Unilever Trading Statement – Third Quarter 2023
| Solid Q3 results and action plan to drive growth and unlock potential |
| Third Quarter 2023 | Nine Months 2023 | |||||
| (unaudited) | USG | Turnover | vs 2022 | USG | Turnover | vs 2022 |
| Unilever | 5.2% | €15.2bn | (3.8)% | 7.7% | €45.8bn | 0.4% |
| Beauty & Wellbeing | 7.4% | €3.1bn | (4.9)% | 8.5% | €9.4bn | 3.7% |
| Personal Care | 8.0% | €3.6bn | (2.2)% | 9.8% | €10.5bn | 3.7% |
| Home Care | 5.3% | €3.1bn | (4.1)% | 7.3% | €9.3bn | 0.5% |
| Nutrition | 5.6% | €3.2bn | (2.4)% | 8.7% | €9.9bn | (5.7)% |
| Ice Cream | (2.8)% | €2.2bn | (6.5)% | 2.8% | €6.7bn | 0.7% |
Third quarter highlights
• Underlying sales growth of 5.2% with 5.8% price growth and (0.6)% volume decline
• Underlying price growth continues to moderate as inflation eases, with underlying volumes now positive in Beauty & Wellbeing, Personal Care and Home Care
• Turnover decreased (3.8)% to €15.2 billion with (8.0)% from currency and (0.6)% from disposals net of acquisitions
• Our billion+ Euro brands, accounting for 56% of Group turnover, delivered underlying sales growth of 7.2%, with 5.7% price growth and 1.4% volume growth, led by strong performances from Dove, Hellmann’s, Rexona and Sunsilk
• Our 2023 outlook remains unchanged with underlying sales growth above 5% and a modest improvement in underlying operating margin
• Today we set out an action plan focused on: faster growth, greater productivity and simplicity, powered by a stronger performance culture. These targeted actions will address the gap between our past performance and potential, delivering improved value creation
Chief Executive Officer statement
“Unilever is a company with strong fundamentals: a portfolio of great brands used by 3.4 billion people each day, number one or two category positions across 80% of its turnover, an unrivalled global footprint, and a team of talented people.
Despite these strengths, our performance in recent years has not matched our potential. The quality of our growth, productivity and returns have all under-delivered.
Today we are setting out our action plan to close this gap. We will drive faster growth by stepping up innovation and investment behind our Power Brands; we will drive simplicity and productivity, leveraging the full strength of our operating model; and we will sharpen our performance culture through strong leadership and stretching goals.
I am excited about what we can achieve by delivering on these three priorities, as we focus on unlocking Unilever’s full potential in the months and years ahead.”
Hein Schumacher
| Action Plan |
Today we set out an action plan to drive growth and unlock potential.
Unilever is a company of many strengths, including, its category positions, the strength of its brands, its unmatched geographic reach and talented and passionate people. However, there has been a disconnect between these intrinsic strengths and the quality of our performance. Remedying this underperformance is our top priority and with Unilever’s strong fundamentals and the many opportunities across the five Business Groups, we are confident that we can achieve that.
Improved performance comes down to three things – delivering higher-quality, faster growth; stepping up productivity and simplicity; and, adopting a stronger performance focus. To address these we have defined a clear action plan that we are focusing the company on.
Faster growth
1. Focus first on 30 Power Brands – representing 70%+ of turnover
2. Drive unmissable brand superiority – addressing all elements of consumer preference
3. Scale multi-year innovation – driving market making and premiumisation
4. Increase brand investment and returns – focusing investment on areas that drive impact
5. Selectively optimise the portfolio – no major or transformational acquisitions
Productivity & simplicity
6. Build back Gross Margin – shifting from gross savings to net productivity
7. Focus our sustainability commitments – driving impact in four priority areas
8. Drive benefits of the new organisation – ensuring single point accountability
Performance Culture
9. Renewed team – leading the change
10. Drive and reward outperformance – with a new reward framework
We are providing more details on each of these in this morning’s CEO update presentation. This action plan leverages Unilever’s many capabilities and looks to accelerate areas where we are already making progress. In all areas we are focused on fewer things, done better, with greater impact.
The action plan will strengthen our performance within our multi-year financial framework:
• Underlying sales growth of 3-5%
• Modest margin expansion
• 100% cash conversion
• Mid-teens return on invested capital
• EPS growth and an attractive dividend
• Delivering total shareholder returns in the top third of our peer group
Appointment of new Chief Financial Officer and other executive leadership changes
As announced separately today, Fernando Fernandez has been appointed as Unilever’s new Chief Financial Officer. Fernando, currently President of Unilever’s Beauty & Wellbeing Business Group, will replace Graeme Pitkethly, who announced his decision to retire from the company earlier this year. Fernando’s appointment is effective from 1 January 2024 and he will join the Board with effect from this date.
Unilever today also announced other changes to its Unilever Leadership Executive, as set out in detail in the separate announcement available here: https://www.unilever.com/news/press-and-media/
| Outlook |
Our 2023 guidance remains unchanged. We continue to expect underlying sales growth for the full year to be above 5%, ahead of our multi-year range, with underlying price growth continuing to moderate.
Our expectation for net material inflation (NMI) for 2023 remains unchanged at around €2 billion. We are confident in delivering a modest improvement in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind our brands.