Unilever at CAGNY
Alan Jope & Graeme Pitkethly
16th February 2021 Unilever at CAGNY
1. Unilever
2. Strategic choices
3. Operational excellence and performance
4. Multi-year financial framework
5. Conclusion
2 Safe harbour statement
This announcement may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Unilever G roup (the ‘Group’). They are not historical facts, nor are they guarantees of future performance.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain competitive; Unilever’s investment choices in its portfolio management; the effect of climate change on Unilever’s business; Unilever's ability to find sustainable solutions to its plastic packaging; significant changes or deterioration in customer relationships; the recruitment and retention of talented employees; Unilever's ability to find sustainable solutions to its plastic packaging; significant changes or deterioration in customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain and distribution; increases or volatility in the cost of raw materials and commodities; the production of safe and high quality p roducts; secure and reliable IT infrastructure; execution of acquisitions, divestitures and business transformation projects; economic, social and political risks and natura l disasters; financial risks; failure to meet high and ethical standards; and managing regulatory, tax and legal matters. A number of these risks have increased as a resul t of the current COVID-19 pandemic. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including in the Annual Report on Form 20-F 2019 and the Unilever Annual Report and Accounts 2019.
3 Unilever
191 countries Multi-category leadership 13 billion Euro brands 2.5 billion consumers
Home Care 21% Beauty & Developed Personal markets Emerging Care 42% markets 41% 58% Foods & Refreshment 38%
93% local leaders. #1 CPG employer in 54 countries
4 Our differentiating strengths
1. Powerful portfolio of leading category and brand positions Global category 50% leadership of turnover from 13 positions billion Euro brands
81% Most effective brands #1 or #2 in marketer their market for 4 consecutive years
5 Our differentiating strengths
1. Powerful portfolio of 2. Strong presence in growth leading category and markets of the future Leading brand positions 40bn position consumer reach points; more than any other in growth markets competitor
Market 93% development local leaders a core capability
6 #1 or #2 in 7 of 10 top future growth markets
Unilever market position #4 #1 #7 #1 #1 #2 #1 #2 #1 #3
Absolute GDP growth 2020 – 2030 US$trn 14.1 Unilever sales €bn
9.4 8.6
5.0 4.7
2.8 2.5 2.2 2.4 2.4 1.2 0.9 1.0 1.0 0.7 0.7 0.6 0.7 0.7 0.7
China India USA Indonesia Turkey Vietnam Pakistan Brazil United Philippines Kingdom
7 Our differentiating strengths
3. The global leader in sustainable business Top Leader of GlobeScan in Dow Jones Sustainability Leaders Sustainability Index survey for last 10 years since 2014
‘A/A-’ Strategy
Ratings in CDP: Climate, fully embedded in Water and Forest our business and brands with purpose
8 Strategic Choices Five strategic choices
1. Develop our portfolio into high growth spaces
10 We will continue to evolve our portfolio towards higher growth segments in home care, beauty, personal care, and foods. Clear criteria for investment choices
Potential in Route to Branding & High growth Scale growth countries leadership technology sensitive
Prestige Functional Plant-based Skin care Hygiene beauty nutrition foods
12 Portfolio evolution into higher growth spaces
Priority focus area
utrition
N
dorants
basedFoods
-
Laundry
Hair Care Hair
Skin Care Skin
Oral Care Oral
Ice Cream Ice
Deo
Skin Cleansing Skin
Prestige Beauty Prestige
Scratch Scratch Cooking
Home Hygiene Home &
Plant Functional Functional
4% 5% 17% 72% 3%
€16bn M&A capital deployed ‘15-20 13 Portfolio change
Divestments In progress
2015 2016 2017 2018 2019 2020 2021
Tea
Cabin Air
Tail BPC brands
>€3bn turnover >€2bn turnover
>€5bn turnover (10% of portfolio)
14 Building Prestige Beauty and Functional Nutrition to scale
€1.1bn* Prestige Beauty Functional Nutrition €0.7bn
+25% growth
2015 2016 2017 2018 2019 2020 2018 2019 2020 2020 Annualised
*Annualised for all acquisitions 15 Five strategic choices
1. Develop our portfolio into high growth spaces
2. Win with our brands as a force for good, powered by purpose and innovation
16 Win with our brands as a force for good, powered by purpose and innovation
Superior product World class technology Purpose drives growth functionality
• Cutting edge technology leading • Superior to competition in tests: • Purpose drives brand power, to product superiority: • BPC: 58% brand power drives growth • BPC: Invictus AP technology • F&R: 72% • Purposeful brands growing 2x • F&R: Plant protein structuring • HC: 66% • HC: Eco-design technology • Stepping up R&D investment over next 3 years
17 Five strategic choices
1. Develop our portfolio into high growth spaces
2. Win with our brands as a force for good, powered by purpose and innovation
3. Accelerate in USA, India, China and leverage emerging markets strength
18 Sharpening our focus in future growth markets
USA India China Leverage EM strength
• €9bn business, 18% of • No. 1 FMCG; 10% of • €3bn business, 6% of • €1bn+ businesses in turnover turnover turnover Brazil, Indonesia, Philippines, Turkey, • 10% of global growth • 20% of global growth • 30% of global growth Thailand, Mexico to 2030 to 2030 to 2030 • eB2B to enhance distribution strength Bespoke innovation Co–located R&D First call on capital
19 Five strategic choices
1. Develop our portfolio into high growth spaces
2. Win with our brands as a force for good, powered by purpose and innovation
3. Accelerate in USA, India, China and leverage emerging markets strength
4. Lead in the channels of the future
20 A future-fit channel strategy
Omnichannel Brazil +99% +44% eCommerce Growth +61% Pure play China +48% +54% 9% eCommerce % of Sales eB2B USA +65% +123%
eB2B excludes UFS 21 Growth rates FY 2020 Five strategic choices
1. Develop our portfolio into high growth spaces
2. Win with our brands as a force for good, powered by purpose and innovation
3 Accelerate in USA, India, China and leverage emerging markets strength
4. Lead in the channels of the future
5. Build a purpose-led, future-fit organisation and growth culture
22 Driving growth through capacity, capability and culture
Digital Inclusion Skills Savings
People shots
Equity, diversity and Advanced digital Strong savings inclusion across Continuous upskilling culture programmes multiple dimensions
23 Five strategic choices
1. Develop our portfolio into high growth spaces
2. Win with our brands as a force for good, powered by purpose and innovation
3. Accelerate in USA, India, China and leverage emerging markets strength
4. Lead in the channels of the future
5. Build a purpose-led, future-fit organisation and growth culture
Operational Excellence
24 Operational Excellence and Performance Driving operational excellence
Improved 60% cells improving penetration
Impactful Covid-19 response: Lifebuoy, Dove, Domestos innovation
Design for eComm: +61% USG FY ‘20 channel
Purposeful Nearly 60% of brands seen as more purposeful brands
Fuel for Free cash flow: €7.7bn growth
26 Long term growth and margin improvement
Underlying Sales Growth Underlying Operating Margin
COVID impact -100bps Food Service impact -1.6%
3.6% 3.2% 19.1% 18.6% 18.5% 2.8% 2.9% 17.7%
1.9% 16.4%
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
27 Improving competitiveness
% Business winning value share since 2017 % Business winning value share during 2020
65% 53% 51% 49% 48% 48% 47% 47% 47%
44% 44% 44% 51% 42% 49% 40% 47% 46%
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Dec Mar Jun Sep Dec 17 18 18 18 18 19 19 19 19 20 20 20 20 19 20 20 20 20
% business winning, MAT % business winning, last 12 weeks
28 Competitive growth across markets and categories in Q4
Markets Categories 13/15 markets >50% business winning value share 10/11 categories >50% business winning value share
50% 50%
Global Average
Global Average
Fabric Sensations
Eastern Europe North America
% business winning value share last 12 weeks 29 Competitive growth across markets and categories in Q4
Markets Key Markets 13/15 markets >50% business winning value share
50% Market Market Growth Unilever USG Indonesia Indonesia (10)% 0%
India India 5% +7%
China China 4% +9% Global Average
North America North America 15% +7%
30 Disadvantaged portfolio during pandemic
Markets Categories % Unilever % Unilever Turnover €bn Turnover €bn Strongly 18% North America 19% Hygiene Advantaged 10bn 9bn
UK & Ireland Advantaged 6% In Home Food 29% Australia & NZ 3bn 15bn
South Asia, LatAm, Laundry 43% North Asia, Africa, 61% Disadvantaged 22bn Middle East, Europe 31bn Personal Care
Strongly Prestige South East Asia Out of Home 10% Disadvantaged 14% 7bn Food 5bn 31 Portfolio to gain from post pandemic recovery
Hygiene Laundry Prestige 18% 16% 1% 16% 9-10%
Growth Recovery as schools Rebound to 3-4% will moderate 3-5% and offices reopen high growth 1% -2%
‘17-’19 ‘20 Post COVID-19 ‘17-’19 ‘20 Post COVID-19 ‘17-’19 ‘20 Post COVID-19
In Home Foods Personal Care Out of Home Foods 30% 27% 8% 3-6% 12% 2% Gradual shift Rebound based Gradual recovery as back to OOH on social occasions eat-on-the-go returns 1% -4% -26% ‘17-’19 ‘20 Post COVID-19 ‘17-’19 ‘20 Post COVID-19 ‘17-’19 ‘20 Post COVID-19
32 Underlying operating margin drivers
H1 2020 H2 2020 +1.0%
+0.5% Gross margin (0.9)%
+0.0% +0.1%
(0.2)%
(0.4)% (0.4)% (0.4)% (0.5)%
Gross margin (0.3)%
(1.0)%
COVID COVID Other Brand & Overheads COVID COVID Other Brand & Overheads mix on cost GM marketing mix on cost GM marketing impact investment impact investment
• Mix: Q1 headwind, outlook depends on COVID recovery • COVID on-cost: lapping Q2, eases with COVID recovery • BMI: investment spread more evenly throughout 2021 • Commodity costs & FX: headwind to continue into H1 33 Multi-year financial framework Multi-year financial framework
Growth Profit Cash
Underlying sales growth ahead of our Profit growth ahead of Sustained strong cash markets sales growth flow 3 – 5% USG
Delivering long term value creation Growing dividend through earnings growth
35 Other long term financial metrics
Savings Restructuring ROIC Leverage investment
Mid to €2bn €1bn high teens 2x per annum for 2021 and 2022, approx lower thereafter
36 Capital allocation
Operational Portfolio Returns to investment reshape shareholders
• Brand growth and • Acquisitions • Dividends innovation • Disposals • Share buybacks • Sustainability • Partnerships • Minority buybacks • Channel and digital capability
37 Conclusion Sustainable business driving superior performance
Operational excellence stepping up performance
Strategic choices to accelerate growth
Continued portfolio evolution
Delivering long term value creation
39