Unilever PLC

Hello and welcome to Unilever's third quarter trading statement for 2025. Thank you for being with us today. I am joined here by Srini Patak. Srini's appointment as Chief Financial Officer was confirmed by the Board last month following an extensive search process. Srini's vast experience and expertise are great assets for Unilever and I am really delighted we will keep building on the strong partnership that we have formed. In a moment, Srini will take you through the details of the third quarter results. First of all, let me highlight the key elements of our performance as I said. We have delivered a good quarter with 4% underlying sales growth and acceleration of volume growth to 1.7% for Unilever, excluding ice cream, despite subdued markets. Growth was broad-based across all business groups, with each of them delivering underlying sales growth about 3%. This performance keeps Unilever on track to meet our full-year outlook and is evidence of our powerful innovation, improved execution and significant shift into premium segments and fast-growing channels. It is also fully in line with the priorities we have set for the business. For example, our major growth engines – beauty and wellbeing and personal care – deliver particularly strong performances. Our power brands continued to outperform, delivering 4.4% growth in the quarter, with volumes up 1.7% for total group and 2.2% excluding ice cream. We also saw a continuation of sustained strengths in developed markets, particularly North America. Volume-led growth in that region was 5.5%, and it was driven by personal care, an improved performance in Prestige Beauty, and once again, exceptional delivery in wellbeing. Europe grew underlying sales by a competitive 1.1%, despite a strong comparator. Structurally, our business in Europe continues to improve and strengthen. Our emerging market business has stepped up with 4.1% USG, led by a return to growth in Indonesia and China. Overall, emerging markets grew well, despite the short-term impact of the goods and service tax reforms in India and some challenges in Latin America. We have delivered these results while preparing our ice cream business for the merger, which we expect to be completed before the end of the year. The timeline is being revised as a result of the US government shutdown impacting the work of the SEC. She will say more about the final stages towards the merger in a moment. In summary, a positive set of results this quarter that reaffirm our confidence in the steps we have taken to make Unilever a true marketing and sales machine. They will continue to guide and inform our actions over the quarters ahead. With that, I will hand over to Srini to take you through the third quarter results in detail. And after that, I will come back to say something about the remainder of the year and beyond, and also provide a brief wrap-up. We will then take questions. First of all, over to Srini.

Thank you, Fernando. Unilever's underlying sales growth in third quarter was 3.9%, with broad-based progress across the business groups. Underlying price growth was 2.4% and volume contributed 1.5%. This resulted in a two-year compounded annual volume growth rate of 2.6%. We expect the ice cream demerger to be completed in 2025. In this context, excluding ice creams, Our underlying sales grew 4%. Volume in the quarter was 1.7 compared to 1.1 in the previous quarter. All the four business groups delivered positive volume growth with a two-year compounded annual volume growth rate of 2.4%. Our power brands, which represent over 75% of our turnover, grew 4.4% in the third quarter, including 1.7 from volume. Power brands, excluding ice cream, delivered 2.2% volume growth in line with our medium-term volume ambition. Strong performances included double-digit growth from Vaseline, Liquid IV, Nutrafol, Sif, and Domestos, and high single-digit growth from Comfort, Oli, and Cornetto. Dove, our biggest brand, keeps outperforming the market with a 6% USD in the quarter and 8% year-to-date. Before turning to the business groups, let me first provide some color on our performance across different geographies. Developed markets continue to perform strongly. North America grew underlying sales by 5.5% with 5.4% from volume, reflecting the continued benefits of our multi-year portfolio transformation. Growth was driven by strong performances in our personal care and well-being brands underpinned by premium innovations. This marks the fifth consecutive quarter of robust volume-led growth in North America, supported by share gains across key categories and sustained brand investment. Europe grew underlying sales by 1.1%, with a 0.6% decline in volume and 1.7% growth from price. Our performance was broad-based and robust, given high competitors of over 6% growth. We gained share across major markets, power brands, and multi-year premium innovations, including the rollout of Wonder Wash and SIF Infinite Clean continued to perform well. Asia Pacific Africa delivered 6.8% underlying sales growth, with 3.5% from volume and 3.1% from price. This is a clear acceleration versus the first half, reflecting an improved performance in key markets and a stronger execution across categories. Indonesia returned to growth as we saw the benefits of the extensive business reset we have undertaken. Strengthened brand plans, sharper channel execution, and renewed customer partnerships are driving improving trends. Sequential improvements in run rate position Indonesia for sustained progress into 2026. In China, while the market environment remains subdued, we delivered low single-digit growth supported by innovations within our key brands and interventions in pricing. The macro environment in India continues to be favorable. Earlier in the year, personal income tax and interest rates were lowered. In September, the government reduced GST or sales taxes to 5% on around 40% of our portfolio, making the affected products roughly 10% cheaper. While these changes are expected to improve consumption through higher disposable income and improved sentiment, Q3 sales were temporarily impacted as trade reduced inventories and consumers delayed purchases in anticipation of lower prices. Trading conditions are expected to normalize from November onwards. Underlying performance was driven by premium portfolios in beauty and well-being and personal care. Turning to Latin America, underlying sales declined by 2.5% in third quarter with a 7.3% decline in volume, partly offset by a 5.2% from price. Markets across Latin America are experiencing a broad-based softening, reflecting continued macroeconomic pressure on category growth and consumer demand. In Brazil, our focus remains on restoring competitiveness in laundry, where we are seeing early signs of progress. In deodorants, we continued to gain share in a declining market impacted by a temporary shift in product formats. Our foods business delivered double-digit growth in Hellmann's, supported by the continued success of its flavored mayonnaise range. In Argentina, the macroeconomic backdrop remains unstable amid ongoing political uncertainty. We expect to see improvement in the region during 2026. Beauty and well-being underlying sales growth was 5.1% driven by strong volume growth of 2.3% and 2.7% from price. Our volume momentum remains very solid with a two-year CAGR of 4%. Dove Hair, Vaseline, Hourglass, K18, Liquid IV, and Nutrafol all delivered double-digit volume-led growth, reflecting the strength of our premium innovations and disciplined execution. Hair care was broadly flat. Growth in our premium portfolio was offset by declines in clear and sun silk, which were impacted by soft market conditions in China and Brazil, and by lower TRESemmé volumes in the US, where we have pricing and promotional corrections in place to support improvement. Core Skin grew mid-single-digit, led by Vaseline, which delivered double-digit growth in both sales and volume. Growth was supported by premium innovations such as the new Cloud Soft Light Moisturizer in India. Prestige Beauty grew mid-single-digit, led by volume, as a category showed gradual recovery. Performance remained mixed, with Hourglass and K18 continuing to grow double-digit, while Paula's Choice and Dermalogica returned to low single-digit growth after declines in the first half. Wellbeing continued its exceptional run, delivering strong double-digit growth. Power Brand's Nutrafol and Liquid IV sustained their outstanding performance, supported by deep innovation funnel, increased brand investment, and selective international expansion. Perslicare underlying sales growth was 4.1%, driven by 1% volume and 3.1% price. The two-year compounded annual volume growth rate of 2% reflects the continued resilience across our core categories, supported by strong growth in Asia-Pacific Africa and in North America, which was driven by Dove. Premium innovations in deodorants and skin cleansing continue to lead growth with the rollout of whole body deodorants and the expansion of premium body wash, driving strong consumer engagement and share gains. Deodorants grew low single digit, led by Dove in North America. Growth was partly offset by weaker performance in Latin America, reflecting a decline in category volumes and a temporary shift in product formats. Skin cleansing grew low single digit, with commodity-related pricing weighing on volumes. Dove continued to perform well, supported by its premium innovations and the launch of a limited-edition seasonal body wash ranges. Lifebuoy grew low single-digit. Oral Care delivered high single-digit growth, led by our power brands CloseUp and Pepsodent, with strong momentum in Asia-Pacific Africa. In September, we further strengthened our personal care portfolio with the completion of acquisition of Dr. Squatch, expanding our presence in the fast-growing premium male grooming segment in North America. Homecare underlying sales grew 3.1% in the third quarter with 2.5% from volume and 0.6% from price. Volume growth stepped up versus the previous quarter, driven by sustained performance in Europe and improving trends across several key markets in Asia, Pacific, Africa. Fabric cleaning was flat overall. Europe grew mid-single digit as the rollout of Wonder Wash continued to drive volume growth and strengthen our competitiveness. Wonder Wash will reach 30 markets by the end of the year. This was partially offset by a decline in Brazil where the market conditions remained soft and we implemented corrective pricing actions. Home and hygiene grew mid-single digit with balanced contributions from both price and volume. Growth was led by SIF and Domestos, both delivering double-digit performances. SIF Infinite Clean, a multi-purpose cleaner powered by probiotics, has now been rolled out across major European markets and is delivering strong early results. Fabric enhancers grew high single-digit. Comfort delivered strong volume-led growth supported by the continuous success of its crystal-fresh technology. Foods delivered growth ahead of the market with underlying sales of 3.4%, with 1.3% from volume and 2.1% from price. Growth was broad-based across regions, led by strong brand execution. Condiments delivered mid-single-digit growth with positive volume and price. Hellmann's maintained its strong momentum with mid-single-digit growth, led by volume. This was supported by competitive growth in developed markets and by a particularly strong double-digit growth in Brazil, where Hellmann's is growing from strength to strength. Cooking aids grew low single-digit with positive volume and price. Knorr and Unilever Food Solutions both delivered low single-digit growth amidst subdued market conditions. Ice cream's underlying sales grew 3.7% in the third quarter with flat volume and 3.7% from price. Volumes were flat against a mid-single-digit comparator last year with a two-year compounded annual volume growth rate of 3.4%. Growth continues to be competitive, reflecting strong innovation, ongoing operational improvements, and disciplined execution across regions. Cornetto led with high single-digit growth, while Ben & Jerry's grew mid-single-digit, supported by the launch of new sundae flavors and a larger shareable pack format that is expanding the consumption locations. Now let me take you through the latest update on the ice cream demerger. All the preparatory work for the demerger remains on track, with the shareholder circular published on 2nd October and the approval of share consolidation received on 21st October. Due to the US government shutdown, the SEC is currently unable to declare the US registration statement effective, resulting in revisions to the original timeline. We remain committed to and are confident of implementing the demerger in 2025, and we will share further updates as soon as practicable, once there is greater clarity on the timing. Let me also now explain how the demerger and the share consolidation will work in practice. As a part of the demerger, shareholders will receive one share in the Magnum ice cream company for every five Unilever shares they hold. Following the demerger, we will carry out a consolidation of Unilever shares to maintain comparability between Unilever share price and key per share metrics before and after the demerger. This is a standard technical adjustment in transactions of this nature and the final ratio will be confirmed shortly after TMICC shares begin trading. Importantly, Unilever is expected to pay quarter four dividend in full, ensuring continuity for our shareholders through the completion of the ice cream demerger. Turnover for the third quarter was Euro 14.7 billion, down 3.5% year on year. Underlying sales growth of 3.9% was more than offset by a negative currency impact of 6.1%. We now expect an adverse currency impact on full year turnover of around 6% and a 30 basis points on the underlying operating margin. Portfolio changes also reduce reported turnover with an impact of negative 1% from net disposals. Acquisitions contributed 0.5% led by strong double-digit growth from K18 and Wild, and supported by the addition of Dr. Squatch following the completion of its acquisition in September. This was more than offset by a negative 1.6% impact from portfolio disposals, including the vegetarian butcher, which was completed in September. With that, over to you, Fernando.

Thank you Srini. Let me conclude by saying something about how we see the remainder of the year. In short, our outlook is unchanged and that applies both including and excluding ice cream. In either case, we expect underlying sales growth to be within our 3-5% multi-year range. Growth in the second half will be ahead of the first half. This despite some softness in certain markets, notably Latin America. Overall, we expect we will continue to outperform our markets with a strong competitive performance in developed markets and an improved performance in emerging markets. Volume growth in quarter four should be at least in line with quarter three. On the bottom line, we continue to expect an improvement in underlying operating margin for the full year, with second-half margins of at least 18.5%, or at least 19.5%, excluding ice cream. Of course, we will continue to monitor external events closely in what remains an uncertain environment. Finally, on the back of a strong quarter, we are looking ahead to the rest of the year and into 2026 with confidence and resolve, Unilever is changing, fast, under the strategic priorities we have set out. The portfolio is stronger, with more beauty, more well-being, more personal care. This quarter saw beauty and well-being up 5.1% and personal care up 4.1%. The shift to premium and digital commerce is accelerating, both organically and through M&A, as per the recent acquisitions of Wild and Dr Squash. Our anchor markets are delivering superior growth. Our U.S. business has now posted five consecutive quarters of strong volume-led growth. The performance expectations we are placing on people within the company are higher, with clear accountability and real differentiation in our incentive outcomes. And our commitment to make Unilever a marketing and sales machine permeates everything we are doing. From the acceleration of desire at scale in elevating our brand portfolio to the significant investment we are making to step up execution and excellence in every part of the business. In short, we are crystal clear on what we need to do and where we want to invest. We will not be diverted from these priorities. As we look ahead, it is clear that some markets and categories will remain soft for a while. But we have put Unilever on a stronger footing and are increasingly confident in our ability to continue outperforming markets, whatever the conditions. With that, thank you for listening and we are looking forward to taking your questions.