Unilever PLC

Good morning and welcome to Unilever's third quarter trading statement. Thank you for joining us today. Prepared remarks today will take 15 to 20 minutes, leaving about 30 minutes for Q&A. And all of today's webcast is available live transcribed on the screen. In a moment, Fernando Fernandez, our CFO, will take you through the details of the results for this quarter. And before that, I wanted to set out a few reflections on the quarter and, more generally, on where I believe we currently stand. The first thing to note is that we have delivered another quarter of volume-led growth. Underlying sales in Q3 grew 4.5%, with volumes up 3.6%. And this marks the fourth consecutive quarter of positive and improved volume growth. Importantly, volumes were positive across all business groups, with the strongest performances in beauty and well-being and ice cream. In ice cream we are starting to see the benefits of ongoing operational improvements. Progress here is unlikely to be linear, but we do believe our ice cream business is on the right trajectory. Overall growth in the quarter was once again driven by our power brands, which were up 5.4%, including 4.3% volume growth. And these brands are undoubtedly benefiting from the increased focus and investments that we are putting behind them under our growth action plan. More generally, the operational improvements we are making as part of the gap help to explain the stronger and more consistent level of delivery we are now experiencing. As part of that, I'm pleased that we are starting to see the positive impact from scaling fewer but bigger innovations across our markets. Alongside operational improvements, we are also continuing to take well-considered steps, where necessary, to sharpen and strengthen the portfolio. This quarter saw us exit the water purification business in China, for example, with the completion of the sale of our stake in Truliva. We also completed our exit from Russia in October with the sale of our entire business to the Arnis Group. The end of a considerate lengthy and complex process. In those parts of the business where we are not yet seeing the level of improvement we want, we are taking decisive action to correct and, when necessary, to reset operations. In Indonesia we are making a significant intervention to address both portfolio and route to market challenges. This is not a quick fix, and we don't expect to see the benefits until well into next year, but we are determined to see this through. In China, we are resetting our go-to-market approach in quarters 3 and 4 with a higher category focus, updated channel strategies and sharper geographic choices. I was pleased to have been in China recently to review the plans and to support our newly appointed leadership in that business. we will continue to build on our strong positions in core categories in China. And I remain confident in our ability to compete in that market despite the broader economic slowdown. We expect to benefit from the changes we are making also in the second half of 2025 and onwards. Taken overall, our group results this quarter confirm that we are firmly on track to meet the outlook for this year. We also remain on track when it comes to the delivery of two important projects. The separation of iScreen and our company-wide productivity program. And work on both is progressing as planned. On iScreen we are building out the leadership team as they prepare to become a standalone company by the end of next year. Abhijit Bhattacharya has been appointed CFO, having previously been CFO of Royal Philips. And Ronald Schellekens has taken up the role of CHRO, joining from PepsiCo. On productivity, implementation has already begun in those countries where consultation with the respective works councils have been concluded. And I will come back to say a few words at the end to sum up. But in the meantime, let me hand over to Fernando to take you through the detail of the results. Thank you, Jaime.

Underlying sales growth in the third quarter was 4.5%, driven by accelerated volume growth of 3.6%. Pleasingly, growth was broad-based, with all business groups delivering positive volume growth for the first time since quarter 4 of 2020. Given softer markets, pricing remains subdued, with underlying price growth in the quarter at 0.9%. We expect subdued pricing for the next couple of quarters. However, several key commodities in our materials basket are starting to pick up, leading to moderate cost inflation and what we expect, it will be higher pricing over time. Our power brands continue to be the engine of our performance in Q3, delivering solid volume growth of 4.3%, against a backdrop of slower market growth. We always said we would focus our resources first on the power brands to maximize value creation for Unilever. Of course, this only works if our other brands also contribute positively to the growth of the company, albeit to a smaller extent. In the third quarter, these brands delivered improved volume growth of 1.3%, a significant step up from a decline of minus 1.6% in the first half. Let's take a closer look now by business groups. Beautiful Bean delivered a strong third quarter, with underlying sales growth of 6.7%, underpinned by 5.7% volume growth. This is the fourth consecutive quarter in which beauty and well-being volume growth has been above 5%. The performance was again anchored in our power brands, which deliver high single-digit growth. Haircare grew low single digit. DAF delivered volume-led growth following the first half launch of scalp plus hair therapy. Tresemme grew strongly, held by the continuous success of its treatments and styling range. Clear was flat in the quarter, with strong growth in most geographies, upset by market weakness in China. CoreSkinCare delivered mid-single-digit growth with strong performances from Dove, Vaseline, and Pons, all driven by premium innovations recently introduced. For the 15 consecutive quarters, our combined health and well-being and prestige beauty businesses delivered double-digit growth. Health and well-being was particularly strong, while prestige beauty felt the impact of a continued slowdown in the U.S. and China beauty markets. Personal care grew 4.4%, driven by volume up 3.1% and price up 1.3%, with a particularly strong performance from our largest brand, DAF, that achieved another quarter of double-digit growth, on the back of strong innovations across both deodorants and skin cleansing. Our deodorants category led the way once again, with high single-digit volume-driven growth, The performance in Latin America was particularly strong, while Europe and North America continued to perform well. DAF grew double-digit, benefiting from our expansion into whole-body deodorants. Axe had a good quarter with the ongoing success of our fine fragrances range. Skin Cleansing grew low single-digit in the quarter. The first half relaunch of DAPS body wash in Europe, plus the introduction of DAPS premium serum-infused body wash range in the US, drove good growth in developed markets. This was tempered, however, by market decline in China, deflation in India, and interventions made in Indonesia to reset our business there. Indonesia also had a negative impact on oral care that decelerated to low single-digit growth after a strong first half. Home care grew 1.9%. Premium innovations continued to drive volume growth of 3.3%. This was partially offset by a 1.4% price decline, linked to the impact of commodity cost deflation in several emerging markets. Fabric cleaning declined low single-digit, with strong volume growth in Europe and India, more than offset by price-led declines in important markets like Brazil and Indonesia. Persil Wonder Wash, featuring our patented Pro-S technology for short cycle washes, is off to a great start in Europe. And innovations in Surfax, Helmatic and Ring are strengthening our competitive position in the emerging Indian liquids market. Home and hygiene deliver mid-single-digit volume-led growth. SIF and Domestos both perform strongly. The European success of Domestos Power Foam continued with the expansion into new geographies, such as Poland and Turkey. Fabric enhancers grew double-digit. This was led by continued double-digit volume growth from Comfort, which benefited from the successful first half launch of its new botanicals and elixir ranges, using our patented CrystalFresh technology. Nutrition grew underlying sales 1.5%, driven by price. Volume growth was relatively muted at 0.4%, amidst market slowdown and consequent increases in promotional intensity. Scratch cooking aids grew low single digits on the back of mid-single digit growth in North. Latin America was particularly strong. held by our next-generation bouillon and seasoning ranges with enhanced flavors and micronutrients. The U.S. delivered mid-single-digit volume-driven growth. Dressings was flat in the quarter. Hellmann's flavor major continued to perform well and was recently introduced in new markets like Argentina and the Philippines. Volume growth in the quarter was offset by negative price as promotional intensity increased. Unilever Food Solutions grew low single-digit with positive volume, despite a decline in China. We continued to expand our digital selling program and benefited from the launch of Hellmann's Professional Mayo in Europe and Brazil. Ice Cream grew 9.8%, with 6.7% from volume and 2.9% from price. As Heinz said, this improved performance reflects the continuous focus on operational improvements, alongside strong innovations. Positive performance was also amplified by a weak prior year comparator. Magnum grew double-digit. Its premium, pleasureless press range continued to perform strongly. And Magnum's bite-sized innovation, Bonbons, addressing the consumer demand for smaller, frequent indulgences, is driving category growth across all seasons. Ben and Jerry's and Cornetto deliver high single-digit growth, helped by the global relaunch of Cornetto with enhanced formulation and new packaging. There is lots to do in ice cream, and as Heinz said, progress will not be linear, but the quality of our innovations And the better operational grip on pricing and distribution has started to translate into improved competitiveness in the US and several European markets. As you know, we run the business today through the lens of our five business groups. However, we think it's also helpful to provide some color on how we are performing from a geographical perspective. In quarter three, we deliver broad-based volume growth with positive contribution from all regions. there were strong performances in developed markets. Butane Wellbeing in North America and Homecare in Europe, for example, both delivered double-digit underlying sales growth. As previously mentioned, we also saw significant improvement in ice cream. Last year, we committed to step-up performance in Europe given its sizable hard currency market. We backed this up with a stronger innovation pipeline and increased levels of grant investment. It is pleasing, therefore, to see broad-based growth in Europe of 6.5%, with all major markets delivering positive volume-led sales growth in the quarter. In North America, underlying sales grew 7.4%, with 6.2% from volume. This was delivered against the backdrop of weakening consumer sentiment and is testament to the potential of our transformed, attractive North American portfolio. In Latin America, underlying sales growth slowed to 3.8%. Brazil, which delivered low single-digit growth, was negatively impacted by deflation in its important fabric cleaning market. After eight quarters of exceptionally strong growth, Mexico grew modestly, reflecting some weakening of consumer sentiment. We continue to deliver positive volume growth in Argentina, despite hyperinflationary pricing and a significant tightening of markets. Sales declines in Indonesia and China meant that Asia-Pacific Africa grew 2.5% in the quarter. Volume growth in India remained above 3%, while underlying price growth of minus 1% would have been flat without a one-off indirect tax benefit in the prior year base. Africa and Turkey delivered another quarter of double-digit underlying sales growth, with good volume and positive price. Southeast Asia declined mid-single-digit, driven by an 18% contraction in Indonesia, which was only partially offset by volume-led growth in the Philippines and Thailand. China declined low single-digit, with market weakness across categories. As I mentioned earlier, we are addressing the issues in Indonesia head-on, taking significant and comprehensive measures. This includes removing price instability across channels, resetting stock levels in retail to what we consider optimum levels, transforming our go-to-market operations, and accelerating portfolio changes. Given the long-standing nature of the issues in Indonesia and the extent of the interventions we are making, we expect the benefits to become apparent from the second half of 2025. Let me return now to performance at the group level. Turnover of 15.2 billion euros was in line with the prior year. Underlined sales growth of 4.5% was upset by adverse impacts from acquisitions and disposals, as well as currency. The net acquisition and disposal impact was minus 1.5%. The acquisitions of K18 and Yasso added 0.3%. Both have been performing in line with their acquisition business cases. This was more than upset by a disposal impact of minus 1.8%, driven by Dollar Shave Club, LWT, and Truliva. the water purification business in China, whose sale was completed on August 2, 2024. Currency had an adverse impact in the quarter of minus 2.8%. This represented a bigger headwind than in the first half, as most major emerging market currencies, except for the Chinese yuan, depreciated against the euro in quarter 3. Turning to the outlook for the remainder of the year. We are on track to deliver our full year 2024 outlook. We continue to expect underlying sales growth for 2024 to be within our multi-year range of 3-5%, with the majority of growth coming from volume. We expect underlying operating margin for the full year to be at least 18%, with increasing investment behind our brands. We expect year-on-year margin progression in the second half. However, it will be smaller than in the first half, given the stronger comparators and some increases in replenishment costs, given the moderate return of commodity inflation.

With that, over to you, Hein. Thank you, Fernando. It is exactly a year now since we launched the Growth Action Plan, a 10-point operational plan to transform Unilever's performance. And we made clear then that this was not a quick fix, that unlocking Unilever's full potential would take time. However, we can be encouraged by the progress we have made to date. And despite softening markets in a number of key geographies, we have seen a steady return to healthy top-line growth. And this is enabling us to invest behind our brands, our innovations and behind other proven drivers of growth. We are also tackling issues and implementing resets when it is simply the right thing to do. And this investment-led strategy will continue to lie at the heart of our approach and at the center of our gap plan. At the same time, we have set in train important and necessary changes to our portfolio and to our organization, which will set us up for long-term success. So, a year on, we are encouraged. But we are not complacent. And we are far from done. We know we remain at the relatively early stage in the transformation of Unilever, with much still to do. So we look forward to sharing the progress that we've made with you in more detail at our investor event in a few weeks time. We will also take the opportunity then to set out how we plan to build on the growth action plan as we look ahead, not just to the next year, but to the next three to five years and in some cases even beyond that. Thank you for your attention and we look forward now to taking your questions.