half of 2024, but we are committed to turn around our competitiveness. Let me close with the 2024 full-year outlook. Our priority remains to drive organic top-line growth. We expect underlying sales growth to be within our multi-year range of 3% to 5%. Underpinning this, we expect an improved contribution from underlying volume growth. The impact of the Growth Action Plan will start to be seen in the second half. We expect to deliver a modest improvement in underlying operating margin for the full year. This will be driven by gross margin expansion through a step up in productivity while net material inflation returns to historic normalized level. In terms of capital returns, we remain committed to an attractive sustainable dividend that will be supplemented by a 1.5 billion euros share buyback program, starting in quarter two. Time to coincide with the expected receipt of the proceeds of Elida Beauty Disposal. With that, let me hand back to Jaime.

Thank you, Fernando. Let me turn now, as I said I would, to the Growth Action Plan. To recap, this was the plan I set out at the end of October, following an intensive piece of work by a hand-picked group of senior leaders across the business. And it produced a Growth Action Plan which, with the benefit of more than seven months now in the business, I'm even clearer, is the right plan at the right time for Unilever. Since October, we've been implementing the plan at speed. Priorities have been set, targets have been cascaded, metrics have been revamped, resources have been allocated, new leadership has been put in place. So in short, we've been reorienting the organization behind the plan. What I want to do today is to share with you in a little bit more detail what we are doing, but more especially where we are seeing signs of progress, recognizing, of course, that we are at very early stage and that the benefits will build steadily as we will go through the year and beyond. The plan has 10 action areas under three broad headings, underpinned by one simple premise, the need to do fewer things better with greater impact, leading to a single overarching objective, the consistent delivery of high-quality, top-line growth ahead of our markets. And I would love to say that we are within touching distance of that objective, but we are not. We know that. We have work to do. But I'm confident we can get there. Everything is being directed to that effort. The plan starts with the need to deliver faster growth, And we believe that we have the brands to do exactly that, specifically 30 of them on which we'll focus first, our power brands. These are already proven drivers of growth. Last year, they were up 8.6%, representing 90% of our total growth and 75 of group turnover. Growing strongly and gross margin accretive. When we talk about the core, this is it. And by any standards, it's a pretty strong core. So we will focus on these brands first. Now, what does that mean in practice? Well, the vast majority of brand and marketing investment is going behind these 30 power brands, and that will continue. Very importantly, this includes investment in digital to continue the strong momentum behind our e-commerce business, which grew 16% last year. Primarily, however, it is about stepping up execution and leveraging scale better. Hence, our brands, and especially the power brands, will benefit from two very important shifts we are making in the way that we develop, position, and grow our brands in the future. First, we are using a highly rigorous and quantifiable process to completely change the way we think about and measure brand superiority. Going forward, we will make our brands unmissably superior, that is, able to win not just on product superiority, but across multiple dimensions, all of them proven drivers of consumer preference. The evidence for this is compelling. It is something that we have validated in 29 strategic cells, where in each case the correlation between improvements against our 6P methodology and stronger brand performance was clear. And this has given us the confidence to move rapidly to the next stage, setting baselines for ambitious goals and developing gap-closing plans. For the 30 power brands, these will be in place by the end of the first half in 2024. The new, unmissably superior framework will then be embedded in the second half and progress tracked against these goals. Second, our power brands will also benefit from an equally new and distinctive approach that we are taking to the way that we think about and systematize innovation. The priority now is on multi-year scalable programs that will drive category growth and premiumization and expansion into new segments and geographies. Again, the process being put in place to drive, track and measure this is rigorous. Scale and multi-year benefits will come from a focus on big platforms, not small projects. So platforms that leverage differentiating R&D strengths, whether, for example, in biotechnology or microbiome, and which generate significant increases in incremental turnover. This will be supported by a step up in R&D investment, which, as you heard from Fernando, now sits at 1.6% of turnover. And let me illustrate the approach we are taking by reference to one example of how I see it working in practice. Vaseline Glue to Hire, a great product from one of our power brands. It's flying. And why? Because it combines strong brand equity, breakthrough technology, called Glutaglow which is a patented technology and it's clinically proven to be 10 times more powerful than vitamin C for boosting skin's brightness. It is delivered in a consumer preferred light sensory format with competitive levels of investment and it is built on a multi-year global platform that is carrying it to new markets and to new more premium segments such as serums, sun protection and a pro-age range. It is already in 12 markets and this month it launches in China. And this is just the kind of scalable, multi-year, multi-platform examples we want to replicate more extensively. And there are, of course, other examples, like our patented and superior technology in deodorants, which is driving premiumization through the 72-hour non-stop protection platform. And this has now been rolled out across three power brands, Rexona, DAF, and X, and 40 markets. driving double-digit growth we now see in deodorants. Similarly, Hellmann's. It's also benefiting from multi-year innovation platforms like Hellmann's Vegan, supported by deep R&D expertise to deliver great taste in a plant-based product. Over six years, it has reached 34 markets and is on track to hit 100 million in turnover next year. Hellmann's, by the way, has been growing double digits for four consecutive years now, adding 1 billion euro turnover since 2019. So we have some great examples of scaling innovations through multi-year technology-backed platforms. We just need more of them and that is what this plan is designed to achieve. In fact, we are confident that taken together the increased rigor and prioritization we applying both to brand superiority and innovation will help to drive the performance of our power brands and with it the overall growth prospects for the business. I want to turn now to the second element of the growth action plan, productivity and simplicity. Let me go straight to gross margin. I make no apology for that. Anyone who has heard me speak over recent months will know how much store I place on gross margin recovery and on getting it back to at least pre-pandemic levels. And I can assure you that that message has landed loud and clear inside the business. And the fact is we have been too slow in recovering the gross margin that we lost during the pandemic, which has constrained volume growth and depressed our bottom line. But the good news is The position started to reverse in 2023 and accelerated in the second half of the year by 330 basis points, as you heard from Fernando. And we are now building on this forward momentum, first by continuing to work price and mix, but also by shifting focus to the important cost side. And we've seen some progress here already. The organization is fully focused on net productivity programs, replacing the previous focus on gross savings. Business group implementation plans are in place. We are striving for lower complexity with over 20% reductions in SKUs, raw and packed materials and number of suppliers. We have arrested the increases in cost per tonne of recent years and our integrated operations delivered significant working capital improvements. So we will build on this momentum throughout 2024 and beyond with a relentless focus on a few, Big ideas. And these include network optimization of the kind that we've undertaken recently in beauty and well-being in the U.S. Vertical integration of some of our key materials. Further cost per ton improvements through operating discipline such as tight waste management. And investing a higher proportion of capex behind net productivity savings. And, importantly, pursuing further improvements in working capital. When I spoke to you in October, I also signalled a significant shift in the way we intended to approach our sustainability commitments. And we deliberately included this under the Productivity and Simplicity section of the Growth Action Plan. The fact is, by limiting our corporate focus to four key platforms – climate, plastics, regenerative nature and livelihoods – we believe we can have a greater impact over a shorter timeframe. However, we'll only achieve that greater impact if we apply, as we are, exactly the same rigor, discipline and stretch to our sustainability targets as we are to other areas of the plan. And, importantly, that we hold ourselves accountable to very transparent and measurable goals. You will get a sense very soon on how we intend to do that when we publish our second Climate Transition Action Plan for shareholder consideration. And for the moment, I hope the direction of travel is clear. Namely, and again, fewer priorities, done better, with greater impact. So now let me turn to the third element of the plan, dialing up performance culture. And specifically, we said that we would refresh the team and find ways to drive and reward our performance. And we've made good progress on both. You will have seen this morning's announcement of a further change to the Unilever executive. Nitin Paranjapi, our Chief People and Transformation Officer, indicated to me some months back that he wanted to retire from Unilever in June. And I'm grateful to Nitin for all he has done over a long and distinguished career. And I'm very pleased to bring in a worthy successor in Mairead Niger, currently Chief Human Resource Officer at Halion and prior to that at Diageo. And I'm confident that Mairead will play a key role in delivering this plan and helping to drive Unilever forward. And with just one position left to fill in attrition, which we anticipate to announce shortly, it means that since last summer, over half of our executive leadership team will have changed, either people or roles. The new team is already working to put in place the means necessary to sharpen the company's performance edge. And on driving stronger performance, we have, for example, put in place a new, more stringent goal-setting process. We've introduced greater transparency in the way that performance is measured and assessed. and we've streamlined leadership behavior standards. These are now focused on those areas most likely to lead to a step up in performance. And then on reward for performance, our approach is being guided by three principles. One, a better line of sight. Two, greater differentiation. And three, more focus on in-year performance. And these principles have already been brought together in a remodeled reward structure for approximately 15,000 of our managers. And of course, the full impact of these changes will take time. But I'm confident that we are moving with the right level of urgency in making the changes that are necessary and in putting in place the framework needed to hasten a step up in performance culture at Unilever. So let me bring this to life a little further. We identified a performance issue in ice cream. And we've moved quickly to change the leader. But that was only the beginning, because since then, we have refreshed the entire leadership team, replacing 80% of country and regional leaders in ice cream. We've reduced the overall size of the leadership team. We've externally benchmarked our overheads with a target to bring them to industry-leading standards. and we significantly rationalized our SKUs, taking out more than a third in 2023. And finally, we're doubling down on meaningful, scalable, big bet innovations. Now, I mention this just to demonstrate that we won't hesitate to move decisively and surgically whenever we feel it is necessary to address underperformance or root out inefficiencies. We will not wait. So that is our growth action plan. And as you can see, it's all about stepping up execution in order to improve the quality, the speed and the competitiveness of our growth. Let me try to sum up briefly before we go to questions. The results for last year confirm that we have pockets of real strength, which yields some great returns. But they also highlight that there are important gaps to close and opportunities to be better scaled and exploited. And our Growth Action Plan addresses those very gaps and opportunities. But with a scalpel, not a bludgeon. This is a very operational plan. It is based on a simple premise, the need to do fewer things better and with greater impact, underpinned by real rigor and discipline in the way we go about everything. Inevitably, the full benefits will take time to work through, but I am confident that they will. The plan has given rise to a huge amount of activity in the company, but the principles and the objectives underpinning it, on which I am totally focused, are very clear. A switch to net productivity to drive gross margin and thereby boost our volume performance, a greater operational grip to drive our competitiveness, and this all leading ultimately to a more consistent delivery. Thank you for listening. We look forward to updating you further throughout the year on progress against the plan. And in the meantime, I hope this has provided a little bit more color on how we are implementing the plan and where we are seeing the early signs of progress. And now I look forward to taking your questions.