Unilever PLC

Good morning and welcome to Unilever's full year results. Thank you for joining us. In a moment, Fernando Fernandez, our CFO, will give a breakdown of the results for 2024, after which I will look at some of the key priorities for this year and beyond. In total, we expect prepared remarks to last around 40 minutes, followed by 30 minutes of Q&A. And all of today's webcast is available live transcribed on the screen. Before I provide a few reflections of my own on the results, I want to touch on some of the broader shifts we have made in 2024 to set us up for a higher and more consistent performance. There are five in particular I want to highlight. First, having been adopted and embedded across the business following its launch in October 2023, the Growth Action Plan, or GAP, was executed last year with speed and with discipline. And we see this reflected across the company. A few examples. In the plans behind our top 30 power brands, in our unmissable brand superiority framework, in the step up in the size and scale of our innovations, or in the embedding of net productivity in the Unilever supply chain. And in all these areas and more, the gap is critical to our work across Unilever. Working on the same themes, on the same imperatives, and bundling our energy, passion, and resources together on the things that really matter. Second, the wide-ranging but necessary productivity program announced in March is being implemented at pace. Actually, we are ahead of plan in creating a leaner, more accountable organization. And by the end of 2024, the number of full-time roles had been reduced by 4,300, with an expected total reduction of 7,500 roles by the end of 2025. Third, capital and resources are being deployed behind our keenest priorities and our biggest opportunities. And whether that's our top brands, our leading markets, our key capabilities, or in meeting our biggest net productivity opportunities. On top of these investments, we returned 5.8 billion euro in capital to shareholders in 2024 in the form of dividends and buybacks. Fourth, we are on track to complete a significant portfolio shift with a separation by the end of this year of our ice cream business. I'll talk more on that later. And fifth, we are giving increasingly tangible expression to our desire to dial up Unilever's performance edge and create that winning culture. For example, the productivity program is being used to de-layer the organization, and people are finding their roles now come with a greater scope, but also more accountability. Measures are being put in place to help motivate and incentivize for performance, whether through more stretching targets or through greater differentiation in reward. And the new organization structure, with the business groups focusing on the top 24 markets and the 30 power brands, And that's bringing simplicity and much sharper category focus. These five shifts represent just some of the ways in which operationally, organizationally, and on the portfolio, we moved quickly and decisively last year to bring that much needed clarity and focus to the business. And while these changes are intended to set us up for consistent higher performance over the longer term, the benefits are already apparent in improved performance. And that brings me to our results for 2024. Now, first a reminder. When we launched the gap towards the end of 2023, we said that our priority was to improve both the quality and the consistency of Unilever's top-line performance. In fact, the gap was a direct response to that challenge. And we also made clear that central to achieving this was restoring gross margin as a first step to pre-pandemic levels, thereby enabling us to step up investment behind our brands and in the rest of the business. And the results we are announcing today reflect progress against each of these objectives. Growth was volume-led, and importantly, within that, underlying volume growth of 2.9% was broad-based across all five business groups and across all four quarters. This was supported by a significant increase in gross margin, up by 280 basis points versus the prior year to 45%, exceeding the pre-COVID level in all business groups except ice cream. The increase in gross margin allowed us to increase brand and marketing investment by €0.9 billion to 15.5% of group turnover. Gross margin expansion also contributed to profit growth. Underlying operating profit growth was 12.6% versus the prior year to €11.2 billion. These results confirm the progress that we are making against our most important and immediate priorities. They also enabled us to deliver top third total shareholder returns in 2024, and that is in line with our ambition. However, consistency is not about one good year. We know there is still a lot to do and some way yet to travel in somewhat more turbulent waters. But as I have said, we laid some important foundations for the future in 2024, as well as delivering results in line with our objectives. And Fernando will now take you through those results in more detail. Fernando.

Thank you, Jaime. Underlying sales growth in the full year was 4.2%, led by volume of 2.9% and with price contributing 1.3%. We delivered four consecutive quarters of underlying volume growth above 2%, with all business groups driving positive volume growth for the year. Our 30 power brands, which represent more than 75% of our group turnover, performed well with 5.3% underlying sales growth, driven by volume growth of 3.8%. While the power brands had the first call on incremental resources and led our growth, we didn't neglect the rest of the business. This paid off as these brands also delivered improved volume growth of 0.7% in the second half, up from minus 1.6% in the first half of 2024. As expected, given the favorable commodity cycle in the first half of 2024, underlying price growth slowed down to 1.3% for the year. However, with input cost inflation in our basket of commodities returning in the second half, We expect an acceleration of price growth through 2025. Let's take a closer look now by business groups. Butane Wellbeing delivered a strong full-year performance, led by broad-based volume growth, particularly across its power brands. Underlined sales growth was 6.5%, with volume at 5.1% and price at 1.3%. In the fourth quarter, underlying sales growth was 5.2%, with 3.9% volume against a strong Q4 2023 comparator. Beauty and well-being's strong performance reflects the ongoing premiumization of our core hair care and skin care portfolio, and the continued strength of our prestige beauty and well-being portfolio, which combined now accounts for approximately 30% of beauty and well-being's turnover. Haircare grew mid-single-digit, with balanced volume and price growth. Dabhair delivered high single-digit volume growth, and our largest hair brand, Sunsil, continued its positive momentum following the 2023 relaunch. Nexus, our Mastiff proposition in the US, grew double-digit, while Clear's growth was muted due to its big exposure to a subdued Chinese market. Our core skin business continued to grow well, with Vaseline achieving double-digit growth for the second consecutive year. This success was driven by the expansion of the glutathione range into more markets and new variants. DAF also posted double-digit growth in skin care, supported by new successful launches of body serums and face treatments across Latin America. Wellbeing delivered double-digit volume growth, led by Liquid IV, Nutrafol and Oli. This performance reflects continued strengths in the brand's core products and innovations, as well as the early benefits of our selective international expansion. Liquid IV entered seven new markets during the year, while Oli made good inroads in China. Prestige Beauty grew at a mid single digit rate due to the beauty market slowing in the US and China. Growth remained lower in fourth quarter, but several brands still deliver good performances. Notably, Hourglass and Tatcha both achieved double digit growth in the year. Beauty and well-being underlying operating margin improved by 70 basis points. Positive mix was a key driver of a strong 220 basis points gross margin expansion. This allowed further investment in BMI to support the continued strengthening of our brands in this business group. Personal care also had a strong year, driven by deodorants, which delivered double-digit growth, and DAF, our largest brand, which accounted for close to 40% of personal care turnover. Underlying sales growth was 5.2% for the year, with 3.1% in volume and 2.1% in price. Volume growth accelerated in the fourth quarter to 3.6%, contributing to an underlying sales growth of 5.3%. DAB's strong growth was supported by the launch of whole body deodorants featuring our superior odor control technology. First introduced in the US in 2024, we will expand this innovation to new markets and to new brands in 2025. DAB also launches new serum shower collection, bringing active face care ingredients to body wash formats. The impressive growth in deodorants was led by DAF, but also with solid contributions from Rexona and Axe, both benefiting from disruptive technology introductions in the areas of odor control and fragrances, respectively. Skin cleansing grew low single-digit, with positive volume and price, despite declines in Indonesia, China, and India. Lax and Lifeway are two of our power brands where performance has been poor and in which we are making significant interventions in 2025. Oral Care deliver mid-single-digit growth with solid results from Pepsodent and CloseUp, our power brands in the category. underline operating margin improved by 196 points during the year significant gross margin expansion enable us to continue reinvesting in our personal care brands with a special focus on our u.s business as we elevate our portfolio to a more premium offering Home care delivered underlying sales growth of 2.9%, driven by a 4% increase in volume. Commodity inflation was more significant in the powders format than in liquids, resulting in negative pricing in several emerging markets. Fourth quarter underlying sales growth was 3%, with 3.3% volume growth and price growth getting close to flat. In fabric cleaning, we introduced Persil's Wonder Wash, designed for the consumer trend towards short and cold wash cycles. Launched in eight markets, this product has shown excellent market share results, contributing to a significant turnaround in Europe during the year. We are continuing to roll it out to more markets and expect it to become a 100 million euros innovation platform. Comfort launched this new range utilizing our patented Crystal Fresh technology. This product line brings superior fragrances to the fabric booster market, helping Comfort achieve nearly 10% volume growth for the year. Domestos and SIF both grew double-digit, supported by strong formats innovation in power foam, sprays, and creams. Underlying operating margin for home care improved by 220 basis points during the year, driven by strong gross margin expansion. This resulted in a 19% improvement in underlying operating profit, despite a step up in brand and marketing investment behind our premium innovations. Foods delivered growth of 2.6% in 2024, with 2.4% price and volume at 0.2%, amidst an overall deceleration in the market. In the fourth quarter, foods grew 2.6%, with 2.1% from price and 0.5% from volume. Our two larger brands, Knorr and Hellmann's, which account for around 60% of food turnover, outperform the food's average. Knorr enhanced its global leadership in the bouillon and seasonings category. Hellmann's achieved volume-led growth through the continuous success of its flavor-major ranges and premium formats. Our Unilever Food Solutions business continues to deliver good results, outperforming markets both in China and the US. In 2024, we expanded our digital selling program and drove unique product formats and sizes specifically designed for professional kitchens. We continue to work on focusing and simplifying our foods portfolio, anchoring it more and more in our power brands. In line with that goal, the disposals of Unox, Conimex, and Swan were announced in the fourth quarter and will be completed during 2025. In 2024, food significantly improved its underlying operating margin by 270 basis points, driven by a strong gross margin expansion. This improved profitability reflects our strategic effort to streamline the business, focusing on our power brands, reducing the number of items, and executing disciplined net revenue management. Ice cream delivered 3.7% underlying sales growth, with a return to volume growth at 1.6% and 2.1% from price. The fourth quarter saw underlying sales growth of 4.3%, with balanced volume and price. Ben & Jerry and Walsh were our fastest growing brands in the category. Ice cream improved performance in 2024 reflects our operational improvement across much of our business, including enhancements to our supply chain, go-to-market strategy and promotional activities. These efforts have strengthened our business and laid a foundation for continued improvements in the years ahead as an independent company. Our results also reflect a step up in innovation, including the launch of Magnum Bonbons and Yasuo Popables, new buy-size premium formats that meet the evolving snacking habits. iScheme underlying operating margin improved by 100 basis points in 2024. Gross margin expansion, led by positive mix, enabled further investment in brand and marketing. The actions taken in 2024 have improved our results and during 2025 we will remain focused on strengthening our operational model while navigating the challenges brought by significant inflation in key materials like cocoa and dairy. We run the business entirely through the lens of our five business groups. However, we believe it is important to provide also some color on the performance we achieve across different geographies. In 2024, we deliver broad-based volume and price growth with positive contribution from all regions, from developed and from emerging markets, an imperative to deliver both volume growth and hard currency profit growth. Developed markets, which account for 42% of group turnover, grew underlying sales by 4.4%, with volumes up 3.3%. This reflected a strong, accelerating performance in North America, led by beauty and well-being, and a big improvement in Europe, driven mainly by personal care and home care. A stronger innovation pipeline and increased level of brand investment are evidence of our commitment to accelerate performance consistently in these important hard currency markets. Latin America, one of Unilever's strongholds, grew 6%, with positive volume growth across Brazil, Mexico and Argentina. Growth slowed in the second half. reflecting an increased currency volatility in the region that will require significant pricing corrections in the short term with potential impacts on volumes. In Asia-Pacific Africa, our biggest region, underlying sales growth of 3.1%, was more subdued than in previous years. Our India business continued to increase market share during a period of modest market growth. We expect conditions to improve mid-term, following recent fiscal and monetary stimulus. India grew 1.8%, with 2.4% underlying volume growth. with tonnage volume growing mid single digit but partially upset by negative mix due to the strong growth in home care versus other categories. Our performance in Africa and Turkey was strong with double digit growth driven by positive volume and price in each quarter. China declined mid single digit with market weakness across all categories apart from foods. Southeast Asia declined low single digit driven by an 8.7% decline in Indonesia. Both China and Indonesia are critical markets for us with significant long-term potential. We are taking decisive actions in both. In China, we are strengthening our business during a market slowdown. We are accelerating our portfolio premiumization to drive growth in the premium and super-premium segments through innovation behind admissible superior power brands. We are serving emerging channels better through social first demand creation models and direct-to-consumer models. We are transforming our route to market to effectively address lower tier cities and smaller format stores. We have redesigned the sales organization with separate sales team at category level and have leveraged digital selling tools for Salesforce and distributors to improve our reach. The transition to a tailored customer development organization and to a digital route to market takes time and faces stock corrections in some channels and categories. However, we are encouraged by the executional progress in line with our plans. In Indonesia, we have long-standing portfolio and brand proposition issues, which will take several quarters to fix. In the short term, we are correcting misaligned investments and price structure across channels and resetting stock levels in retail. We are expanding our direct and indirect coverage with fewer and bigger distributors. We are paying particular attention to the health and beauty channel, for which we are innovating in growing demand spaces. The result is underpinned by a far-reaching cost-saving program that fuels brand investment. As we said previously, we expect to see in our results the benefits of the changes in China and Indonesia from the second half of 2025 onwards. Let me return now to performance at the group level. Turnover for the full year was 60.8 billion euros, up 1.9% versus the previous year. Excluding the effect of M&A actions to further sharpen our portfolio, turnover growth would be 3.5%, primarily driven by underlying sales growth of 4.2%, with an adverse currency impact of minus 0.7%, considerably lower than in 2023, when the euro strengthened against most currencies. As a result of our portfolio actions, the net impact from acquisitions and disposals was minus 1.5%. Acquisitions added 0.4%, driven by Yasso and K18, both performing well and in line with our acquisitions business cases. This was more than offset by a disposal impact of minus 1.8%, driven by Suave, Dollar Shave Club, as well as LEWT and Unilever Russia, which sales were completed in June and October 2024, respectively. During the year, we expanded our gross margin by 280 basis points to 45%, building upon the improvement of 200 basis points achieved in 2023. Within 18 months, we have rebuilt gross margin beyond the pre-COVID level. In all business groups, apart from Ice Cream, gross margin is the backbone of our financial plan, and our new base is 45%. Our ambition is to improve from here. In 2024, we made progress in transforming Unilever into a structurally higher gross margin business by driving volume leverage, positive mix, and net productivity gains. These were enabled by procurement interventions in key materials and by allocating a significantly higher fraction of our capital expenditure to margin expansion, which resulted in lower production and logistic costs. The very strong improvement of 420 basis points in the first half of 2024 was boosted by tailwinds, namely the strong benefits of deflation in some components of our commodity basket and the pricing carryover from 2023. This strong gross margin expansion gave us flexibility to both increase investment in our brands and expand underlying operating margin. We increased brand and marketing investment by 120 basis points to 15.5% of turnover, an increase of 900 million euros. All additional investment was concentrated in our top 30 brands behind a much more focused innovation program. Our brand and marketing investment has been the highest percentage of turnover in over a decade, with an increase of 250 basis points, or 1.6 billion euros, over the last two years. Overheads reduced by 10 basis points as a result of a tighter cost control and savings in the second half from the productivity program. The combination of a strong gross margin expansion, lower overheads and substantial increased brand support results in underlying operating profit of 11.2 billion euros, up 12.6% versus the previous year. The underlying operating margin improved 170 basis points to 18.4%. Underlying earnings per share were 2.98 euros, up 14.7%. Our operational performance, the combination of sales growth and strong margin expansion, contributed 15.6% to underlying earnings per share growth. An increase in finance costs had an adverse effect of minus 1.4%. As expected, higher interest rates impacted the cost of debt, while interest income and interest credit from pensions were slightly lower than in the prior year. Net finance cost as a percentage of average net debt were 2.5%. For 2025, we continue to expect net finance costs to be around 3% of average net debt. Tax was a drag of 0.6% on underlying EPS, as our underlying effective tax rate slightly increased to 25.8%. This was driven primarily by increases in non-deductible interest and in withholding tax, which were largely offset by benefits from tax settlements and other one-off items. We expect our underlying tax rate to be at around 26% for full year 2025. The impact of our share-buy-back programs made a positive contribution of 1%. Net profit from joint ventures and associates, as well as other, increased versus the prior year, while minority interest decreased. Together, they contributed 0.8% to underlying earnings per share growth. Negative currency effect in underlying EPS was the same as the one experienced at the turnover level, at minus 0.7%. Our free cash flow in the full year was 6.9 billion euros versus 7.1 billion in 2023. That included a tax refund of 400 million euros in India. Our average working capital remained strong at minus 9% of turnover in 2024. Cash conversion, which indicates our ability to convert profit into cash, was strong at 106%, above our long-term ambition of around 100%. Keeping a robust balance sheet is a key feature of our value creation model. Closing net debt was 24.5 billion euros, up 900 million. At year end, net debt to underline EBITDA was 1.9 times, versus 2.1 times in the previous year, and in line with our guidance of around 2 times. The step up in underlying operating profit was the prime driver behind a 190 basis points increase in underlying return on invested capital to 18.1%. We maintain our medium-term expectation of high-teens underlying ROIC, which is a key building block of our multi-year value creation model. We have allocated capital during 2024 in line with our priorities, growth, productivity, portfolio reshaping, and capital returns to shareholders. Investing for growth and productivity are critical to ensure sustainable long-term economics of our business. It is investing in our brands, investing in R&D, and investing in capacity expansion and productivity. We step up brand support by 900 million euros in 2024, up 120 basis points as a percentage of turnover. Capital expenditure increased by 13.6% to 1.9 billion euros, resulting in 3.2% of turnover, up 30 basis points versus the previous year, as we invested more capex for margin expansion. Our three-year guidance of average 1.2% restructuring spend remains unchanged for the period 2024-2026, Due to the acceleration of the productivity programme, we increased restructuring costs to 1.4% of turnover in 2024 and we expect a similar ratio for 2025. Over time, we plan to allocate around 1.5 billion euros a year to optimise our portfolio as we rotate into more premium segments. 2024 was a year in which we did more portfolio pruning through disposals than additions through bolt-on acquisitions. We remain very disciplined and value rational in our M&A activities. The bar is high for any additions to our portfolio, and transformational acquisitions remain off the table. I will cover the complete and announced transactions in more detail in a moment. We also deliver €5.8 billion of capital returns to our shareholders in 2024, through cash dividends of €4.3 billion and a share buyback programme of €1.5 billion. Our Q2 interim dividend was increased by 3%. Reflecting the full-year performance, the Board increased the Q4 interim dividend by 6.1% versus the prior year. We continue to optimize our portfolio, allocating capital to premium segments through bolt-on acquisitions and divesting lower-growth businesses. In February 2024, we acquired K18, a premium biotech hair care brand. In January 2025, Industang Unilever Ltd. signed an agreement to acquire the premium active-sled beauty brand Minimalist. This marks another step in the transformation journey of our beauty and well-being portfolio towards fast-growing premium demand spaces in India. We completed several disposals during the year. This included Elida Beauty and the water purification businesses, King One Group and Purit. In October, we completed the sale of our Russian subsidiary to the Arnes Group. In addition, we announced several disposals that we expect to complete during 2025, including the sale of the food brands Unox, Conimex and Swan, as well as the disposal of our laundry business in Central America. Turning to the outlook for 2025, we expect underlying sales growth for full year 2025 to be within our multi-year range of 3-5%. Market growth slowed throughout 2024. We anticipate a slower start to 2025 with subdued market growth in the near term. We expect the market and our growth to improve during the year as prices increase, reflecting higher commodity costs. We expect for the full year a more balanced contribution between volume and price. We anticipate a modest improvement in underlying operating margin for the full year versus 18.4% in 2024. We expect this improvement to be realized in the second half, given the very strong first half comparator of 19.6%, which benefited strongly from carryover pricing and input cost deflation. As we said at our investor event last year, our goal is very simple. Deliver absolute profit growth in hard currency that is in line with companies that consistently feature in the top third of the peer group when it comes to total return. We made a step forward in 2024 by increasing underlying operating profit by 12.6% to 11.2 billion euros. And we are determined to grow profit from here in 2025 and beyond. We will deliver capital returns in line with our capital allocation framework. This includes an attractive, sustainable dividend based on paying out around 60% of underlying EPS and returning surplus cash via share buybacks. In that vein, we have announced a new share buyback of up to 1.5 billion euros, which will commence today and complete in the first half of 2025, well ahead of the separation of high scheme. With that, over to you, Hein.

Thank you, Fernando. In turning now to the priorities for this year and beyond, it is important to note that the process of transforming Unilever continues. We are thinking about this under three broad headings. Number one, implementing our new strategy, the Growth Action Plan 2030. Number two, continuing the wide-ranging productivity program that we have embarked on and, as part of that, delivering the savings that we have promised. Number three, completing the separation of the ice cream business by the end of this year. Now, let me take each of these briefly in turn, starting with the Growth Action Plan 2030. As a reminder, this is a comprehensive five-year strategic plan, encompassing a refreshed purpose, anchored firmly back with the consumer to brighten everyday life for all. An ambitious goal to be best-in-class performer, founded on the twin objectives of ensuring our brands are unmissably superior and market-making. At its core, the Growth Action Plan 2030 rests on three key strategic pillars, where we intend to focus, where we want to excel, and where we need to accelerate. And underpinning all of this are two critical and defining platforms, sustainability and culture. And even though this is a comprehensive strategic approach, its beauty in many ways is its simplicity. It draws on Unilever's inherent strengths while at the same time building on the changes and the progress that we have made over the last 18 months. Since unveiling GAP 2030 towards the end of last year, we've been focused on aligning the organization behind that new strategy. But already we see the process of strategy into action taking effect. Under the focus pillar, for example, we said we would double down in India as one of our key markets, that we would look to accelerate our beauty and well-being business, and that we would commit capital in support of these, as well as a few other priorities. Well, these came together with the announcement last month that Hindustan Unilever had signed an agreement to acquire the premium beauty brand Minimalist, which Fernando mentioned earlier. This is an acquisition that strengthens our position in a high-growth premium demand space in a key market, and it's one that we're very excited about. As we go through the year, we will share progress with you on each of the different elements of the GAP 2030. Today, I want to say something specifically about our work on sustainability. As you know, since last year, we have focused our agenda on four areas, climate, nature, plastics and livelihoods. And these are the areas that have the most direct impact on the business, but also the ones where we can use our scale and influence to have the greatest positive change. The commitments that we've made under each pillar are stretching, ambitious, time-bound and, importantly, transparent. And while the figures that we're sharing today are subject to final assurance and will appear next month in our 2024 annual report, I wanted to give you an indication today of where we are on some of the anchor metrics supporting each pillar. On climate, for example, at 76%, we are on target when it comes to the reduction of scope one and two emissions coming from our own operations. And that's up from 74% last year. On nature, we've exceeded our target for this year of 500,000 hectares of land benefiting from our regenerative agriculture and protect and restore practices, up from around 300,000 last year and well on our way to 2 million hectares by 2030. On plastic, we are on track in the reduction of our virgin plastic used in our packaging at 23%. And again, good progress versus last year, where we were at 18%. And on livelihoods, and a new target of the proportion of procurement spent with suppliers committing to the living wage, we are ahead of the plan at 32%. I hope you can see we are as committed to making progress in the area of sustainability as we are in any other part of the GAP 2030. And we also know we cannot achieve these commitments alone and that we can benefit from external views to make us better. And as such, we have refreshed our Sustainability Advisory Council to ensure that we have access to the very best people and to the most up-to-date and relevant sources of advice and counsel. The second key priority in 2025 is the continuing implementation of our wide-ranging productivity program. The significance of this to the ongoing transformation of Unilever cannot be overstated. When we launched the program last March, we said we expected to deliver cost savings of 800 million euro over three years, more than enough to offset the operational dis-synergies from the separation of ice cream. In doing that, we identified 7,500 roles that would be impacted. But by the end of 2024, the program had led to a reduction of 4,300 full-time roles and to in-year savings of close to 200 million euros. As I said earlier, this puts us ahead of the plan, so much so that we are now confident of completing the program of 7,500 role reductions by the end of 2025. As a result, from 2026, we expect levels of restructuring spend to be substantially lower. But the significance of the productivity program goes beyond the savings it will generate. A leaner, more accountable organization is also a key enabler in creating the kind of winning culture I spoke about earlier. And these are big but necessary changes. And we will continue to implement them in 2025 with a combination of care, speed, and discipline that characterized our approach in 2024. Now, let me turn to the third key priority for 2025, the separation of ice cream. Again, we are well on track. Today we've set out the progress that we are making towards the demerger of the business by the end of 2025. And this includes the appointment of a highly experienced chair-designate, Jean-François van Boxmeer. Currently chair of Vodafone and previously CEO of Heineken, Jean-François brings vast knowledge of the consumer goods industry, as well as considerable experience as a non-executive. We are delighted that he has agreed to take on this important role. We are also announcing today the route to separation. Ice cream will be separated by way of demerger through listing of the business in Amsterdam, London and New York. The same three exchanges on which Unilever PLC shares are currently traded. Ice cream will be incorporated in the Netherlands and will continue to be headquartered there in Amsterdam. This decision follows a full review by the board of separation options, which were focused on maximizing returns for shareholders, setting the ice cream business up for success and ensuring execution certainty by the end of 2025. We will give further updates on progress at quarter one, but are confident that with the decisions we are announcing today, we remain firmly on track to complete separation by the end of the year. Let me sum up before moving to questions. We have made clear that our aim is to deliver higher performance on a consistent basis. One is no good without the other, and we know that. And we are not there yet. There is a lot to do. But as our performance in 2024 suggests, we are on track. And as an operational intervention, the GAP, the Growth Action Plan, is working for us. The quality of our execution is getting better and our grip on the organization is getting tighter. We are moving with new levels of speed, with clarity and precision to address areas of weakness and to open up areas of opportunity. The priority now in 2025 is to give effect to the revised strategy, the GAP 2030, and we look forward to sharing progress with you as we go through the year. And this is also a vital year in delivering the leaner, more accountable, more productive organization, together with a stronger, better positioned portfolio on which our model depends. We are resolutely focused on delivering both of these in 2025. And with a highly motivated Unilever team now fully in place, we are confident that we will. On that note, thank you for listening and we look forward now to taking your questions.

Thank you. Good morning and many thanks for joining the call. If you'd like to ask a question, please press star 1 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 out. And finally, please keep your questions to a maximum of two. Thank you.

Thank you very much. I see our first question on the line is from Warren at Barclays. Warren, please go ahead.

Yeah, good morning, Hein, Fernando Gemma, Warren Ackerman here at Barclays. A couple of questions. First one is, Can you just comment on category growth, please, and market share trends and what you expect in 2025? It sounds like Q1 is a slower start. Can you maybe explain what's driving this bit more subdued Q1 and just to check in that you're comfortable with 2025 organic growth consensus? That's the first one. Second one is, again, maybe moving to margins. Can you perhaps comment on the margin phasing of gross margin and the underlying trading operating profits margin? Can you confirm, for example, that gross margins will be up for the year and perhaps give us some help on what you expect on COGS inflation, cost savings and perhaps brand and marketing?

in 2025 from that slightly higher base i think 15.5 percent thank you thank you warren um let me let me take the take the question sort of one by one there were quite a few and then i'll hand over to to fernando to to fill in some missing parts i think first of all on on market growth as we said you know we we pointed to slower growth we did see slower growth in quarter four and we sort of see that continuing overall in quarter one. Now, there are differences, though, per category, as you say. So, first of all, beauty and well-being and personal care continue to see, you know, market growth that is, you know, that is sort of close to, you know, to mid-single digits, slightly below, but, you know, decent growth in Europe as well as in the US. And, of course, these are important markets for us, and we showed therefore also good growth in these developed markets in Q4, and we have a plan to continue that streak going forward. We do see softer growth in home care that was mainly on the back of lower pricing in Q4, and that's also something that we see continuing. Nutrition also somewhat subdued. Ice cream as well, and that's mainly because of some sharp increases in commodity costs in ice cream, and that puts some pressure overall on volume. So that gives probably some color on the different categories. We do see it back-weighted though, as we said, in terms of our growth. And that's primarily because, as I said, some of the commodity costs are increasing. And if we start to price, that usually comes with a bit of a time lag. So there will be room for pricing throughout the year. We're obviously taking the necessary actions there. And we will execute overall on the growth action plan. Our shares are certainly not dipping. We remain very competitive. In fact, we see opportunity to grow ahead of the market, which you may recognize from the Q4 numbers. And that's, of course, our ambition going forward as well. If you look at the margin and the phasing, look, as we said, our key goal was really to get to a gross margin above pre-COVID levels. And initially we said that we're going to do that by end of 2025, 2026 or so. We pulled that forward. We're there now at a margin of 45% overall, and that's what we consider the new base. So I wouldn't guide specifically to a gross margin per quarter, but I would say that 45% level, that's a level that we feel comfortable with from where to grow. And there I want to point to a few very clear parts of our growth action plan. Number one, net productivity. Yes, we realize net productivity in terms of cost per ton in 2024, and we're going to realize net productivity in 2025. There will be some Cox inflation. As I said, pricing will be important, but that will come in the course of the year. And then, of course, there is the drive towards a more premiumized portfolio. So the volume and the mix effect should kick in as well. But these things are not going to come immediately. not going to come very, very fast. You know, that is something that builds over time. When it comes to BMI, we didn't guide on BMI. I've never done that as sort of the perfect percentage, where it's 15.5%. We feel that's a lot more competitive than where we were. And, you know, with the overall growth of the top line and, you know, sort of staying around that number is probably right. It makes us very competitive. But when we feel that we need to invest... you know, to accelerate growth. Like, for example, we did in the fourth quarter behind our personal care products in the US, where, you know, we really increased competitiveness. We see good growth in hard currency. You know, that's the kind of stuff that we like. So, hey, there is a bit of a market slowdown across the globe. We see that in most markets. But We are battling that through improved competitiveness, driving the growth action plan with determination around the things that we can control. Net productivity, very clear story. We will continue that next year. And the gross margin of 45% for us. We're happy with that accomplishment, but we now need to take it from there and continue to improve. Fernando.

Yeah. Good morning, Warren. I believe that what I would add is basically we have seen some return of inflation to our basket of commodities. It is not a general increase. It is really concentrated in a few family of materials. I would call three of them pile mold and surfactants that affect so bad. and HPC liquids, cocoa, with a very significant impact in ice cream, and tea, that affects our Indian business. It's very difficult with the start of tariffs and the significant volatility in currencies to predict the material inflation. With the current information we have now, we see an annual material inflation of around 0.7, 0.8 billion, of which half is currency-related. This material inflation, of course, will drive some acceleration of pricing and hence our guidance of more balance between volume and pricing. And we expect that pricing to be materialised from quarter to onwards.

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

Thank you, Gemma. Good morning, everyone. So my first question is on what you said you can control. In a market that is slowing, you are talking about the balance of volume and pricing. So I understand the pricing accelerates through the year. I would like to understand on volume what visibility you have of achieving a I don't know, a number which I presume will be around the 2% mark. If you could talk about innovation, launches, market share, what is it that makes you confident that you can... stay at this level despite potentially pricing as well, eating on elasticity. And my second question is on Europe. Last year, you said that 70% of your market share gap was due to Europe. Can you talk about your performance in that region and how you see 2025 unfolding? Thank you.

Thanks, Janine. Very clear. Let me first talk about volume and pricing. I mean, look, first of all, in the second half of 2024, we actually stepped up on volume-led growth. So we realized 3.2% volume of UVG and 1.1% UPG. And in the fourth quarter, we continued to be volume-led. That was very broad across all of the business groups. And this was so important when we laid out the growth action plan that we wanted to become that company where we would restore a healthy balance between volume and mix and price. And I think we're sort of demonstrating that. But of course, going forward, we believe that you're indicating around 2%. We believe that 2025 with the spikes on commodity that Fernando talked about will be a bit more balanced between volume and price. But we remain laser focused on continuing that volume and mixed growth. So, look, I mean, if you look at the trend, quarter three, quarter four, and then going forward, what do we do? Innovations, fewer, bigger, better. Now, we saw already big progress in 2024 on that, but in 2025, we have again identified around 12 big bets that we're going after. These ones should all become 100 million euro platforms for us. And I think we indicated a few in the video. Think of Wonderwash, for example, one of them. Think of Glutahaya, which is continuing and so forth. So we're going to continue to invest behind those. Now, if you then think of Europe, look, we have indeed improved market shares in Europe quite considerably, mainly behind home care. That was a true trend change. We also improved and increased market share and leadership in personal care. We're very positive about the developments in deodorants in Europe. The Dove brand has shown very solid growth. Europe is around 18% of our turnover. And we've said from the very beginning, because it's important, we want to make sure that we're also competitive in Europe. And we are determined, again, on the back of innovation. And the European consumer is actually responding to that to continue to grow our volumes there. So Europe is certainly not a part of the world in which we're actually negative about. We will continue to invest behind it and improve on margins. Last word on... Yeah, I think on volumes, as I said, price will probably mount volume versus price. We do see price developing in 2025, but more back-weighted. Pricing takes a bit of time. We're implementing that. We're, of course, also talking at this moment in time. It's the beginning of the year. You talk to retailers. You're doing all the actions. We expect that to follow from Q2 onwards, and that will, of course, contribute to overall top-line growth.

Next question comes from Jeff at BNP. Go ahead, Jeff.

Good morning, everyone. Two questions, if I may. The first question is, excluding ice cream, would you expect the business to achieve 4% to 6% growth this year, i.e. in line with the mid-term guidance? And secondly, with respect to the three exchanges where the ice cream business will be listed, will one of these be a sort of primary listing, i.e. most of the trading will happen on one venue? And if that's right, where will that be? Thank you.

Thank you, Jeff. When it comes to the guidance, look, what we've said is that after the demerger of ice cream, we have guided towards a 4% to 6% growth. That's still what we're shooting for. We said, look, there is a bit of impact on ice cream, but we also said that you know, by then the growth action plan would be in place for a considerable amount of time. We have been able to get our investments behind the core brands, you know, really right. And innovations in the platforms that I talked about should mature before that time and leading to that growth. So I'd rather sort of stick to the guidance of, you know, the 3% to 5% that we are looking for this year and then, you know, and then we looked at that after the merger of ice cream. When it comes to the three exchanges, look, the country of incorporation is the Netherlands. And that means that, in your words, Amsterdam or Euronext, better said, would be a primary listing location with other listings in London and New York. And that is, of course, to mitigate any technical flowback.

Thank you very much. The next question comes from Olivier at Goldman Sachs. Go ahead, Olivier.

Hi, good morning. Two questions, please. Could you give us a bit more detail on COGS inflation? You mentioned cocoa and dairy inflation, but obviously that relates to the ice cream business only. What's the outlook for the rest of your commodity baskets, which would be for the four divisions left? And then on liquid IV, I mean, growth has been phenomenal. You've boosted production in the U.S. due to strong demand. Did you have some capacity constraints which was preventing you from growing as much as you wanted? And how much white space do you see for the brand globally? Thank you.

Thanks, Olivier. I'll pass on the question on inflation and Cox to Fernando. Just a few words on Liquid IV. Look, Liquid IV is, we believe, the number one powder hydration brand in the U.S. It has gone through very steep growth. It's about seven times larger than when we acquired it. and we have expanded it into into seven other markets than the us alone throughout the year 2024 we started you know with some product i mean obviously we need to expand on capacity which we've done in-house we're also working with others and there may have been a few weeks or whatsoever you know that we may have had some some disruptions or not being able to fully meet demand but i would say overall that's resolved And we are very confident that we can service our customers to the appropriate levels. We're obviously very positive about Liquid IV. The expansion in other markets is not to the extent that it's in the U.S. because it's a habit change for consumers. But we see absolutely, you know, we see a lot of opportunity for growth still, even in the U.S. in itself. So we remain very bullish behind Liquid IV and we will continue to invest levels on or above the company average of BMI of 15.5%. Fernando, on the Cox.

Phenomenal growth in liquid IV and I would highlight also our sugar-free launch has been probably the most successful launch in the year for Unilever. In Cox, I mentioned that the inflation, the impact of net material inflation is around 0.8 billion with the information we have today. And it's very concentrated. As I mentioned, palm oil and surfactants, you know, they are part of soap bars and liquids in beauty and personal care and home care. This is around 55% of inflation. And 25% of the total inflation is around cocoa. cocoa and chocolate that, of course, you know, is just fundamentally used in ice cream. So these are the categories that are more affected, you know. Of course, in percentual terms, the impact in ice cream is significantly higher than in the other categories due to the cocoa and chocolate effect.

Thank you. Next question comes from Guillaume at UBS. Go ahead, Guillaume.

Thank you, Gemma, and good morning all. I've got one point of clarification and one question. In terms of the point of clarification, Hein, when you talk about a slower start to the year, just to be clear, are you effectively guiding for a sequential slowdown in Q1 relative to the 4% achieved in Q4 or not necessarily? And likewise on margins, does your guidance of modest margin expansion with the improvement realized in the second half effectively mean your margins should be expected to be down in the first half of the year? And also on the margin front, does your guidance bake in a potential benefit from having ice cream as discontinued operations from Q4? And then my question is on North America, because that's the second consecutive quarter, the region grew by 7% with volumes in excess of 6%. Could you maybe shed some light on this very strong volume performance, both in terms of categories, but also where you're seeing the biggest share gains? And I guess looking ahead, how sustainable is that strong mid-single-digit underlying sales growth performance? Thank you very much.

Thank you, Guillaume. Look, on the guidance that we have given, I mean, first of all, we're looking for the full year to remain within the guidance and we're confident about that. We have indicated an overall slower start of the year. Let me just elaborate a little bit on that. You know, market growth, as I said, slowed down a bit in Q4 and we see that also subdued in Q1. I talked about pricing. That will take a bit of time before that fully takes effect. And there will be, as a result of commodity spikes and so forth, there will be some volume instability overall. Now, with all that said, we are continuing very strongly behind our growth action plan and the actions we take. We're not going to deviate from that trajectory. But we do guide sequential slowdown. So, yes, 4% in Q4, and that means slowdown in Q1. And then we expect it to ramp up during the year. When it comes to the margin, we're not guiding margins for the quarter or for the first half year as such, but we do say 45% gross margin is a good base. That's where we want it to be. It came earlier than what we said. The second thing that we said was, We are ahead in our overall restructuring or the productivity exercise with already 4,300 full-time roles less in the company. We expect that full productivity program to end by the end of 2025, which is well ahead of expectations almost a year. When it comes to restructuring spend, for example, we have spent 1.4% of turnover in 2025. We expect a similar percentage in 2020, sorry, 2024. We expect a similar percentage in 2025, but we still aim for, you know, 1.2% over a course average on three years. And that means significantly reduced spend in 2026. So I think that gives some color on where we are. We are here to make sure that we fulfill commitments on the medium-term basis and, of course, on a full-year basis. But there will be some sequential slowdown from Q4 to Q1, as we mentioned in the very beginning.

In North America, two quarters of 7% with volume of 6%. We believe that this reflects the fundamental transformation of our portfolio in the region with a very important role for businesses like wellbeing that is growing double digit or prestige that also has grown in single digit in the region. I feel good news also the development of personal care along 2024. We have been increasing performance and it has been a key contributor to growth in quarter four. So fundamentally, you know, we believe that our business in North America is a very different business to the one we had a few years ago and with much more underlying growth potential. So good performance in a business that is of much better quality than it used to be.

I agree with that. Before we go to the next question, there was one other question on ice cream, which I know that I just wanted to mention. So in the guidance that we have given, ice cream is fully part of the group for 2025. What we've said before is once ice cream is demerged, it will have a technical effect on margins overall of around 90 basis points. But that is not included in our guidance remarks that we're making today. So guidance remarks simply include ice cream for the year.

Thank you. Next question comes from Jeremy at HSBC. Go ahead.

Morning. A couple of questions from me. First one is just on some of these competitive metrics that I know we've had in previous courses. Can you just give us a bit more detail on where you think Unilever grew versus its markets in kind of 24 and perhaps in the more recent period. And then also some color of what your sort of market share sales gaining or losing market share is. And then the second question is on your China business. Obviously you put the slide up about some of the changes that you're making there. Perhaps you could talk more about your portfolio in China and the kind of competition in that market. So are there areas which you've seen become dramatically more competitive and where you think you might have to withdraw or sort of deprioritize or even divest certain parts of your business in that market. Thanks.

Thanks a lot, Jeremy. A few points on competitiveness. Look, what we've said, I'm taking you back to the beginning of 2024, because I think it's important to talk about what did we say and what did we do. And we said at the time that we expected turnover-weighted market shares to improve in the second half of 2024. And that's exactly what we have seen. We've seen improved shares, particularly over the last six months. And we believe that in the last quarter, we're certainly back at a fairly neutral market share situation. That means no gain, no loss on the universe that we measure. But that's only about two thirds of the total business. One third of our business is not measured. In that sense, think about our well-being business, think about our prestige business, think about our out-of-home ice cream business or our food solutions business. And we believe that these businesses, with some alternative calculations that we have made, we are in market share gain position. And I think if you look at our reported numbers, versus peers and versus market, I think that is a good evidence of that. And we expect that for 2025 to continue on the back of, once again, clear plans in the growth action plan, a significant step up on BMI to the 15.5% level. Maybe just to highlight, if you take that 15.5% level, That means an increase in 2024 of 900 million. Then that comes on the back of a 600 million increase that we did in the second half of 2023. So around a 1.5 billion euro step up in support to our brands, fewer and bigger and better innovations. And that is a trajectory that we will continue to work on. So where is competitiveness better? Where are we under pressure? I can give you some geographical color here. As I said before on the question, and I think on Janine, we believe Europe was actually stronger for us, good and positive developments, home care particularly, but also personal care. U.S. imbued in personal care positive developments and positive market share developments. I mean, that means gaining in our foods business, in condiments as well as in cooking aids. And I would talk similarly about Latin America. Where do we see softness? We see softness in China because of the reset that we're doing, but also the consumer shift to channels in which we don't have fair share. And that includes, for example, the Douyin channel. We also see softness in Indonesia where we are making a significant reset. Overall, India I would qualify as relatively neutral. So I'd sort of like to leave it there, but that probably gives you a feel. Zooming in on China a bit, I talked about Douyin. Our portfolio is quite concentrated in China. We have, I mean, in beauty, in hair care, important brands around clear. And then of course, home care with the OMO fabric cleaning proposition and food solutions. You know, I think it's a concentrated portfolio. We feel good about those. Those are strong brands. We have good innovation plans behind them. We are making the necessary but also profitable inroads in the channels that I talked about, such as Doyen, and you will see a positive effect of that in the second half of 2025 on a comparable basis.

The next question comes from Victor at TD Securities. Go ahead, Victor.

Hi, good morning. This is Victor on for Moscow, and thanks for the question. Two for me, please. So I wanted to ask about U.S. personal care, specifically deodorants. It seems that trends are improving. You know, they haven't talked about challenges here last year and being late to the emerging super cream segment in the U.S. Can you talk about how that's improved? Maybe what you did specifically behind brands like Gov to address this and the consumer traction behind the new innovation? And also, my second question is that given that Egg prices are more than 70% higher in the U.S. year over year. How much of the $0.8 billion commodity inflation outlook is this? How do you see the effects of higher costs impacting the P&L, specifically in mayonnaise? Thanks.

Thanks, Victor. Just a few remarks on the US, on the PC business, and then Fernando will take some remarks on inflation. So, you know, on deodorants, as well as on skin cleansing, by the way, so it's on both, we've seen positive developments. I mean, on the innovations that are playing a role, our whole body deodorants, it's only an early introduction, but we believe we have a very exciting portfolio for us going forward, as well as strong market activation on that one. On skin cleansing, it's the serum collection of body washes behind DAF. It's a much more premium product, really off to a great start, so we're very excited about that. And it really hits it home. It's behind a big power brand, more premium product, great product superiority, but also I think the execution that we did entirely through social and digital products. You know, we're very, very positive about that. So, you know, we're seeing improved momentum in the U.S. business and PC, and we expect that to continue. I think when it comes to inflation, and particularly in the U.S., Fernando?

Yeah, you know, our responsibility is to really protect the integrity of the P&L shape. And, you know, we are very committed to continue investing behind our brands. And that requires pricing to offset commodity inflation, you know. We will do that. Of course, there is always a lag. between the heat of the net material inflation at the time at which you really learn the pricing in the market, but we are committed to really protect the integrity of the P&R shape.

Thank you. Our final question comes from Tom Sykes at Deutsche Bank. Go ahead, Tom.

Yeah, thank you, Morning. Just trying to square the guidance a little bit more on the shape of the year in that you're seeing a slowdown before you're putting pricing through, and then you're saying that growth will improve as you put pricing in. I mean, when you think about the volume mix, are you also assuming or budgeting for volume mix to improve? In the second half of the year, even though you're pushing pricing through, and I suppose, therefore, what are the sort of particular drags on volume mix that you expect to annualize out? And then just following up on the U.S. growth, and I suppose slightly more widely, but you've got this Project Sky, which you piloted with Walmart Mexico, and I believe that may be going into Walmart U.S., this year um where you are putting that system in is there a sell-in that's slightly greater before you go live with that um and is that at all contributing contributing to the strong performance in north america and what improvements from rolling out that system do you think you'll get in 25 please

Thanks, Tom. I mean, on the guidance, let me just make a few overall remarks on volume and on pricing. I may be a bit repetitive here, and then Fernando can give some more color, and I'll come back to you then on the customer question. So first of all, as we said, yes, you are right. So again, I'm a bit repetitive here, but what we're seeing is that Pricing indeed will come, but it will come with some lag in the second quarter and beyond. We will see some volume mix volatility in the first quarter probably as well. But overall, don't forget, we have a few areas that we've already hinted to that we are repairing and resetting. So think of China and Indonesia where we expect overall positive results year on year in the back half of 2025. That will contribute to a better UVG in those quarters. We will continue with the strategy that we talked about in the US and in Europe also in the first quarter. So there will be no change to that, but pricing will very likely evolve. Then when it comes to timing issues such as, look, it's a whole myriad of things, whether it's timing of Chinese New Year, timing of Easter, trading days. We're seeing a very high interest environment in Latin America, leading retailers to deplete their stocks to a greater extent. You know, there's a lot going on in the world and I would say it all has some effect on the volatility on volumes in the first quarter. But again, we are navigating through that, putting the necessary actions in place and pricing that will evolve over in the course of the year. But we want to be realistic on the slope of the business and how it will develop. Your question on the Skype program. Yes, we are very, very positive about that. And I think this is really part of digitizing the company more. I mean, using AI, it's one of our bigger bets with AI to significantly improve digitalization. planning and forecasting overall. We've talked about that. We are rolling this out with many customers around the world. I can't give you a precise number, but it's basically in Europe as well as in the US. And we're getting very enthusiastic responses and we're seeing a clear uptick in service as well as in forecasting preciseness. So yeah, we're very positive about that and we will continue to roll forward.

I would add to that, Hein, that the scores in our advantage survey, the way that key retailers measure the different players in the industry, we have seen a significant improvement in the scores of Unilever and in the relative position of the company.

I think one of the best ones we've seen at least in more than a decade. And we're very positive about that. And execution is at the heart of our growth action plan. So if I wrap it up, in summary, 2024 has been a year of improved performance. We said it in the video and it reflects therefore a year of a lot of activity. But we want to make sure that whatever we say, we do. And I think you got that sense in 2024. And that is also our mantra going forward. For us, it's all about delivering higher performance on a consistent basis, having sort of a multi-year program in mind. We believe that the growth action plan is working, working for us. We see it in competitiveness. We see it in cost control. We see it in driving innovation and mix. The quality of execution is getting better, and we believe that the grip on the company is getting tighter. And therefore, we are determined to move forward. with new levels of speed and clarity and precision to address the weaknesses that are there, but also to open up great opportunities. So we believe we are better positioned today than where we were a year ago, and we're confident of delivering ambitions in 2025 and the years ahead. Thank you very much for joining on this call, and obviously we're very much looking forward to speak to you in person in the next couple of days or in the next couple of weeks. Thank you.