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Unilever PLC Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Underlying operating profit was €11.2 billion, up 12.6% YoY due to a strong gross margin expansion, lower overheads, and substantially increased brand support.
- The company delivered four consecutive quarters of underlying volume growth above 2%, with all Business Groups driving positive volume growth for the year.
- Ice Cream delivered 3.7% underlying sales growth, with a return to volume growth at 1.6% and 2.1% from price.
- Developed markets, which account for 42% of Group turnover, grew underlying sales by 4.4% with volumes up 3.3%.
- Brand and marketing investment has been the highest percentage of turnover in over a decade with an increase of 250 basis points or €1.6 billion over the last two years.
- Home Care saw softer growth in Q4 due to lower pricing.
- There is a market slowdown across the globe.
- Ice Cream saw sharp increases in commodity costs, putting pressure on volume.
- The company has longstanding portfolio and brand proposition issues in Indonesia, which will take several quarters to fix.
- The company saw slower market growth in Q4 and Q1.
- The company expects a technical effect of around 90 bps on margins overall once Ice Cream is demerged.
- The company expects to continue to improve the gross margin of 45%.
- The company expects to continue to be volume-led in Q4.
Q&A Highlights from Unilever PLC Earnings Call Q4 2024
- Analyst asked about the margin phasing of gross margin and the underlying trading operating profit margin.
- Hein Schumacher, CEO of Unilever PLC, explained that the company's gross margin is currently at a level of 45%, which is considered a new base for growth. The company is focused on net productivity, cost per ton, and pricing, which will be important in the coming year. The company is also working to improve its competitiveness through the Growth Action Plan, which includes driving volume and mix growth.
- Hein Schumacher, CEO of Unilever PLC, explained that the company's gross margin is currently at a level of 45%, which is considered a new base for growth. The company is focused on net productivity, cost per ton, and pricing, which will be important in the coming year. The company is also working to improve its competitiveness through the Growth Action Plan, which includes driving volume and mix growth.
- Analyst asked about the volume growth and pricing strategy.
- Hein Schumacher explained that the company has achieved 3.2% volume growth in the second half of 2024 and 1.1% UPG in the fourth quarter. The company is focused on maintaining a healthy balance between volume and mix and price, and is confident that it can achieve a 2% volume growth in 2025. The company is also investing in innovation, with plans to launch 12 big bets in 2025, including Wonder Wash and Gluta-Hya.
- Hein Schumacher explained that the company has achieved 3.2% volume growth in the second half of 2024 and 1.1% UPG in the fourth quarter. The company is focused on maintaining a healthy balance between volume and mix and price, and is confident that it can achieve a 2% volume growth in 2025. The company is also investing in innovation, with plans to launch 12 big bets in 2025, including Wonder Wash and Gluta-Hya.
- Analyst asked about the company's strategy in Europe.
- Hein Schumacher explained that Europe is an important market for Unilever, and the company is focused on improving its market share and leadership in Home Care and Personal Care. The company has also seen solid growth in Europe, particularly in the Dove brand, and is committed to continuing to invest in the region.
- Hein Schumacher explained that Europe is an important market for Unilever, and the company is focused on improving its market share and leadership in Home Care and Personal Care. The company has also seen solid growth in Europe, particularly in the Dove brand, and is committed to continuing to invest in the region.
- Analyst asked about the expected growth rate of the business excluding Ice Cream, and whether it will achieve the midterm guidance of 4% to 6%.
- The company expects to achieve a growth rate of 4% to 6% excluding Ice Cream, in line with the midterm guidance.
- The company expects to achieve a growth rate of 4% to 6% excluding Ice Cream, in line with the midterm guidance.
- Analyst asked about the three exchanges where the Ice Cream business will be listed, and if one of them will be the primary listing.
- The company plans to list the Ice Cream business on three exchanges, with Amsterdam being the primary listing location.
- The company plans to list the Ice Cream business on three exchanges, with Amsterdam being the primary listing location.
- Analyst asked about the company's guidance for the slower start to the year and if it means a sequential slowdown in Q1 compared to the 4% achieved in Q4.
- Hein Schumacher, the company's Chief Financial Officer, explained that the guidance for a slower start to the year includes a sequential slowdown in Q1 compared to the 4% achieved in Q4. He further clarified that the guidance is for the full year to remain within the guidance, and the company is confident about achieving it.
- Hein Schumacher, the company's Chief Financial Officer, explained that the guidance for a slower start to the year includes a sequential slowdown in Q1 compared to the 4% achieved in Q4. He further clarified that the guidance is for the full year to remain within the guidance, and the company is confident about achieving it.
- Analyst asked about the company's guidance for margins and if it includes a benefit from having Ice Cream as a discontinued operation in Q4.
- Hein Schumacher, the company's Chief Financial Officer, explained that the guidance for margins does not specifically include a benefit from having Ice Cream as a discontinued operation in Q4. He further clarified that the guidance includes 45% gross margin as a good base and that the company is ahead in its overall restructuring or productivity exercise, with 4,300 full-time roles less in the company.
- Hein Schumacher, the company's Chief Financial Officer, explained that the guidance for margins does not specifically include a benefit from having Ice Cream as a discontinued operation in Q4. He further clarified that the guidance includes 45% gross margin as a good base and that the company is ahead in its overall restructuring or productivity exercise, with 4,300 full-time roles less in the company.
- Analyst asked about the company's portfolio in China and the level of competition in that market.
- Hein Schumacher, the company's Chief Financial Officer, explained that the company has seen improved shares in China, particularly over the last six months, and that they are back at a fairly neutral market share situation. He further clarified that the company's Wellbeing, Prestige, and out-of-home Ice Cream businesses have seen market share gains, and that they expect to continue to work on their Growth Action Plan to support their brands with fewer and bigger and better innovations. He also mentioned that they see softness in China due to the reset they are doing, but also in Indonesia where they are making a significant reset. Overall, the company feels good about their portfolio in China, particularly in Beauty, Hair Care, Home Care, and Food Solutions, and they are making the necessary inroads into channels such as Douyin.
- Hein Schumacher, the company's Chief Financial Officer, explained that the company has seen improved shares in China, particularly over the last six months, and that they are back at a fairly neutral market share situation. He further clarified that the company's Wellbeing, Prestige, and out-of-home Ice Cream businesses have seen market share gains, and that they expect to continue to work on their Growth Action Plan to support their brands with fewer and bigger and better innovations. He also mentioned that they see softness in China due to the reset they are doing, but also in Indonesia where they are making a significant reset. Overall, the company feels good about their portfolio in China, particularly in Beauty, Hair Care, Home Care, and Food Solutions, and they are making the necessary inroads into channels such as Douyin.
- Analyst asked about the company's strategy to address consumer traction and commodity inflation, specifically in the US.
- The company is focused on innovations such as whole-body deodorants and serum collection of body washes behind Dove, which are premium products with strong market activation. The company is also committed to protecting the integrity of the P&L shape by investing in brands and pricing to offset commodity inflation.
- The company is focused on innovations such as whole-body deodorants and serum collection of body washes behind Dove, which are premium products with strong market activation. The company is also committed to protecting the integrity of the P&L shape by investing in brands and pricing to offset commodity inflation.
- Analyst asked about the company's approach to pricing and volume mix volatility in the US and North America.
- The company is seeing positive results in China and Indonesia, which will contribute to a better UVG in the back half of 2025. The company is also navigating through volatility in the first quarter, putting necessary actions in place, and pricing will evolve over time. The company is also positive about its Sky program, which is rolling out with many customers and is improving planning and forecasting.
- The company is seeing positive results in China and Indonesia, which will contribute to a better UVG in the back half of 2025. The company is also navigating through volatility in the first quarter, putting necessary actions in place, and pricing will evolve over time. The company is also positive about its Sky program, which is rolling out with many customers and is improving planning and forecasting.
- Analyst asked about the company's approach to pricing and volume mix volatility in the US and North America.
- The company is seeing positive results in China and Indonesia, which will contribute to a better UVG in the back half of 2025. The company is also navigating through volatility in the first quarter, putting necessary actions in place, and pricing will evolve over time. The company is also positive about its Sky program, which is rolling out with many customers and is improving planning and forecasting.
- The company is seeing positive results in China and Indonesia, which will contribute to a better UVG in the back half of 2025. The company is also navigating through volatility in the first quarter, putting necessary actions in place, and pricing will evolve over time. The company is also positive about its Sky program, which is rolling out with many customers and is improving planning and forecasting.