2022 Full Year Results
| Strong sales growth and continued progress against strategy | |||||||||
| Underlying performance | GAAP measures | ||||||||
| (unaudited) | 2022 | vs 2021 | 2022 | vs 2021 | |||||
| Full Year | |||||||||
| Underlying sales growth (USG) | 9.0% | Turnover | €60.1bn | 14.5% | |||||
| Beauty & Wellbeing | 7.8% | Beauty & Wellbeing | €12.3bn | 20.8% | |||||
| Personal Care | 7.9% | Personal Care | €13.6bn | 15.9% | |||||
| Home Care | 11.8% | Home Care | €12.4bn | 17.3% | |||||
| Nutrition | 8.6% | Nutrition | €13.9bn | 6.1% | |||||
| Ice Cream | 9.0% | Ice Cream | €7.9bn | 14.8% | |||||
| Underlying operating profit | €9.7bn | 0.5% | Operating profit | €10.8bn | 23.6% | ||||
| Underlying operating margin | 16.1% | (230)bps | Operating margin | 17.9% | 130bps | ||||
| Underlying earnings per share | €2.57 | (2.1)% | Diluted earnings per share | €2.99 | 28.8% | ||||
| Free cash flow | €5.2bn | €(1.2)bn | Net profit | €8.3bn | 24.9% | ||||
| Fourth Quarter | |||||||||
| USG | 9.2% | Turnover | €14.6bn | 11.4% | |||||
| Quarterly dividend payable in March 2023 | €0.4268 | per share (a) |
(a) See note 10 for more information on dividends
USG, UVG, UPG, UOP, UOM, underlying EPS, constant underlying EPS, underlying effective tax rate, FCF, net debt, ROIC and UEBITDA are non-GAAP measures
Full year highlights
• Underlying sales growth accelerated to 9.0% , driven by all Business Groups, with price growth of 11.3% and volumes declining 2.1%
• Turnover increased 14.5% to €60.1 billion , including 6.2% from currency and (1.0)% from disposals net of acquisitions
• Underlying operating profit improved slightly to €9.7 billion despite margin decline of 230bps driven by input cost inflation
• Underlying earnings per share decreased 2.1% , diluted EPS up 28.8% helped by profit on disposals
• Free cash flow €5.2 billion , including €0.3 billion of tax paid on separation of ekaterra, the global Tea business, reflects 97% cash conversion
• €1.5 billion share buyback and €4.3 billion dividends during 2022
• Brand and marketing investment increased €0.5 billion in constant exchange rates
• Our billion+ Euro brands , accounting for 53% of Group turnover, delivered underlying sales growth of 10.9%, led by strong performances from OMO, Hellmann’s, Rexona, Sunsilk and Magnum
• Simpler, more category-focused organisation , in place since 1 July, is driving greater operational focus and faster decisions
Chief Executive Officer statement
“Unilever delivered a year of strong topline growth in challenging macroeconomic conditions. Underlying sales growth was 9.0%, driven by disciplined pricing action in response to high input cost inflation. Growth was broad-based across each of our five Business Groups, led by strong performances from our billion+ Euro brands. Despite sharp rises in material costs, we have prioritised stepping up our brand and marketing investment. Underlying operating margin was delivered in line with our guidance, with underlying operating profit up for the year.
We have made further progress in the transformation of Unilever and continued to deliver against our strategic priorities. Our new operating model is already unlocking a culture of bolder and more rapid decision-making with improved accountability. We continue to improve our growth profile, with the sale of the global Tea business and the acquisition of Nutrafol. We are increasingly realising the benefits from the reshaped portfolio, accelerated savings delivery and improved execution. There is more to do, but the changes we have made mean that we start 2023 with momentum, setting us up well for delivering another year of higher growth, which remains our first priority.”
Alan Jope
9 February 2023
| Outlook for 2023 |
In 2022, we carefully balanced price growth, volume and competitiveness to navigate through the high cost inflation environment. We will again deliver strong underlying sales growth in 2023, with improving volume performance and competitiveness as the year progresses. We will continue to price and drive our cost savings programmes, in order to allow us to invest behind our brands and deliver improved margin.
We expect cost inflation to continue in 2023. Our expectation for net material inflation (NMI) in the first half of 2023 is around €1.5 billion. We anticipate significantly lower NMI in the second half, with a wide range of possible outcomes, though we do not expect cost deflation.
In the first half, underlying price growth will remain high, and volume growth will be negative. Volume will improve as price growth softens, but it is too early to say whether volume will turn positive in the second half. We expect 2023 underlying sales growth to be at least in the upper half of our multi-year range of 3 – 5%.
We will deliver only a modest improvement in underlying operating margin in the full year, as we plan for another year of increased investment, and with cost inflation remaining high, underlying operating margin will be around 16% in the first half.
| Full Year Review: Unilever Group |
| (unaudited) | Turnover | USG | UVG | UPG | A&D | Currency | Turnover change | UOM% | Change in UOM |
| Full Year | €60.1bn | 9.0% | (2.1)% | 11.3% | (1.0)% | 6.2% | 14.5% | 16.1% | (230)bps |
| Fourth Quarter | €14.6bn | 9.2% | (3.6)% | 13.3% | (3.1)% | 5.3% | 11.4% |
Performance
Underlying sales growth stepped up to 9.0% in 2022, led by pricing, in the face of significant input cost inflation across our markets. Price growth has sequentially improved in each of the past eight quarters, reaching 13.3% in the fourth quarter and taking the full year underlying price growth to 11.3%. This had, as expected, some negative impact on volumes, which declined 2.1%.
Beauty & Wellbeing grew underlying sales by 7.8% driven by price. Volumes were slightly positive, helped by another year of strong growth in Prestige Beauty and Health & Wellbeing, which now account for more than €2.5 billion of turnover. Personal Care underlying sales were up 7.9%, driven by strong pricing. Volumes grew in Deodorants, but declined in other categories. Home Care, which was particularly exposed to rising input costs, delivered the highest price growth and some volume decline, leading to underlying sales growth of 11.8%. Nutrition grew 8.6%, led by high price growth of Dressings and a continued recovery of Unilever Food Solutions. Ice Cream improved underlying sales by 9.0%, with strong volume growth in out-of-home channels, benefiting from a good summer season, but not quite compensating for lower in-home volumes.
Emerging markets grew underlying sales by 11.2% with price of 13.5% and volume down 2.0%. South Asia grew strongly through both price and volume. Price growth in Latin America increased to 20.4% with volumes contracting by 4.6%. China declined slightly as it was affected by pandemic-related restrictions, particularly in the second and fourth quarters. South East Asia achieved double-digit price growth with virtually flat volumes. Turkey delivered high single-digit volume growth in a very inflationary environment. Developed markets increased by 5.9%, with 8.4% from price and (2.3)% from volume. Volumes held up better in North America than in Europe.
Turnover increased 14.5% to €60.1 billion, which included a currency impact of 6.2% and (1.0)% from disposals net of acquisitions. Underlying operating profit was €9.7 billion, up 0.5% versus the prior year. Underlying operating margin declined by 230bps to 16.1%. Gross margin decreased by 210bps which reflected €4.3 billion of net material inflation, and increased production and logistics costs that were only partially mitigated by our pricing action and savings delivery. Brand and marketing investment was stepped up by €0.5 billion in constant exchange rates. This equated to a 10bps contribution to margin in current exchange rates. Overheads increased by 30bps largely due to investments in capabilities to drive growth and increased scale of our Prestige Beauty and Health & Wellbeing businesses.
Capital allocation and operating model
On 22 July and 19 December 2022, we completed the first and second €750 million tranches of our ongoing share buyback programme of up to €3 billion. The quarterly interim dividend for the fourth quarter is maintained at €0.4268. Since 1 July 2022, our simpler, more category-focused operating model for Unilever has been in place, organised around five Business Groups and a technology-driven backbone, Unilever Business Operations. We are on track to deliver the new structure within existing restructuring plans, and to generate around €600 million of cost savings over the first two years after 1 July 2022, with the majority in 2023.
| Conference Call |
Following the release of this trading statement on 9 February 2023 at 7:00 AM (UK time), there will be a live webcast at 8:00 AM available on the website www.unilever.com/investor-relations/results-and-presentations/latest-results. A replay of the webcast and the slides of the presentation will be made available after the live meeting.