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.

Good morning and many thanks for joining the call. If you would like to ask a question, please press star one on your keypad. If you no longer wish to ask a question, press star two to exit the queue. When it is your turn to ask a question, your name will be called and then please go ahead. And finally, please keep your questions to a maximum of two.

Thank you very much. So I see our first question is from Warren Ackerman at Barclays. Go ahead, Warren.

Yeah, good morning. Hi, good morning, Fernando. Good morning, Jim. That's Warren here at Barclays. Two for me. The first one is, well, very solid results, but Indonesia is a weak spot, down 18% in Q3. It's been an underperformer for, well, almost a decade. I guess the question is, why should investors believe the turnaround this time will be any different Storms we've seen in the past. Are you able, maybe, Fernando, to walk us through more specifically exactly what you're doing and why you're confident that actually this time you're going to get it right? Any kind of signposts for us of between now and the second half of next year, what we should be expecting to see from Indonesia? I think you said it's 30% of your underperforming sales globally. So, obviously, clearly key to get that right. And then the second one, maybe more for Hein, is the restructuring in Europe, well, not just Europe, globally, in terms of the people reduction. I think, Hein, you've said previously the organization is feeling a little bit anxious in terms of actually having to do this. Can you maybe sort of reassure us that that's on track? You know, where are we in terms of the numbers and what should we expect from going into next year and you're able to do this over the next couple of quarters without any real disruption to the business. Thank you.

I'll pass on the question about Indonesia and more about the numbers to Fernando in a second. But let me just first answer. You know, Indonesia is a key market for us, and we are absolutely committed to see it through. But at the same time, it does have longstanding issues. Obviously, I'm not excited about where we are, so let me be clear. But at the same time, we are making a very, very significant intervention at this point. If you look at our competitiveness and in-market sales, that is stabilizing. But we are resetting our route to market. We are removing price instability across different channels. We're resetting stock levels across the whole channel landscape. And we are improving our portfolio on the back of our global category strategies and so forth. So we're making, in Q3 and Q4, we're making a significant intervention in Indonesia. That is not going to yield results in the next quarter. It will take a little bit of time. But this is probably the most drastic and the most significant intervention that we are making. If you look at the numbers, Fernando, maybe you want to walk through a couple of key points here.

Yeah, good morning, Warren. Hey, you know, just during the year, we have been recovering part of the share losses we suffered due to the consumer backlash that is related to the geopolitical situation in the Middle East. We have recovered around one quarter of the share losses. But if you look at our run rate, given the fact that our shares are down versus previous year, we should be declining around 5% to 6%. The difference in performance with our actual reported number is linked, as Heinz said, with a clear reset of our distributor system. I have been in Indonesia in August, close to one week. We have been taking drastic actions there. We are putting stocks in what we consider is more optimum levels going forward. And fundamentally, we are attacking an issue of pricing instability across channels that is really putting our distributor systems in disarray. Every time you do that, you have to dial up some channels and dial down some other channels. And there is a friction time that we believe it will take between three to five months to really stabilize. We expect to have some additional stock cleaning in the system that has to be done. But that's the situation in Indonesia. So shares are stabilizing. One quarter of the share loss recovered, but much more to go. significant challenges in terms of portfolio and making our brands more contemporary in the context of significant societal change and a significant reset of our distributor system underway in order to remove any price instability. This is what we are doing, huge drastic actions and we expect to see improvement in six months or so.

Thanks, Fernando. Warren, on the productivity and on the restructuring, as you call it, a few remarks. First of all, in Europe, and that is, of course, the part of the business that is mostly impacted, we have finalized our consultation with the European Works Council. That is, of course, important. We are now following the process in different countries in Europe, but we are on track. For the rest of the world, the design of the new organization has been completed and also been communicated. That means that there is a lot more clarity now. We're very keen to provide clarity to employees. That's the best thing that you can do. So from that standpoint, we are on track. Clarity is there and we aim to make a significant progress before the end of the year. As I said, when you do something like this, and certainly this is not a regular exercise in our company, that does lead to some anxiety and that's totally understandable. And of course, fueled by uncertainty. But at the same time, I feel there is a lot of uncertainty There's a lot of good momentum as well. We're getting clear signs of that. Fernando and I hosted our top 120 leaders around the globe here last week to talk about the longer term and so forth. So we feel good about the transformation of the company, but we're mindful that we're going through a phase of third and fourth quarter in which restructuring is being executed. But so far, no notable impact on our performance.

Our next question comes from Celine at JP Morgan. Go ahead, Celine.

All right. Good morning. So my first question is on the pricing outlook. And especially, I presume it's a home care division question as well. But trying to understand where you think you will be hitting the ground on the lower pricing and then you know, re-accelerating that. You mentioned that some of the commodity has started to rise again. So if you could talk about this versus maybe what could be as well a more competitive environment, which may mean that you may have to keep prices or promotional level higher for longer. So that's my first question. My second question is, is on the USA where we've seen a very strong acceleration in volume mix. Could you go a bit into details on what has happened there, maybe an excise cream performance there, and, you know, what kind of duration you will see in terms of those better volume mix than expected in North America? Thank you.

Thanks, Celine. Let me kick it off. I mean, first of all, I mean, on pricing, as you say, I mean, 0.9% for the group in the quarter. That's just, you know, slightly lower than Q2. So, you know, of 1% that we reported then. You know, I wouldn't point to, you know, a guide on pricing for the year or for the next year. So we're a bit careful there. We're obviously talking about our total, I mean, underlying sales growth overall. But, you know, just to give you a bit of color, we did see in the first half of 2024, we did see deflationary impact overall on our key commodity baskets. Now we're seeing, you know, moderate inflation returning in the fourth quarter with some particular spikes. You know, think of cocoa, think of aluminum, think of palm to some extent. So we're mindful of that. And obviously we stay very close to that. If you think of promotional intensity, actually in our BPC category, so beauty, personal care, but also home care in itself, we're not seeing a huge additional promotional intensity overall. We did increase promotional intensity for ice cream and for nutrition somewhat. Ice cream was also too correct for pricing. So those are the things that we've done. I think going forward we expect subdued pricing in the next couple of quarters and then likely return to moderate levels of pricing reflecting inflation in our main commodities. On the US, the economy has proven to be very resilient overall. I mean, consumer sentiment is actually, you know, quite a bit better actually than last year. But I think consumers are still facing the consequences of inflation of two years ago. And obviously, after COVID, we've seen a lot of spending in the US. I think that's now... With savings being more depleted, I think that's now a lot lower than it was, which probably explains some of the lower demand for high-end prestige luxury products. But overall, in our core business, we see actually a very resilient American consumer.

Yeah, I would add to that, Celine, that both our ice cream business and the rest of the portfolio has performed very well. The remaining companies including ice cream grew more than 7% with 6% in volume. I believe it is testament to what we usually call a seriously transformed portfolio in the US that is very attractive in terms of growth. And if you look at our performance year to date, it's very, very solid in the US. The growth has been broad-based, not only in prestige, beauty, and health and well-being that had the 15th consecutive quarter of double-digit growth, but our core business in grocery, in beauty, in personal care grew strongly. Our food business a bit more muted, low single-digit growth, but we saw positive volume growth across the five business groups in the U.S., and we believe that this is really reflecting the strong portfolio that we have building through acquisitions, disposers, and organically in the U.S.,

Our next question comes from Olivier at Goldman Sachs. Go ahead, Olivier.

Hi, good morning, Hein, Fernando and Gemma. Just one quick question, actually, more of a follow-up on LATAM and the trends you are seeing there in Brazil and Mexico, and then particularly in Mexico. It was a very strong growth driver historically. This looks like it's been a bit of a slowdown, whether it's from you or from some of your peers. Do you think it's just a temporary post-election slowdown, or is it something a bit more structural there concerning what's happening to the currencies? Thank you.

Yeah, I think, thanks Olivier. I mean, first of all, Mexico has been a significant growth contributor to us for the last eight quarters. We've seen, you know, double digit growth for almost two years now. And I think we have seen a more normalized quarter right now. I mean, if you look at overall Latin America, actually Argentina held up well for us. Brazil, you know, we've seen some lower pricing, particularly in home care, but overall holding up well as well. So I think... The way I would read it is it's more normalized now after very strong growth for two years. And we expect, competitive-wise, we're doing well. So we expect that sort of more normalized pattern to continue for the next couple of quarters.

Yeah, adding some color on that, you know, just in Brazil, our BPC business, beauty and personal care, continue growing very, very strongly. But the laundry market is a powder market in which the commodities inflation has been more significant recently. that what you see in the laundry liquids market that is more prevalent in developed markets, and that has taken some impact on pricing. The Mexican situation, you know, we saw a change in consumer sentiment after the election. Some incentives that were put by the government before that has disappeared. But, you know, we believe that this is a short-term issue, and it's a bit dependent also in what will be the development of the U.S. economy in the medium term. In Argentina, the government is putting right measures in place. The fiscal adjustment has been very dramatic, with some impact in the economic activity. But our performance in competitive terms is really spectacular there. We are growing significantly ahead of the market.

Our next question comes from Tom Sykes at Deutsche Bank. Go ahead, Tom.

Yeah, thanks, Gemma. Morning, everybody. So, firstly, just in a follow-up to about a very high proportion of your EBIT coming from maybe sort of a quarter or less of your countries you operate in. Do you think you'll be taking stronger interventions in the tail of smaller countries that you operate in and is that something that we ought to think about as There's potentially a drag on organic growth at all over the next couple of years, notwithstanding there may be other things that you're doing to improve performance. But is that a factor that we should think about at all, please? And then just you're obviously growing at 3% volume, excluding ice cream at some point, maybe. That moderates a little, and you've said best in class previously over a decade was sort of 2.5%. If you do grow at sort of circa 2.5%, could you maybe just talk about the algorithm for you in terms of either gross margin or the drop through to operating profit that you would see you'd be able to generate on 2.5% volume mix, please?

Thanks, Tom, for the questions. I'll take the first one on Indonesia and your point about smaller countries, and then Fernando will take the one on the growth algorithm. So I think, first of all, on the smaller countries, I mean, look, what we're doing is we're... We have re-looked at our operating model and in line with our business groups, global business groups leading operations, we have dedicated much more of our sales resources, most of our sales resources and of course supply chain as well as R&D to these business groups in our large countries. So we're very dedicated in these large countries. Think of countries like the United States, the UK, China, Brazil, but also Indonesia. In smaller countries, we actually operate more in an efficient way. So we tend to work there as one, as we call it, one Unilever. So we don't have a dedicated go-to-market for categories. We go more efficient. And I would not expect, therefore, the smaller countries to be a drag on profitability. I would say the reverse. We will always look for improvements. And I think in combination with the productivity exercise that we're currently doing, I think that should not lead to a drag, as you asked. Fernando, on the growth algorithm.

Yeah, we believe that in the medium term, the markets will come to a more normalized level and balance between volume and pricing. We are investing to put the business in a consistent path of more than 2% volume growth. As you can see, we have been having four quarters now of positive volume and improving volume growth in the business. And we expect pricing after two or three quarters to really come back to more normalized levels closer to the CPI. that in the case of our turnover-weighted CPI is more in the territory of 3% or something like that. With that, we know that to be a top 30 TSR company in the sector, we need to deliver high single-digit earning growth. In the long run, we believe the algorithm that we have mentioned to the market with the guidance that we have given for the long term will bring us into that kind of level.

Our next question comes from Guillaume at UBS. Go ahead, Guillaume.

Thanks, Gemma, and good morning. Hi, and Fernando. Two questions for me, please. The first one is on your unchanged margin outlook for the year. So, Fernando, I think at the time of the first half results, you mentioned that you wanted to remain cautious, and you were listing three reasons for that. You were talking about competitive environments, return of some inflation. and the depreciation of some currencies. So you were basically seeing 18% as a prudent floor at the time. So my question is, with only two months to go before the end of the year, do you still see 18% as cautious, or have things materially changed, be it on the BMI, the FX, or the commodity front? And then my second question is on the separation of ice cream. I think Hindustan yesterday indicated that you will determine the mode of separation by the end of the year. I was wondering if you could confirm that. And also related to this, as you're making now some strong progress toward the separation, do you have better visibility on the stranded costs? And also maybe if you could provide some broad indication on the potential tax leakage that would arise from a sale of the business versus a separate listing. Thank you very much.

Thanks, Guillaume. Fernando, we'll take the one on ice cream and probably we'll add something on the warm discussion because you had it before. But let me make a few remarks up front. I mean, we are leaving the guidance indeed unchanged. I think what is important for us, you know, we've seen a very strong gross margin expansion in the first half of the year that will increase. not repeat in the second half. I think we talked about that. I mean, the first half includes some carryover pricing, also some deflationary impacts, so that helped. The second half, you know, is more around us driving net productivity, which is an important part of the agenda, but wouldn't sort of have that tailwind necessarily. At the same time, we're very keen to continue our investment behind our brands. And of course, we're resetting some operations. So we really want to set up the company to be successful in the medium and long term. And that is one reason why we wouldn't change our guidance at this point.

Yeah, I would add on that, you know, that we are comfortable with our gross margin development and this is giving us a space to continue investing behind our brands strongly. And, you know, we will not comment anymore on guidance. You know, the guidance is the one that we have given and we will not make any additional comment on that. Regarding ice cream separation, we are very pleased with the improvement in performance in ice cream. We believe that it's absolutely critical to drive a stronger performance while we proceed with the separation. Separation at the global level is on track. We are working in the legal entity setup in 57 countries in which we are separating the business. setting up the standalone operating model and preparing the carve-out financials. And everything is on track for the separation by the end of 2025. Regarding the announcement of IndustanLiver yesterday, on September, the board of IndustanLiver set up a committee of independent directors to assess the best way forward of the business after the announcement of IndustanLiver in March. Yesterday they have announced that they will proceed with the separation like the parent company has done. As you know, HUR is a public company and needs to follow appropriate governance in line with local law. They have now confirmed the intention to separate and the mode of separation will be confirmed before the end of the year.

Thank you. Next question comes from Jeff Stent at BNP. Go ahead, Jeff.

Good morning. I'm just looking at nutrition, which, you know, looking at the sort of light on the charts, just sort of trending down, it feels like we're kind of going back to the old days, you know. So, you know, high coal has sort of been in for a while now. Is there anything that's going to be sort of radically different to the past in terms of strategy for nutrition? You know, is there any reason we should start to be getting more optimistic as to you see a transformation of nutrition.

Thank you. Thanks, Jeff. You were a bit hard to hear, but I'll take it. It was about nutrition and the transformation of nutrition and the results of nutrition. So let me make some comments. I mean, first of all, indeed, Heiko is in since June. We are very focused in nutrition on restoring competitiveness in our core categories, and those are condiments and cooking aids. And of course continuing to drive our food solutions business globally. So these are the pillars under the nutrition business. And very important that we continue to transform the nutrition business to a more focused portfolio. To that end, we are actually improving competitiveness, particularly on condiments, so we're happy with that. We did drive additional promotional intensity on that business. Food solutions business continues to grow in line with what we expected. So that is a mid-single-digit improvement overall. And then, of course, there is the Indian food business, which is a very local food business. Amongst others, there's still tea and coffee, as well as Horlicks Functional Nutrition. So it's more of a beverage business. That had some negative pricing in the third quarter. So I would say overall better competitiveness. We have invested behind that. We are focusing harder and more behind our core pillars, condiments, cooking aids and food solutions. And we are determined to grow our Indian food business going forward.

Right. Next question comes from Victoria at Bank of America. Go ahead, Victoria.

Thank you very much. I have one follow-up question. When you talk about palm oil, I'm not sure I fully understand. Is it good or bad for you? Because when palm oil prices were down, you had this massive competitive pressure from local producers in India, Indonesia, some other countries. Now you're talking about palm oil prices obviously going up and its impact on margins. How should we think about it in the context of your Asia performance mostly? And my second question is, in terms of your focus on constant currency EPS growth going forward, how should we think about it in the context of current results and additional headwinds on the currency side of it? Is there any, I don't know, renewed hedging strategy, any stronger focus on selected markets? Anything just to keep in mind on this metric. Thank you so much.

Thank you for the question. I'll take the first one on Palm and then Fernando will talk about the FX question. As you say, when Palm is really in deflationary mode, we see a lot of new local companies coming to the market, coming in with low prices and so forth. Actually, we see Palm increasing in the fourth quarter. So at this point in time, it's still not at a very high price level. So there is a lot of competitive intensity, but that's what we always have. So the way we deal with it, first of all, is, of course, driving unmissable brand superiority, as we say. So we simply have to be better than the competition. You know, if I look at the shares on personal care and mainly in countries where this is the case, I mean, you know, Indonesia, and we talked about Indonesia as well as in the last three months. We talk about India. I think it's holding up quite well. If you look forward with moderate inflation, we should be in a good position. So, yes, it could affect competitive intensity somewhat, but I'm not sure. I don't think it's a very material difference. We simply need to provide great brands, great products, and so forth. On FX, Fernando.

On FX, we are very conscious of the importance of developing our earnings growth in hard currency. This is a key element of our strategy now. We will not make fundamental changes to our hedging strategy. Our hedge has the intention of fundamentally giving us a reasonable period of time to put pricing in the market when there is currency devaluation, particularly in the E&E markets. When it comes to the short term, year-to-date, our currency impact is negative at around 1.9% year-to-date, and it was worse than that in the quarter three. But we expect the full year to be at around 1.5%. There is a positive impact in the quarter four that is linked to a very significant devaluation of the Argentinian currency last year, in December last year. And this year there is an appreciation in real terms of the Argentinian peso in a country that is significant for us when it comes to contribution to sales. So that's everything about currency.

Our next question comes from David Hayes at Jefferies. Go ahead, David.

Thanks, Gemma. Good morning all. So two for me, just in terms of the broader question, just in terms of the developed markets, I mean, 7% volume growth third quarter, which is amazingly impressive versus emerging markets at three. I mean, I think we would have seen a few years ago for sure. And certainly pre-COVID, you know, developed markets were struggling to get any volume growth. So I guess the question is, what's really driving that 7% sort of level? Is there things you'd point to that say that's not obviously going to be sustainable? Would you expect into next year volume growth between developed markets and emerging markets to kind of balance off to be maybe similar? Is that kind of what you're predicting in terms of your planning? And or related to that, is there an element of your new action plan over the last year has been focused on developed markets first. You're seeing the benefits there and emerging markets follow, and that that would see a step up as maybe you implement some of the changes more broadly. And then the second question is on market share metric. I may have missed it, so apologies if I did. But can you give us an update on the third quarter market share metric versus where we were in the first half of that step? Thank you so much.

Thanks a lot, David. Some remarks on developed versus emerging. You know, on developed markets, a few things that we've done. I mean, first of all, we did put additional emphasis on Europe this year, and we're seeing the results of that. And the emphasis has been mainly around the introduction of significant innovation. And we're seeing the European consumer actually respond to that. So that's something that we're actually very excited about. I mean, if you think about it, in Europe, All five business groups have delivered a positive volume growth and with very strong volume growth in, for example, home care, a business that we've historically struggled with somewhat in Europe, but actually we're really turning that. And again, we're very excited about that. And the same is, by the way, about on personal care. If you then think about it on the US and Europe combined, we are putting emphasis, of course, on our what we call global business units. And they delivered another quarter of double digit growth with more so on well-being and less so on prestige beauty. But the combination is strong and we're scaling some of those businesses. So think of Liquid IV going into Europe, which is going well. But also think of brands like Oli being introduced in China, which is actually going quite strong. And then the third reason is our core U.S. business. As I said, the U.S. consumer is resilient, but we are also investing significantly behind it. We've completely relaunched our Dove range in the U.S. That was a very big innovation program. And I would say there is more to come. So we feel that the pipeline is now much stronger. So we are actually quite positive about our business in the US. And we feel that in the next quarters, at some point, that European growth will slow down without a doubt. But we feel that we have a very strong momentum. Then on the emerging markets. If you look at our numbers, they are indeed a bit peculiar if you compare developed versus emerging, and I absolutely agree. But of course, these numbers are also impacted by a few very particular things. One is the reset in Indonesia, and we talked about that. The second one is we are also revamping our go-to-market in China. That has some short-term impact, but we're quite confident that that will deliver positive growth in the second half of next year. despite some of the headwind that we're seeing. And then, of course, India pricing and the particular impact that we've seen in quarter three because of one-time effects and so forth. So I think the picture is probably a bit atypical, but I want to leave the message that we are investing behind Europe. We're seeing good momentum in the US. Emerging markets somewhat softer this time, but there are particular impacts here that we aim to reverse, of course, in the course of next year.

Yes, regarding competitiveness, we will provide a comprehensive assessment of our competitiveness with the full year results. But as we said, we were expecting sequential improvement in the H2. We are seeing that materialising. You have seen yesterday, Hindustan Liver communicated that we have turned positive in competitiveness in India. And I know that you follow similar market information that we follow, David, and in Europe and U.S. we have seen progress also. So overall, you know, sequential improvement is starting to be materialized in our competitiveness, but the whole assessment will be done and communicated to you with the full year results.

Our final question comes from Ed Lewis at Redburn. Go ahead, Ed.

Yes, thanks very much. I guess just a bigger picture question. Looking back at when you unveiled the gap high and you talked about addressing performance culture, one of the three aspects of the plan. Can you share some thoughts on how you're doing driving change there? That's clearly when we look across the universe of companies like yours, when you do crack sort of the culture and get your positive change there, it does drive longer term benefits. So any thoughts around that, please?

Yeah, no, thanks for the question, Ed. Look, the change of a company or the transformation of the company will take a bit of time, as I said. So particularly on culture change, that is something that will take time. But I think we are truly pulling all levers now. And I see indeed a much, much more positive momentum in the company than probably a year ago. Let me give you a few examples. The introduction and the implementation of what we call unmissable brand superiority, which is essentially strong execution around all levers that you can pull around the brand, so price, packaging, promotion, placement, and so forth, I think it's really there. And I feel that holistic execution is stronger than it was. Of course, there are still issues. There always will be. But I think it's much more disciplined now than a year ago. The idea of doing fewer things better and with greater impact. I think we have completely embedded now our new sustainability strategy, which is a much more focused exercise and much more in tune with what our business really is. I feel also good about the innovation side. You know, we have defined 12 platforms this year. You know, think of the introduction, the relaunch of Dove that I said, but also think of sugar-free variant in liquid IV. Think of the introduction of Wonderwash. Things that we can truly scale and scale across our markets. That is happening, and I'm actually seeing it. And then, of course, there are intangible matters. As I mentioned before, we've gathered our leadership here very recently. We're going to drive a very systemic culture change program in the months to come. And I have to say, I'm looking forward to it. I think we feel more confident now than probably a year ago with four quarters in, but also the momentum that I see in the business. That just probably gives you a bit of a feel.

Great. We shall bring the Q&A to a close there. But if there are any further questions, please feel free to contact the IR team.

Yes, and thanks a lot for joining. So, as I said, and I think your last question was spot on, I think we are making progress against the Growth Action Plan, but once again, it is a multi-year journey and there is still a lot to do. But to that end, we look forward to share the progress that we've made with you in more detail at our investor event, and that's in a few weeks' time. And we will take the opportunity then to set out how we plan to build on the growth action plan to drive consistently improved performance in the years ahead. We look forward to seeing or obviously to speaking to you then. Enjoy the rest of your day. Thanks a lot for joining.