Unilever PLC Q1 FY2025 earnings call

Fernando Fernandez discussed the company's transformation, focusing on consumer obsession, portfolio quality, marketing and sales machine building, completing productivity program, and recapturing pioneering spirit. Srini Phatak detailed first quarter results, including segment performances, Power Brands' role, and regional variations. He also mentioned the ice cream business separation progress, with the stand-alone Magnum Ice Cream Company to be demerged in quarter 4.

Underlying sales growth in the first quarter was 3%, with underlying volume growth contributing 1.3%. Price growth continued to improve sequentially to 1.7%. Power Brands, which contribute over 75% of turnover, had underlying sales growth of 3% with 1.2% from volume and 1.8% from price. Beauty & Wellbeing underlying sales grew 4.1% with volume at 2.5% and price at 1.5%. Personal Care had underlying sales growth of 5.1% with 2.7% volume and 2.4% price. Home Care delivered underlying sales growth of 0.9%, driven by a 1% increase in volume. Foods had underlying sales growth of 1.6% in the first quarter with volume at minus 1.1% and price growth at 2.7%. Ice Creams delivered 4% underlying sales growth with 1.8% from volume and 2.2% from price. Developed markets, accounting for 42% of turnover, grew underlying sales 4.5% with volumes up 3.3%. Latin America slowed to 1.5% with volume declining 3%. Asia Pacific, Africa had underlying sales growth of 2%, with India growing 3%, Turkey with double-digit growth, China declining high single digit, and Southeast Asia muted.

Reaffirms full year 2025 outlook with underlying sales growth within 3% to 5%, expects modest improvement in underlying operating margin, and assesses tariffs' impact as limited and manageable. Commits to driving top line growth with strong volume contribution and delivering profit growth in hard currency.

Market conditions are volatile and uncertain with global economy likely operating below long-term potential. Currency volatility heightened by tariff announcements. Macro-economic uncertainty posing risk to consumer confidence. Emerging markets facing challenges like high real interest rates in Latin America and broad-based market weakness in China.

Q: Can you set out the moving pieces around why you will accelerate in H2 and confidence in Asia?

A: Focus on landing strong innovation plan, competitive investment in brands, shifting resources to best growth opportunities, divisionalizing sales force, and progress in China and Indonesia with better comparators and operational improvements.

Q: How much leeway do you have on cost savings and pricing if macro worsens?

A: Committed to EUR 550 million savings from productivity program, and will evaluate other levers like procurement and pricing adjustments.

Q: Priority areas over coming weeks and visible changes?

A: Short-term priorities include landing strong innovation plan, competitive brand investment, shifting resources, divisionalizing sales force, completing ice cream separation, and delivering productivity program. Long-term focus on building desirability at scale.

Q: Why EBITDA margins at Hindustan sustainable?

A: India is a strong business with potential tailwinds from government incentives, tax reliefs, and lower inflation, with plans to invest and defend positions.

Q: Why margin wording changed?

A: No change in stance, just added color on margin phasing with more balanced H1 and H2 considering base year context.

Q: On Power Brands and Dove?

A: Power Brands remain primary focus, Dove growing well with strong momentum, and Home Care performance in emerging markets expected to improve with time.

Q: Wellbeing and Beauty plans?

A: Wellbeing growing strongly, core Beauty has competitive performance excluding China and Indonesia, Prestige Beauty affected by market slowdown but some premium brands growing.

Q: Phasing of margin and Sky program?

A: Margin phasing due to base year factors and investment in innovations, Sky program rollout has no impact on sales phasing.

Q: FX impact and EM recovery?

A: Committed to hard currency earnings, will manage FX through various levers, confident in EM recovery with better comparators and operational improvements.

Q: North America and morale?

A: North America performance reflects portfolio transformation, One Unilever markets started well, morale improving with focus on desire at scale and performance is culture.