Unilever PLC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Growth Action Plan (GAP): Launched in 2023, executed with speed, impacting top brands, innovations, and supply chain productivity.
• Productivity Program: Reduced 4,300 full-time roles by end of 2024, aiming for 7,500 by end of 2025; ahead of plan.
• Capital Deployment: Deployed to top priorities, returned €5.8 billion to shareholders in 2024 via dividends and buybacks.
• Ice Cream Separation: On track to complete by end of 2025; appointed Jean-Francois van Boxmeer as Chair Designate; to list on Amsterdam, London, and New York exchanges.
• Culture and Organization: Leaner organization, performance incentives, new structure with Business Groups focusing on top markets and Power Brands.

Segment Performance

• Beauty & Wellbeing: Underlying sales growth 6.5% led by volume 5.1% and price 1.3%. Power Brands (over 75% of Group turnover) performed well, with Prestige Beauty and Wellbeing ~30% of turnover. Hair Care and Skin Care growing; Wellbeing brands like Liquid I.V. saw double-digit volume growth.
• Personal Care: Underlying sales growth 5.2% driven by deodorants (double-digit growth) and Dove (40% of turnover). Volume growth accelerated in Q4, supported by innovations like Whole Body Deodorants.
• Home Care: Underlying sales growth 2.9% with volume 4.0%. Fabric Cleaning (Persil Wonder Wash) and Comfort grew, with gross margin expansion.
• Foods: Growth 2.6% with price 2.4% and volume 0.2%. Knorr and Hellmann’s performed well; disposals of Unox, Conimex, Zwan announced.
• Ice Cream: Underlying sales growth 3.7% with volume 1.6% and price 2.1%. Ben & Jerry’s and Wall’s were fastest-growing brands; operational improvements made.

Guidance

• Underlying Sales Growth: Expected to be within 3%-5% in 2025, with a slower start but improvement as pricing increases due to commodity costs.
• Gross Margin: At 45% (new base), expect modest improvement in underlying operating margin, back-weighted due to market slowdown and commodity inflation.
• Capital Returns: New share buyback up to €1.5 billion commencing in 2025, completing in the first half of 2025.

Risks

• Commodity Inflation: Impact on materials like palm oil, cocoa, affecting margins and pricing; concentrated inflation with half due to currency.
• Market Volatility: In regions like Latin America (currency volatility) and Asia Pacific (market weakness in China, Indonesia), affecting volumes and pricing.
• Competitive Pressures: In markets like China and Indonesia, requiring strategic actions to improve market share and portfolio.

Question and Answer

• Q: Comment on category growth, market share trends, and 2025 outlook; margin phasing.

A: Hein and Fernando discuss market slowdown, pricing acceleration from Q2 onwards, net productivity efforts, and gross margin at 45% as the new base.

• Q: Volume visibility, innovation, Europe performance.

A: Hein talks about balanced volume and pricing, innovation bets (e.g., Wonder Wash), and Europe's improved market shares in Home Care and Personal Care.

• Q: Excluding Ice Cream growth, Ice Cream listing exchanges.

A: Jeff问及 growth guidance for non-Ice Cream business and Ice Cream listing on Amsterdam, London, and New York exchanges with no primary listing dominance.

• Q: COGS inflation, Liquid I.V. growth.

A: Hein and Fernando discuss COGS inflation impact on materials like cocoa and Liquid I.V.'s strong growth, including sugar-free launch.

• Q: Sequential slowdown, North America performance.

A: Guillaume and Fernando talk about sequential slowdown in Q1 due to market factors, and North America's improved portfolio with strong growth in Wellbeing and Prestige Beauty.

• Q: Competitiveness, China business.

A: Jeremy and Hein discuss market share improvements, China's portfolio changes (premiumization, digital models), and actions in China and Indonesia.

• Q: U.S. Personal Care, commodity inflation.

A: Victor and Hein talk about U.S. Personal Care's improved performance with deodorant innovations and Fernando discusses protecting P&L from commodity inflation.

• Q: Volume mix, Sky program.

A: Tom and Hein discuss volume mix volatility in Q1, and the Sky program's rollout to improve planning and forecasting with retailers.