UNLYF - Unilever PLC (UL) Q4 2023 Earnings Call Transcript

2024-02-08 08:22:06 ET

Unilever PLC (UL)

Q4 2023 Earnings Conference Call

February 08, 2024, 03:00 ET

Company Participants

Hein Schumacher - CEO & Director

Fernando Fernandez - CFO & Director

Conference Call Participants

Thomas Sykes - Deutsche Bank

Guillaume Delmas - UBS

Warren Ackerman - Barclays Bank

Jean-Olivier Nicolai - Goldman Sachs Group

Jeffrey Stent - BNP Paribas Exane

Sarah Simon - Morgan Stanley

Bruno Monteyne - Sanford C. Bernstein & Co.

Fulvio Cazzol - Berenberg

David Hayes - Jefferies

Karel Zoete - Kepler Cheuvreux

Celine Pannuti - JPMorgan Chase & Co.

Presentation

Hein Schumacher

Good morning, and welcome to Unilever's Full Year Results. I'm delighted to be here today with our new Chief Financial Officer, Fernando Fernandez, who, as you know, took over the role on the 1st of January.

Fernando may be new to the role but not, of course, to Unilever, having previously served as President of our Beauty & Wellbeing business group, and before that, as head of Unilever's business in Latin America.

We expect prepared remarks to be around 45 minutes, followed by Q&A of around 30 minutes. And all of today's webcast is available live, transcribed on the screen.

This is how we will run today. In a moment, Fernando will take you through the details of the results and our outlook. I will then give an update of our progress against our Growth Action Plan before we take your questions.

First, though, let me try to frame today's announcement with a few overall reflections of my own. The results and our performance for last year give some cause for assurance, the strength and the resilience of the business are clear, but not enough cause for comfort. There are some real gaps that we need to close. Most of all, however, they reaffirm the importance and the relevance of the measures we are taking now at pace to accelerate Unilever's growth and to step up the quality and the consistency of our performance.

Those measures were set out in the Growth Action Plan I shared with you at the end of October. But given its importance, I want to devote most of my remarks today to the plan and how we are implementing it.

First, though, let me highlight five important shifts that we have already made, some of which are reflected in the results we are sharing with you today. First, we returned to positive volume growth of 1.8% in Q4 and gross margin expansion of 330 basis points in the second half. Second, we tightened grip on operations and working capital leading to strong free cash flow. Third, we stepped up brand and marketing investment focused on the 30 Power Brands. Fourth, we made significant changes in our Ice Cream business to address underperformance. And fifth, we accelerated portfolio change with the acquisition of the premium hair care brand, K18, and the disposal in the value segment of Elida Beauty.

I will come back to the Growth Action Plan in more detail later, but I wanted to flag these five shifts upfront partly because they are significant in their own right, but also because they're indicative of the changes that we are making, changes that we need to make, and we know that.

Our competitiveness bottomed out, but remains unacceptably low. So we are not waiting to take the action that is needed. And on that note, let me hand over to Fernando to take you through the results.

Fernando, over to you.

Fernando Fernandez

Thank you, Hein. I am very happy to be here with you today for the first time as Unilever Chief Financial Officer.

Let me introduce myself. I joined Unilever in Argentina as an economist in the finance function. For the last 16 years, I have led some of our key operations like the Philippines, Brazil and Latin America. More recently, I was the President of the Beauty & Wellbeing business group.

My long experience high-growth businesses, particularly in volatile markets, has always been anchored in one fundamental belief: drive brand and product differentiation to grow volume, positive mix and to expand gross margin consistently. That recipe never fails in delivering long-term competitive success, and it is the one we will ruthlessly follow. ...

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