REG - Unilever PLC - Final Results
10/02/2022 07:00
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RNS Number : 2276B Unilever PLC 10 February 2022
2021 FULL YEAR RESULTS
Performance highlights (unaudited)
Underlying performance GAAP measures
vs 2020 vs 2020
Full Year
Underlying sales growth (USG) 4.5% Turnover €52.4bn 3.4%
Underlying operating profit €9.6bn 2.9% Operating profit €8.7bn 4.8%
Underlying operating margin 18.4% (10) bps Operating margin 16.6% 20 bps
Underlying earnings per share 2.62 5.5% Diluted earnings per share 2.32 9.2%
Free cash flow €6.4bn €(1.3)bn Net profit €6.6bn 9.0%
Fourth Quarter
USG 4.9% Turnover €13.1bn 8.4%
Quarterly dividend payable in March 2022 €0.4268 per share((a))
(a) See note 11 for more information on dividends.
Full year highlights
· Fastest underlying sales growth in nine years - 4.5%, with 2.9%
price and 1.6% volume
· Turnover increased 3.4%, with a positive impact from acquisitions
and a negative impact from currency
· Underlying operating profit increased 2.9% and underlying
operating margin decreased by 10bps
· Underlying earnings per share increased 5.5% and diluted earnings
per share 9.2%
· Announced the sale of Tea business for €4.5 billion, with
completion expected in H2 2022
· Completed €3 billion of share buybacks in 2021; announcing
further €3 billion programme for 2022-2023
· Dividend per share growth of 3% for 2021
· Announced a simpler, more category-focused organisational model
Alan Jope: Chief Executive Officer statement
"The acceleration of Unilever's operating performance continues. We delivered
our fastest underlying sales growth for nine years - 4.5% for the full year,
with 1.6% from volume.
Our thirteen billion-Euro brands grew 6.4%. Priority markets of China, India,
and the US grew at 14.3%, 13.4%, and 3.7% respectively. Our growth in
e-commerce was 44%, ahead of global channel growth and bringing e-commerce to
13% of turnover. We have continued to re-shape our portfolio into high growth
spaces, acquiring in Prestige Beauty and Functional Nutrition, and agreeing
the sale of our Tea business.
The major challenge of 2021 has been the dramatic rise of input costs. We
responded with pricing actions, delivering underlying price growth of 2.9% for
the year, accelerating to 4.9% in the fourth quarter, with full year
underlying operating margin down 10bps and underlying earnings per share up
5.5%.
We are focused on driving faster growth from our strong portfolio of brands
and markets, and recently announced a major change to create a simpler, more
category-focused organisation designed to further improve performance. In
2022, we will manage a significant input cost inflation cycle and will
continue to invest competitively in marketing, R&D and capital
expenditure.
We have engaged extensively with our shareholders in recent weeks and received
a strong message that the evolution of our portfolio needs to be measured. We
therefore do not intend to pursue major acquisitions in the foreseeable future
and will conduct a share buyback programme of up to €3 billion over the next
two years."
10 February 2022
Outlook for 2022
We expect underlying sales growth in 2022 to be in the range of 4.5% to 6.5%.
Pricing will continue to be strong, with some impact on volume as a result.
We currently expect very high input cost inflation in the first half of over
€2 billion. This may moderate in the second half to around €1.5 billion,
although there is currently a wide range for this that reflects market
uncertainty on the outlook for commodity, freight and packaging costs.
The new organisation is expected to generate around €600 million of cost
savings over two years. We plan to maintain competitive levels of investment
in marketing, R&D and capital expenditure through a period of
inflation-led gross margin pressure until input costs normalise and the full
extent of pricing is reflected.
2022 underlying operating margin is expected to be down by between 140bps and
240bps, so maintained between 16% and 17%, with the first half impacted more
than the second half. We expect margin to be restored after 2022, with the
bulk coming back in 2023 and the rest in 2024.
Unilever's strong cash flow delivery will continue, and the Board has approved
a share buyback programme of up to €3 billion to be conducted over the next
two years, which we expect to commence in the first quarter.
Organisational change
In January 2022, we announced major changes to Unilever's organisation to make
it simpler and more category-focused. Unilever will be organised around five
category-focused Business Groups, each responsible and accountable for their
strategy, growth and profit delivery; running their businesses in all
geographies.
We expect our new organisation to be fully operational from the middle of the
year. The new structure will be achieved within existing restructuring
investment plans of €2 billion across 2021 and 2022. Restructuring
investment for 2022 is therefore expected to be around €1.4 billion,
returning to pre-2017 levels of around 1% of turnover thereafter. The new
organisation is expected to generate around €600 million of cost savings
over two years.
FULL YEAR OPERATIONAL REVIEW: DIVISIONS
Fourth Quarter 2021 Full Year 2021
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG Change in underlying operating margin
€bn % % % €bn % % % bps
Unilever 13.1 4.9 - 4.9 52.4 4.5 1.6 2.9 (10)
Beauty & Personal Care 5.8 6.2 0.9 5.3 21.9 3.8 0.8 3.0 -
Home Care 2.7 5.0 (3.1) 8.4 10.6 3.9 0.7 3.1 (110)
Foods & Refreshment 4.6 3.2 0.6 2.5 19.9 5.6 2.9 2.7 40
Our markets: Very high input cost inflation has been widespread across our
markets and is expected to continue. Covid-19 is having an ongoing impact on
the operating environment, including in the final quarter of the year as new
restrictions were implemented in some geographies.
In North America and Europe markets declined in 2021 as we lapped high demand
in the prior year for in-home food and hygiene products. Covid-19 impacted
India in the early part of the year. In China the market recovered well in
2021 but economic growth has started to slow. Markets in Latin America are
recovering, with growth driven by higher prices, although macroeconomic
volatility remains high. In South East Asia markets are improving following
tough restrictions on daily life through 2021. In Turkey, economic conditions
deteriorated throughout the fourth quarter.
Unilever overall performance: Stepping up competitive growth is our priority.
In 2021, our five strategic priorities and focus on operational excellence
delivered full year underlying sales growth of 4.5% with volume of 1.6% and
price of 2.9%. In the fourth quarter price stepped up to 4.9% with volume
flat, as our brands provided strong pricing power in an environment of rising
commodity and other input costs. Foods and Refreshment grew fastest in 2021
with 5.6% underlying sales growth with food solutions and out-of-home ice
cream partially recovering from channel restrictions in 2020.
In the US growth has returned to competitive levels, with strong contributions
from Prestige Beauty, functional nutrition and food solutions. India grew
double-digit with balanced volume and price and strong actions on savings and
mix. China grew double-digit, led by volume, with growth broad-based across
categories and channels, especially e-commerce.
Latin America grew high single-digit led by price with flat volume in a high
inflation market. South East Asia declined following tough Covid-19 related
restrictions throughout the year and weak competitive performance in
Indonesia. Europe grew slightly from both price and volume.
Prestige Beauty delivered strong double-digit growth across all brands as
channels reopened, with e-commerce a big contributor. Functional nutrition
grew double-digit across the portfolio of brands.
E-commerce growth was 44% and now represents 13% of Unilever's turnover.
Turnover increased 3.4%. Underlying sales growth was 4.5%, there was a net
positive impact of 1.3% from acquisitions and disposals and a negative impact
of 2.4% from currency-related items.
Underlying operating profit was €9.6 billion, an increase of 2.9% including
a negative impact from currency of 4.3%. Underlying operating margin decreased
by 10bps. Gross margin decreased by 120bps reflecting very high inflation in
raw material, packaging and distribution costs, partially offset by savings
and pricing actions. Brand and marketing investment fell slightly but remained
at competitive levels, and overheads benefitted from turnover leverage, making
a positive impact of 90bps and 20bps respectively on underlying operating
margin.
Free cash flow was €6.4 billion compared to €7.7 billion in 2020 as we
increased capital expenditure and lapped the strong working capital
improvement of 2020 which was maintained in 2021.
We have agreed to sell our global tea business, ekaterra ("Tea"), to CVC
Capital Partners Fund VIII for €4.5 billion on a cash-free, debt-free basis.
In full year 2020, ekaterra generated turnover of around €2 billion. The
sale excludes Unilever's tea business in India, Nepal and Indonesia as well as
Unilever's interests in the Pepsi Lipton ready-to-drink tea joint ventures and
associated distribution businesses.
After reviewing options for Elida Beauty, we concluded that this business will
create the most value managed as an independent unit within Unilever, with
dedicated focus under our new operating model.
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 3.8%, with 3.0% from price
and 0.8% from volume. All categories delivered good growth apart from skin
cleansing which declined following elevated demand in the prior year. Skin
care grew high single-digit with channels reopening in 2021. Vaseline
performed strongly throughout the year, supported by several premium
innovations across brightening, therapeutics and hydration. Deodorants grew as
the market continued to recover, with good growth and restored competitiveness
in North America. Dove refillable deodorant launched in the US and has been
well-received by consumers. Hair care grew mid-single-digit with Sunsilk, Dove
and Clear contributing and styling in North America being restored to
competitive growth. Oral care grew with good performance in South Asia and
Africa. Prestige Beauty grew double-digit with all brands benefitting from
e-commerce and a recovery in beauty channels compared to the prior year. New
innovations in Prestige Beauty include Dermalogica's biolumin-c and sound
sleep cocoon and Ren's zero waste packaging.
Underlying operating margin in Beauty and Personal Care was flat, with high
material inflation in palm oil having a particularly high impact on gross
margin, despite stepped up pricing. Brand and marketing investment was lower
overall due to reductions in Europe and South East Asia where Covid-19
restrictions impacted market growth. We invested more in the US and China, and
benefitted from efficiencies in advertising production costs.
Home Care
Home Care underlying sales grew 3.9%, with 3.1% from price and 0.7% from
volume. In fabric care, mid-single-digit growth in fabric cleaning and low
single-digit growth in fabric enhancers was led by South Asia and Latin
America. We continue to see good innovation performance from dilutable laundry
liquids across Latin America, under the OMO brand. Capsule and liquid formats
continued to grow well, and in China OMO became the leading capsules brand in
traditional retail and second largest in e-commerce. Underlying sales in home
and hygiene declined mid-single-digit as we lapped strong demand for hygiene
products in 2020, and overall home and hygiene continues to trade ahead of
pre-pandemic levels.
Underlying operating margin in Home Care declined by 110bps. Gross margin
declined as very high input cost inflation could not yet be fully recovered
through stepped up pricing. Brand and marketing investment was lower,
reflecting elevated spend in 2020 behind hygiene products at the peak of the
pandemic.
Foods & Refreshment
Foods and Refreshment underlying sales grew 5.6%, with volume growth of 2.9%
and price of 2.7%. Ice cream grew mid-single-digit, balanced across volume and
price. Growth was driven by out-of-home food, with in-home ice cream flat as
we lapped double-digit prior year growth. Our Magnum and Ben & Jerry's
brands each grew high single-digit. Food solutions has begun to recover from
channel closure in 2020, delivering double-digit growth. In-home food saw low
single-digit price led growth, following elevated demand and double-digit
growth in 2020. Our largest food brand Knorr grew high single-digit across
in-home and out-of-home channels through innovations such as zero-salt stock
cubes and Rinde Mas in Latin America, a plant-based product that extends the
yield of meat dishes while adding flavour. Dressings brand Hellmann's grew
double digit for the second year in succession. Our retained tea business grew
double-digit.
Foods and Refreshment underlying operating margin improved by 40bps. Gross
margin declined as high input cost inflation could not yet be fully recovered
through increased pricing. Brand and marketing investment increased, driven by
India and China, but benefitted underlying operating margin as a result of
faster turnover growth.
FULL YEAR OPERATIONAL REVIEW: GEOGRAPHICAL AREA
Fourth Quarter 2021 Full Year 2021
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG Change in underlying operating margin
€bn % % % €bn % % % bps
Unilever 13.1 4.9 - 4.9 52.4 4.5 1.6 2.9 (10)
Asia/AMET/RUB 6.1 5.7 1.3 4.3 24.3 5.8 3.0 2.7 50
The Americas 4.4 7.2 (1.2) 8.5 16.8 5.5 0.4 5.1 (80)
Europe 2.6 (0.8) (1.5) 0.7 11.3 0.4 0.3 0.2 (40)
Fourth Quarter 2021 Full Year 2021
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
€bn % % % €bn % % %
Emerging markets 7.7 6.7 0.1 6.6 30.4 6.7 2.6 4.1
Developed markets 5.4 2.2 (0.3) 2.6 22.0 1.5 0.2 1.3
North America 2.8 6.5 1.1 5.3 10.6 3.4 0.5 2.9
Latin America 1.6 8.5 (4.8) 13.9 6.2 9.0 0.1 8.9
Asia/AMET/RUB
Underlying sales grew 5.8% with 3.0% from volume and 2.7% from price. India
grew double-digit with a balanced split between price and volume. Pricing and
savings actions continue to be important in India as commodity prices remain
elevated. China delivered double-digit volume led growth, with food solutions
growing back to above 2019 levels whilst Home Care and Beauty and Personal
Care also grew well. South East Asia declined low single-digit as the region
was impacted by Covid-19 related restrictions throughout the year, and our
Indonesian business performance was poor in a highly competitive market.
In Turkey, we delivered double-digit growth with high single-digit volume. In
South Africa we grew mid-single-digit in volatile market conditions, weighted
towards volume.
Underlying operating margin increased by 50bps. Gross margin declined and was
offset by efficiencies in overheads and brand and marketing investment.
The Americas
Underlying sales growth in North America was 3.4%, with 2.9% from price and
0.5% from volume as we restored competitiveness through the year. Prestige
Beauty, functional nutrition and food solutions all grew strongly while
in-home food and hygiene declined as we lapped the high demand of 2020. On a
two-year compound annual growth basis, North America underlying sales growth
is 5.5%.
Latin America grew 9.0% with positive pricing of 8.9% and flat volume.
Throughout the year we took several price increases to counter high inflation
and currency devaluation. Innovations designed for consumers feeling the
negative impacts of inflation have been successful. In Brazil double-digit
growth was price led with a low single digit volume decline whilst in
Argentina volume remained positive.
Underlying operating margin decreased by 80bps. Gross margin decline was
partially offset by lower overall brand and marketing investment. We increased
spend in North America behind high growth areas and reduced in Latin America.
Europe
Underlying sales grew 0.4% with 0.3% from volume and 0.2% from price. Foods
and Refreshment volumes grew low single-digit, as out-of-home ice cream
recovered alongside in-home ice cream growth. Home Care volumes declined, as
we lapped high demand for hygiene products in 2020. Beauty & Personal Care
in Europe declined slightly in a declining market. Pricing actions are
underway across Europe with the different national retail landscapes being
managed very actively.
Recovery in out-of-home ice cream supported mid-single-digit growth in Italy.
Germany and the UK declined as we lapped high 2020 growth for in-home foods
and hygiene.
Underlying operating margin declined 40bps, driven by gross margin, while
brand and marketing investment reduced.
ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FULL YEAR
Finance costs and tax
Net finance costs decreased €151 million to €354 million in 2021. The
decrease was driven by a lower cost of debt and a reduction in interest on tax
settlements. This was partially offset by lower interest income driven by
interest on tax credits in Brazil in the prior year. The interest rate on
average net debt fell to 1.5% from 2.2% in the prior year.
The underlying effective tax rate was 22.6% compared with 23.0% in 2020. We
saw benefits in tax settlements and other one offs, as well as the restatement
of deferred tax balances for changes in tax rates. The additional impact of
non-underlying tax meant that the effective tax rate was 23.1% compared with
24.6% in 2020.
Joint ventures, associates and other income from non-current investments
Net profit from joint ventures and associates was €191 million, an increase
of €16 million compared to 2020. Other income from non-current investments
was €91 million and relates to investments made by Unilever Ventures.
Earnings per share
Underlying earnings per share increased by 5.5% to €2.62, including a
negative impact of 2.3% from currency. Constant underlying earnings per share
increased by 7.8%. The increase was mainly driven by operating performance,
lower finance costs and income from non-current investments. There was also a
reduction in the average number of shares as a result of our share buyback
programme, contributing 0.9%. These were partially offset by an increase in
profit attributable to minority interests. Diluted earnings per share were up
9.2% at €2.32.
Free cash flow
Free cash flow was €6.4 billion in 2021, down from the €7.7 billion
delivered in 2020 as capital expenditure and cash tax paid increased. We
maintained enhanced working capital discipline in 2021, although the
significant favourable working capital movements generated as we increased our
focus on receivables in 2020 were not repeated.
Net debt
Closing net debt was €25.5 billion compared to €20.9 billion as at 31
December 2020 driven by lower free cash flow, the €3 billion share buyback
executed during the year and acquisitions including Paula's Choice. Net debt
to underlying EBITDA was 2.2x as at 31 December 2021 versus 1.8x in the prior
year.
Pensions
Pension assets net of liabilities were in surplus of €3.0 billion at 31
December 2021 versus a surplus of €0.3 billion at the end of 2020. The
increase was driven by positive investment returns on pension assets. Pension
liabilities remained unchanged overall, with a decrease from higher interest
rates offsetting an increase due to higher inflation.
Return on invested capital
Return on invested capital was 17.2%, compared to 18.0% in the prior year.
This is due to recent acquisitions (Horlicks and Paula's Choice), and a
significant currency impact resulting in increased goodwill and intangibles.
Finance and liquidity
In 2021, we issued the following bonds:
· 12th August 2021: $500 million 3NC1 fixed rate notes at 0.626%
due August 2024, $850 million fixed rates notes at 1.750% due August 2031, and
$650 million fixed rate notes at 2.625% due August 2051.
In February 2021, $1,000 million 4.250% fixed rate notes matured and were
repaid. In March 2021, $400 million 2.750% fixed rate notes matured and were
repaid. In July 2021, €500 million 0.000% fixed rates notes matured and were
repaid.
As at 31 December 2021 Unilever had undrawn revolving 364-day bilateral credit
facilities in aggregate of $7,965 million with a 364-day term out. Additional
bilateral undrawn revolving 364-day credit facilities of €1,500 million were
signed in December 2021.
Share buyback programme
On 3 December 2021, we announced the completion of our €3 billion share
buyback programme, initiated earlier in the year. The total consideration for
the repurchase of shares is recorded within other reserves and all of the
62,976,145 shares purchased in the buyback programme are held in Treasury.
COMPETITION INVESTIGATIONS
As previously disclosed, Unilever is involved in a number of ongoing
investigations by national competition authorities, including those of France,
Portugal and South Africa. These proceedings and investigations are at various
stages and concern a variety of product markets. Where appropriate, provisions
are made and contingent liabilities disclosed in relation to such matters.
Ongoing compliance with competition laws is of key importance to Unilever. It
is Unilever's policy to co-operate fully with competition authorities whenever
questions or issues arise. In addition, the Group continues to reinforce and
enhance its internal competition law training and compliance programme on an
ongoing basis.
NON-GAAP MEASURES
Certain discussions and analyses set out in this announcement include measures
which are not defined by generally accepted accounting principles (GAAP) such
as IFRS. We believe this information, along with comparable GAAP measurements,
is useful to investors because it provides a basis for measuring our operating
performance, ability to retire debt and invest in new business opportunities.
Our management uses these financial measures, along with the most directly
comparable GAAP financial measures, in evaluating our operating performance
and value creation. Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information presented in
compliance with GAAP. Wherever appropriate and practical, we provide
reconciliations to relevant GAAP measures.
Unilever uses 'constant rate', and 'underlying' measures primarily for
internal performance analysis and targeting purposes. We present certain
items, percentages and movements, using constant exchange rates, which exclude
the impact of fluctuations in foreign currency exchange rates. We calculate
constant currency values by translating both the current and the prior period
local currency amounts using the prior year average exchange rates into euro,
except for the local currency of entities that operate in hyperinflationary
economies. These currencies are translated into euros using the prior year
closing exchange rate before the application of IAS 29. The table below shows
exchange rate movements in our key markets.
Annual Average rate in 2021 Annual Average rate in 2020
Brazilian Real (€1 = BRL) 6.366 5.781
Chinese Yuan (€1 = CNY) 7.663 7.862
Indian Rupee (€1 = INR) 87.599 84.100
Indonesia Rupiah (€1 = IDR) 16983 16557
Philippine Peso (€1 = PHP) 58.401 56.447
UK Pound Sterling (€1 = GBP) 0.861 0.888
US Dollar (€1 = US $) 1.187 1.135
Underlying sales growth (USG)
Underlying sales growth (USG) refers to the increase in turnover for the
period, excluding any change in turnover resulting from acquisitions,
disposals, changes in currency and price growth in excess of 26% in
hyperinflationary economies. Inflation of 26% per year compounded over three
years is one of the key indicators within IAS 29 to assess whether an economy
is deemed to be hyperinflationary. We believe this measure provides valuable
additional information on the underlying sales performance of the business and
is a key measure used internally. The impact of acquisitions and disposals is
excluded from USG for a period of 12 calendar months from the applicable
closing date. Turnover from acquired brands that are launched in countries
where they were not previously sold is included in USG as such turnover is
more attributable to our existing sales and distribution network than the
acquisition itself. The reconciliation of changes in the GAAP measure turnover
to USG is provided in notes 3 and 4.
Underlying price growth (UPG)
Underlying price growth (UPG) is part of USG and means, for the applicable
period, the increase in turnover attributable to changes in prices during the
period. UPG therefore excludes the impact to USG due to (i) the volume of
products sold; and (ii) the composition of products sold during the period. In
determining changes in price, we exclude the impact of price growth in excess
of 26% per year in hyperinflationary economies as explained in USG above. The
measures and the related turnover GAAP measure are set out in notes 3 and 4.
Underlying volume growth (UVG)
Underlying volume growth (UVG) is part of USG and means, for the applicable
period, the increase in turnover in such period calculated as the sum of (i)
the increase in turnover attributable to the volume of products sold; and (ii)
the increase in turnover attributable to the composition of products sold
during such period. UVG therefore excludes any
impact on USG due to changes in prices. The measures and the related turnover
GAAP measure are set out in notes 3 and 4.
Non-underlying items
Several non-GAAP measures are adjusted to exclude items defined as
non-underlying due to their nature and/or frequency of occurrence.
• Non-underlying items within operating profit are: gains or losses on
business disposals, acquisition and disposal related costs, restructuring
costs, impairments and other items within operating profit classified here due
to their nature and frequency.
• Non-underlying items not in operating profit but within net profit
are: net monetary gain/(loss) arising from hyperinflationary economies and
significant and unusual items in net finance cost, share of profit/(loss) of
joint ventures and associates and taxation.
• Non-underlying items are: both non-underlying items within operating
profit and those non-underlying items not in operating profit but within net
profit.
Underlying operating profit (UOP) and underlying operating margin (UOM)
Underlying operating profit and underlying operating margin mean operating
profit and operating margin before the impact of non-underlying items within
operating profit. Underlying operating profit represents our measure of
segment profit or loss as it is the primary measure used for making decisions
about allocating resources and assessing performance of the segments. The
reconciliation of operating profit to underlying operating profit is as
follows:
€ million Full Year
(unaudited) 2021 2020
Operating profit 8,702 8,303
Non-underlying items within operating profit (see note 2) 934 1,064
Underlying operating profit 9,636 9,367
Turnover 52,444 50,724
Operating margin (%) 16.6% 16.4%
Underlying operating margin (%) 18.4% 18.5%
Underlying earnings before interest, taxation, depreciation and amortisation
(UEBITDA)
Underlying earnings before interest, taxation, depreciation and amortisation
means operating profit before the impact of depreciation, amortisation and
non-underlying items within operating profit. We use UEBITDA in assessing our
leverage level, which is expressed as net debt / UEBITDA. The reconciliation
of operating profit to UEBITDA is as follows:
€ million Full Year
(unaudited) 2021 2020
Operating profit 8,702 8,303
Depreciation and amortisation 1,746 2,018
Non-underlying items within operating profit 934 1,064
Underlying earnings before interest, taxes, depreciation and amortisation 11,382 11,385
(UEBITDA)
Underlying effective tax rate
The underlying effective tax rate is calculated by dividing taxation excluding
the tax impact of non-underlying items by profit before tax excluding the
impact of non-underlying items and share of net (profit)/loss of joint
ventures and associates. This measure reflects the underlying tax rate in
relation to profit before tax excluding non-underlying items before tax and
share of net profit/(loss) of joint ventures and associates. Tax impact on
non-underlying items within operating profit is the sum of the tax on each
non-underlying item, based on the applicable country tax rates and tax
treatment. This is shown in the following table:
€ million Full Year
(unaudited) 2021 2020
Taxation 1,935 1,923
Tax impact of:
Non-underlying items within operating profit((a)) 219 272
Non-underlying items not in operating profit but within net profit((a)) (41) (146)
Taxation before tax impact of non-underlying items 2,113 2,049
Profit before taxation 8,556 7,996
Non-underlying items within operating profit before tax((a)) 934 1,064
Non-underlying items not in operating profit but within net profit before tax 64 36
Share of net (profit)/loss of joint ventures and associates (191) (175)
Profit before tax excluding non-underlying items before tax and share of net 9,363 8,921
profit/(loss) of joint ventures and associates
Underlying effective tax rate 22.6% 23.0%
((a) )See note 2.
Underlying earnings per share
Underlying earnings per share (underlying EPS) is calculated as underlying
profit attributable to shareholders' equity divided by the diluted average
number of ordinary shares. In calculating underlying profit attributable to
shareholders' equity, net profit attributable to shareholders' equity is
adjusted to eliminate the post-tax impact of non-underlying items. This
measure reflects the underlying earnings for each share unit of the Group.
Refer to note 6 for reconciliation of net profit attributable to shareholders'
equity to underlying profit attributable to shareholders equity.
Constant underlying EPS
Constant underlying earnings per share (constant underlying EPS) is calculated
as underlying profit attributable to shareholders' equity at constant exchange
rates and excluding the impact of both translational hedges and price growth
in excess of 26% per year in hyperinflationary economies divided by the
diluted average number of ordinary shares. This measure reflects the
underlying earnings for each share unit of the Group in constant exchange
rates.
The reconciliation of underlying profit attributable to shareholders' equity
to constant underlying earnings attributable to shareholders' equity and the
calculation of constant underlying EPS is as follows:
€ million Full Year
(unaudited) 2021 2020
Underlying profit attributable to shareholders' equity (see note 6) 6,839 6,532
Impact of translation from current to constant exchange rates and 210 19
translational hedges
Impact of price growth in excess of 26% per year in hyperinflationary (42) -
economies
Constant underlying earnings attributable to shareholders' equity 7,007 6551
Diluted average number of share units (millions of units) 2,609.6 2,629.8
Constant underlying EPS (€) 2.68 2.49
Net debt
Net debt is a measure that provides valuable additional information on the
summary presentation of the Group's net financial liabilities and is a measure
in common use elsewhere. Net debt is defined as the excess of total financial
liabilities, excluding trade payables and other current liabilities, over
cash, cash equivalents and other current financial assets, excluding trade and
other current receivables, and non-current financial asset derivatives that
relate to financial liabilities.
The reconciliation of total financial liabilities to net debt is as follows:
€ million As at 31 December 2021 As at 31 December 2020
(unaudited)
Total financial liabilities (30,133) (27,305)
Current financial liabilities (7,252) (4,461)
Non-current financial liabilities (22,881) (22,844)
Cash and cash equivalents as per balance sheet 3,415 5,548
Cash and cash equivalents as per cash flow statement 3,387 5,475
Add: bank overdrafts deducted therein 106 73
Less: cash and cash equivalents held for sale((a)) (78) -
Other current financial assets 1,156 808
Non-current financial asset derivatives that relate to financial liabilities 52 21
Net debt (25,510) (20,928)
((a) )Cash and cash equivalents held for sale of €78m are net of bank
overdraft of €12m.
Free cash flow (FCF)
Within the Unilever Group, free cash flow (FCF) is defined as cash flow from
operating activities, less income taxes paid, net capital expenditure and net
interest payments. It does not represent residual cash flows entirely
available for discretionary purposes; for example, the repayment of principal
amounts borrowed is not deducted from FCF. FCF reflects an additional way of
viewing our liquidity that we believe is useful to investors because it
represents cash flows that could be used for distribution of dividends,
repayment of debt or to fund our strategic initiatives, including
acquisitions, if any.
The reconciliation of cash flow from operating activities to FCF is as
follows:
€ million Full Year
(unaudited) 2021 2020
Cash flow from operating activities 10,305 10,933
Income tax paid (2,333) (1,875)
Net capital expenditure (1,239) (932)
Net interest paid (340) (455)
Free cash flow 6,393 7,671
Net cash flow (used in)/from investing activities (3,246) (1,481)
Net cash flow (used in)/from financing activities (7,099) (5,804)
Return on invested capital (ROIC)
Return on invested capital (ROIC) is a measure of the return generated on
capital invested by the Group. The measure provides a guard rail for long-term
value creation and encourages compounding reinvestment within the business and
discipline around acquisitions with lower returns and longer payback. ROIC is
calculated as underlying operating profit after tax divided by the annual
average of: goodwill, intangible assets, property, plant and equipment, net
assets held for sale, inventories, trade and other current receivables, and
trade payables and other current liabilities.
€ million Full Year
(unaudited) 2021 2020
Operating profit 8,702 8,303
Non-underlying items within operating profit (see note 2) 934 1,064
Underlying operating profit before tax 9,636 9,367
Tax on underlying operating profit((a)) (2,175) (2,154)
Underlying operating profit after tax 7,461 7,213
Goodwill 20,330 18,942
Intangible assets 18,261 15,999
Property, plant and equipment 10,347 10,558
Net assets held for sale 1,581 27
Inventories 4,683 4,462
Trade and other current receivables 5,422 4,939
Trade payables and other current liabilities (14,861) (14,132)
Period-end invested capital 45,763 40,795
Average invested capital for the period 43,279 40,029
Return on invested capital 17.2% 18.0%
((a) )Tax on underlying operating profit is calculated as
underlying operating profit before tax multiplied by the underlying effective
tax rate of 22.6% (2020: 23.0%) which is shown on page 9.
CAUTIONARY 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 Group (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; 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 products; secure and
reliable IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political risks and
natural 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 result 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 2020 and the Unilever Annual Report and Accounts 2020.
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations Team
UK «44 78 2527 3767 lucila.zambrano@unilever.com «44 20 7822 6830 investor.relations@unilever.com
or «44 77 7999 9683 JSibun@tulchangroup.com
NL «31 10 217 4844 els-de.bruin@unilever.com
or «31 62 375 8385 marlous-den.bieman@unilever.com
There will be a web cast of the results presentation available at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
INCOME STATEMENT
(unaudited)
€ million Full Year
2021 2020 Increase/
(Decrease)
Current Constant
rates rates
Turnover 52,444 50,724 3.4% 6.2%
Operating profit 8,702 8,303 4.8% 9.6%
Which includes non-underlying items credits/(charges) of (934) (1,064)
Net finance costs (354) (505)
Pensions and similar obligations (10) (9)
Finance income 147 232
Finance costs (491) (728)
Which includes non-underlying income/(costs) of 10 (56)
Non-underlying item net monetary gain/(loss) arising from
hyperinflationary economies (74) 20
Share of net profit/(loss) of joint ventures and associates 191 175
Other income/(loss) from non-current investments and associates 91 3
Profit before taxation 8,556 7,996 7.0% 12.9%
Taxation (1,935) (1,923)
Which includes tax impact of non-underlying items of 178 126
Net profit 6,621 6,073 9.0% 16.0%
Attributable to:
Non-controlling interests 572 492
Shareholders' equity 6,049 5,581 8.4% 15.4%
Combined earnings per share
Basic earnings per share (euros) 2.33 2.13 9.2% 16.3%
Diluted earnings per share (euros) 2.32 2.12 9.2% 16.3%
STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
€ million Full Year
2021 2020
Net profit 6,621 6,073
Other comprehensive income
Items that will not be reclassified to profit or loss, net of tax:
Gains/(losses) on equity instruments measured at fair value through other 166 78
comprehensive income
Remeasurement of defined benefit pension plans 1,734 215
Items that may be reclassified subsequently to profit or loss, net of tax:
Gains/(losses) on cash flow hedges 279 60
Currency retranslation gains/(losses) 1,177 (2,590)
Total comprehensive income 9,977 3,836
Attributable to:
Non-controlling interests 749 286
Shareholders' equity 9,228 3,550
STATEMENT OF CHANGES IN EQUITY
(unaudited)
€ million Called up share capital Share premium account Unification reserve Other reserves Retained profit Total Non- controlling interest Total equity
31 December 2019 420 134 - (5,574) 18,212 13,192 694 13,886
Profit or loss for the period - - - - 5,581 5,581 492 6,073
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments - - - 68 - 68 10 78
Cash flow hedges - - - 62 - 62 (2) 60
Remeasurements of defined benefit pension plans - - - - 217 217 (2) 215
Currency retranslation gains/(losses) - - - (2,356) (22) (2,378) (212) (2,590)
Total comprehensive income - - - (2,226) 5,776 3,550 286 3,836
Dividends on ordinary capital - - - - (4,300) (4,300) - (4,300)
Issue of PLC ordinary shares as part of Unification((a)) 51 - - - (51) - - -
Cancellation of NV ordinary shares as part of Unification((a)) (233) (20) - - 253 - - -
Other effects of Unification((b)) (146) 73,364 (73,364) 132 14 - - -
Movements in treasury shares((c)) - - - 220 (158) 62 - 62
Share-based payment credit((d)) - - - - 108 108 - 108
Dividends paid to non-controlling interests - - - - - - (559) (559)
Currency retranslation gains/(losses) net of tax - (6) - - - (6) - (6)
Hedging gain/(loss) transferred to non-financial assets - - - 10 - 10 2 12
Net gain arising from Horlicks acquisition((e)) - - - - 2,930 2,930 1,918 4,848
Other movements in equity((f)) - - - (44) (236) (280) 48 (232)
31 December 2020 92 73,472 (73,364) (7,482) 22,548 15,266 2,389 17,655
Profit or loss for the period - - - - 6,049 6,049 572 6,621
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments - - - 147 - 147 19 166
Cash flow hedges - - - 276 - 276 3 279
Remeasurements of defined benefit pension plans - - - - 1,728 1,728 6 1,734
Currency retranslation gains/(losses) - - - 1,025 3 1,028 149 1,177
Total comprehensive income - - - 1,448 7,780 9,228 749 9,977
Dividends on ordinary capital - - - - (4,458) (4,458) - (4,458)
Share capital reduction((g)) - (20,626) - - 20,626 - - -
Repurchase of shares((h)) - - - (3,018) - (3,018) - (3,018)
Movements in treasury shares((c)) - - - 95 (143) (48) - (48)
Share-based payment credit((d)) - - - - 161 161 - 161
Dividends paid to non-controlling interests - - - - - - (503) (503)
Hedging gain/(loss) transferred to non-financial assets - - - (171) - (171) (3) (174)
Other movements in equity((f)) - (2) - (82) 231 147 7 154
31 December 2021 92 52,844 (73,364) (9,210) 46,745 17,107 2,639 19,746
a) As part of Unification, NV shareholders were issued new
PLC shares, all issued NV shares were cancelled. The impact is recognised in
retained profit.
b) Includes the reduction of PLC's share capital following the
cessation of the Equalisation Agreement. Prior to Unification, a conversion
rate of £1= €5.143 was used in accordance with the Equalisation Agreement
to translate PLC's share capital. Following Unification, PLC's share capital
has been translated using the exchange rate at the date of Unification. To
reflect the legal share capital of the PLC company, an increase to share
premium of €73,364 million and a debit to the unification reserve for the
same amount have been recorded as there is no change in the net assets of the
group. This debit is not a loss as a matter of law.
c) Includes purchases and sales of treasury shares, other
than the share buyback programme and the transfer from treasury shares to
retained profit of share-settled schemes arising from prior years and
differences between exercise and grant price of share options in 2020.
d) The share-based payment credit relates to the non-cash
charge recorded against operating profit in respect of the fair value of share
options and awards granted to employees.
e) Consideration for the Horlicks Acquisition included the
issuance of shares in a group subsidiary, Hindustan Unilever Limited, which
resulted in a net gain being recognised within equity.
f) 2021 includes a hyperinflation adjustment of €280
million and €82 million related to the Welly acquisition. 2020 includes
€163 million paid for purchase of the non-controlling interest in Unilever
Malaysia.
g) Share premium has been adjusted to reflect the legal
share capital of the PLC company, which reduced by £18,400 million following
court approval on 15 June 2021.
h) Repurchase of shares reflects the cost of acquiring
ordinary shares as part of the share buyback program announced on 29 April
2021.
BALANCE SHEET
(unaudited)
€ million As at 31 December 2021 As at 31 December 2020
Non-current assets
Goodwill 20,330 18,942
Intangible assets 18,261 15,999
Property, plant and equipment 10,347 10,558
Pension asset for funded schemes in surplus 5,119 2,722
Deferred tax assets 1,465 1,474
Financial assets 1,198 876
Other non-current assets 974 931
57,694 51,502
Current assets
Inventories 4,683 4,462
Trade and other current receivables 5,422 4,939
Current tax assets 324 372
Cash and cash equivalents 3,415 5,548
Other financial assets 1,156 808
Assets held for sale 2,401 28
17,401 16,157
Total assets 75,095 67,659
Current liabilities
Financial liabilities 7,252 4,461
Trade payables and other current liabilities 14,861 14,132
Current tax liabilities 1,365 1,451
Provisions 480 547
Liabilities held for sale 820 1
24,778 20,592
Non-current liabilities
Financial liabilities 22,881 22,844
Non-current tax liabilities 148 149
Pensions and post-retirement healthcare liabilities:
Funded schemes in deficit 831 1,109
Unfunded schemes 1,295 1,326
Provisions 611 583
Deferred tax liabilities 4,530 3,166
Other non-current liabilities 275 235
30,571 29,412
Total liabilities 55,349 50,004
Equity
Shareholders' equity 17,107 15,266
Non-controlling interests 2,639 2,389
Total equity 19,746 17,655
Total liabilities and equity 75,095 67,659
CASH FLOW STATEMENT
(unaudited)
€ million Full Year
2021 2020
Net profit 6,621 6,073
Taxation 1,935 1,923
Share of net (profit)/loss of joint ventures/associates and other (282)
(income)/loss from non-current investments and associates
(178)
Net monetary (gain)/loss arising from hyperinflationary economies 74 (20)
Net finance costs 354 505
Operating profit 8,702 8,303
Depreciation, amortisation and impairment 1,763
2,018
Changes in working capital (47) 680
Pensions and similar obligations less payments (183) (182)
Provisions less payments (61) (53)
Elimination of (profits)/losses on disposals 23 60
Non-cash charge for share-based compensation 161 108
Other adjustments (53) (1)
Cash flow from operating activities 10,305 10,933
Income tax paid (2,333) (1,875)
Net cash flow from operating activities 7,972 9,058
Interest received 148
169
Net capital expenditure (1,239) (932)
Acquisitions and disposals (2,088) (1,387)
Other investing activities (67) 669
Net cash flow (used in)/from investing activities (3,246) (1,481)
Dividends paid on ordinary share capital (4,483)
(4,279)
Interest paid (488) (624)
Change in financial liabilities 1,390 (181)
Repurchase of shares (3,018) -
Other financing activities (500) (720)
Net cash flow (used in)/from financing activities (7,099) (5,084)
Net increase/(decrease) in cash and cash equivalents (2,373) 1,773
Cash and cash equivalents at the beginning of the period 5,475 4,116
Effect of foreign exchange rate changes 285 (414)
Cash and cash equivalents at the end of the period 3,387 5,475
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(unaudited)
1 ACCOUNTING INFORMATION AND POLICIES
Except as set out below the accounting policies and methods of computation are
consistent with the year ended 31 December 2020. In conformity with the
requirements of the Companies Act 2006, the condensed preliminary financial
statements have been prepared in accordance with the International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and as adopted for use in the UK.
The condensed financial statements are shown at current exchange rates, while
percentage year-on-year changes are shown at both current and constant
exchange rates to facilitate comparison. The income statement on page 13, the
statement of comprehensive income on page 13, the statement of changes in
equity on page 14 and the cash flow statement on page 16 are translated at
exchange rates current in each period. The balance sheet on page 15 is
translated at period-end rates of exchange.
On 29 November 2020, the Unilever Group underwent a reorganisation so that
there were no longer two parent companies, Unilever N.V. ('NV') and Unilever
PLC ('PLC'), but one parent company PLC. This reorganisation is referred to
as 'Unification' in the condensed financial statements. Prior to Unification,
NV and PLC together with the group companies operated as a single economic
entity. Following Unification, all group companies are now controlled solely
by PLC. All companies controlled by NV before Unification are included in the
group consolidation for the year ending 31 December 2020 and they were already
group companies prior to Unification. The only impact to the consolidated
balance sheet from Unification is within equity due to the cancellation of NV
shares and issuance of PLC shares in 2020.
The condensed financial statements attached do not constitute the full
financial statements within the meaning of Section 434 of the UK Companies Act
2006, which will be finalised and delivered to the Registrar of Companies in
due course. Full accounts for Unilever for the year ended 31 December 2020
have been delivered to the Registrar of Companies; the auditors' reports on
these accounts were unqualified, did not include a reference to any matters by
way of emphasis and did not contain a statement under Section 498 (2) or
Section 498 (3) of the UK Companies Act 2006.
ORMATION AND POLICIES 1 ACCOUNTING INFORMATION AND
POLICIES (continued)
New accounting standards
Interest Rate Benchmark Reform (Phase 2) Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 (effective 1 January 2022)
The Group has adopted the amendments that allow modifications to asset and
liability values as a direct consequence of the interest rate benchmark
reform, and which are made on an economically equivalent basis (i.e. where the
basis for determining contractual cash flows is the same), can be accounted
for by only updating the effective interest rate. The Group does not have
significant financial instruments that refer to an interest rate benchmark so
these amendments do not have a material impact on Unilever.
2 SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT
Non-underlying items
These include non-underlying items within operating profit and non-underlying
items not in operating profit but within net profit:
· Non-underlying items within operating profit are gains or losses
on business disposals, acquisition and disposal related costs, restructuring
costs, impairment and other items within operating profit classified here due
to their nature and frequency.
· Non-underlying items not in operating profit but within net
profit are net monetary gain/(loss) arising from hyperinflationary economies
and significant and unusual items in net finance cost, share of profit/(loss)
of joint ventures and associates and taxation.
Restructuring costs are charges associated with activities planned by
management that significantly change either the scope of the business or the
manner in which it is conducted.
€ million Full Year
2021 2020
Acquisition and disposal-related credits/(costs) ((a)) (332) (69)
Gain/(loss) on disposal of group companies((b)) 36 8
Restructuring costs((c)) (632) (916)
Impairments((d)) (17) -
Other((e)) 11 (87)
Non-underlying items within operating profit before tax (934) (1,064)
Tax on non-underlying items within operating profit 219 272
Non-underlying items within operating profit after tax (715) (792)
Interest related to the UK tax audit of intangible income and centralised 10 (56)
services
Net monetary gain/(loss) arising from hyperinflationary economies (74) 20
Non-underlying items not in operating profit but within net profit before tax (64) (36)
Tax impact of non-underlying items not in operating profit but within net
profit:
Taxes related to share buyback as part of Unification - (30)
Taxes related to the UK tax audit of intangible income and centralised (29) (53)
services
Taxes related to the reorganisation of our European business 31 (58)
Hyperinflation adjustment for Argentina deferred tax (43) (5)
Non-underlying items not in operating profit but within net profit after tax (105) (182)
Non-underlying items after tax((f)) (820) (974)
Attributable to:
Non-controlling interests (30) (23)
Shareholders' equity (790) (951)
((a) )2021 includes a charge of €196m relating to the disposal of
ekaterra and other acquisition and disposal activities.
((b) )2021 gain relates to several small disposals of brands in
Foods and Refreshment. The 2020 gain relates to the disposal of a laundry bar
business in Latin America.
((c) )Restructuring costs are comprised of various supply chain
optimisation projects and organisational change programmes across markets.
((d) )Relates to the write down of leased land and building assets.
((e) )2020 includes a charge of €87 million for litigation matters
in relation to investigations by national competition authorities including
those in Turkey and France.
((f) )Non-underlying items after tax is calculated as
non-underlying items within operating profit after tax plus non-underlying
items not in operating profit but within net profit after tax.
3 SEGMENT INFORMATION - DIVISIONS
( )
Fourth Quarter Beauty & Home Foods & Refreshment Total
Personal Care
Care
Turnover (€ million)
2020 5,176 2,547 4,379 12,102
2021 5,769 2,729 4,623 13,121
Change (%) 11.5 7.1 5.6 8.4
Impact of:
Acquisitions (%) 2.4 0.1 - 1.1
Disposals (%) - - (0.3) (0.1)
Currency-related items (%), of which: 2.5 2.0 2.5 2.4
Exchange rates changes (%) 2.1 1.5 2.0 1.9
Extreme price growth in hyperinflationary markets* (%) 0.4 0.5 0.5 0.4
Underlying sales growth (%) 6.2 5.0 3.2 4.9
Price* (%) 5.3 8.4 2.5 4.9
Volume (%) 0.9 (3.1) 0.6 -
Full Year Beauty & Home Foods & Refreshment Total
Personal Care
Care
Turnover (€ million)
2020 21,124 10,460 19,140 50,724
2021 21,901 10,572 19,971 52,444
Change (%) 3.7 1.1 4.3 3.4
Impact of:
Acquisitions (%) 2.7 - 0.8 1.4
Disposals (%) - (0.1) (0.2) (0.1)
Currency-related items (%), of which: (2.8) (2.6) (1.8) (2.4)
Exchange rate changes (%) (3.0) (2.9) (2.1) (2.6)
Extreme price growth in hyperinflationary markets* (%) 0.2 0.3 0.3 0.3
Underlying sales growth (%) 3.8 3.9 5.6 4.5
Price* (%) 3.0 3.1 2.7 2.9
Volume (%) 0.8 0.7 2.9 1.6
Operating profit (€ million)
2020 4,311 1,243 2,749 8,303
2021 4,471 1,294 2,937 8,702
Underlying operating profit (€ million)
2020 4,591 1,519 3,257 9,367
2021 4,742 1,417 3,477 9,636
Operating margin (%)
2020 20.4 11.9 14.4 16.4
2021 20.4 12.2 14.7 16.6
Underlying operating margin (%)
2020 21.7 14.5 17.0 18.5
2021 21.7 13.4 17.4 18.4
*Underlying price growth in excess of 26% per year in hyperinflationary
economies has been excluded when calculating the price growth in the tables
above, and an equal and opposite amount is shown as extreme price growth in
hyperinflationary markets.
Turnover growth is made up of distinct individual growth components namely
underlying sales, currency impact, acquisitions and disposals. Turnover growth
is arrived at by multiplying these individual components on a compounded basis
as there is a currency impact on each of the other components. Accordingly,
turnover growth is more than just the sum of the individual components.
Underlying operating profit represents our measure of segment profit or loss
as it is the primary measure used for the purpose of making decisions about
allocating resources and assessing performance of segments. Underlying
operating margin is calculated as underlying operating profit divided by
turnover.
4 SEGMENT INFORMATION - GEOGRAPHICAL AREA
Fourth Quarter Asia / The Europe Total
AMET / Americas
RUB
Turnover (€ million)
2020 5,649 3,884 2,569 12,102
2021 6,131 4,382 2,608 13,121
Change (%) 8.5 12.8 1.5 8.4
Impact of:
Acquisitions (%) 0.2 2.4 0.9 1.1
Disposals (%) - - (0.4) (0.1)
Currency-related items (%), of which: 2.5 2.8 1.8 2.4
Exchange rates changes (%) 2.4 1.6 1.8 1.9
Extreme price growth in hyperinflationary markets* (%) 0.1 1.2 - 0.4
Underlying sales growth (%) 5.7 7.2 (0.8) 4.9
Price* (%) 4.3 8.5 0.7 4.9
Volume (%) 1.3 (1.2) (1.5) (0.0)
( )
Full Year Asia / The Europe Total
AMET / Americas
RUB
Turnover (€ million)
2020 23,440 16,080 11,204 50,724
2021 24,264 16,844 11,336 52,444
Change (%) 3.5 4.8 1.2 3.4
Impact of:
Acquisitions (%) 0.8 3.2 0.3 1.4
Disposals (%) - (0.1) (0.3) (0.1)
Currency- related items (%), of which: (2.9) (3.6) 0.7 (2.4)
Exchange rates changes (%) (3.0) (4.3) 0.7 (2.6)
Extreme price growth in hyperinflationary markets* (%) 0.1 0.8 - 0.3
Underlying sales growth (%) 5.8 5.5 0.4 4.5
Price* (%) 2.7 5.1 0.2 2.9
Volume (%) 3.0 0.4 0.3 1.6
Operating profit (€ million)
2020 4,137 2,723 1,443 8,303
2021 4,536 2,696 1,470 8,702
Underlying operating profit (€ million)
2020 4,546 2,973 1,848 9,367
2021 4,833 2,980 1,823 9,636
Operating margin (%)
2020 17.6 16.9 12.9 16.4
2021 18.7 16.0 13.0 16.6
Underlying operating margin (%)
2020 19.4 18.5 16.5 18.5
2021 19.9 17.7 16.1 18.4
*Underlying price growth in excess of 26% per year in hyperinflationary
economies has been excluded when calculating the price growth in the tables
above, and an equal and opposite amount is shown as extreme price growth in
hyperinflationary markets.
5 TAXATION
The effective tax rate for 2021 is 23.1% compared to 24.6% in 2020. The
decrease is primarily driven by tax on one-off items in 2020 including the tax
impact of certain non-underlying items.
Tax effects of components of other comprehensive income were as follows:
€ million Full Year 2021 Full Year 2020
Before Tax After Before Tax After
tax (charge)/ tax tax (charge)/ tax
credit credit
Gains/(losses) on:
Equity instruments at fair value through other comprehensive income 178 (12) 166 77 1 78
Cash flow hedges 291 (12) 279 87 (27) 60
Remeasurements of defined benefit pension plans 2,405 (671) 1,734 250 (35) 215
Currency retranslation gains/(losses) 1,237 (60) 1,177 (2,646) 56 (2,590)
Other comprehensive income 4,111 (755) 3,356 (2,232) (5) (2,237)
6 COMBINED EARNINGS PER SHARE
The combined earnings per share calculations are based on the average number
of share units representing the combined ordinary shares of NV and PLC in
issue during the period, less the average number of shares held as treasury
shares.
In calculating diluted earnings per share and underlying earnings per share, a
number of adjustments are made to the number of shares, principally the
exercise of share plans by employees.
Earnings per share for total operations for the twelve months were calculated
as follows:
2021 2020
Combined EPS - Basic
Net profit attributable to shareholders' equity (€ million) 6,049 5,581
Average number of shares (millions of share units)((a)) 2,599.9 2,620.3
Combined EPS - basic (€) 2.33 2.13
Combined EPS - Diluted
Net profit attributable to shareholders' equity (€ million) 6,049 5,581
Adjusted average number of shares (millions of share units)((a)) 2,609.6 2,629.8
Combined EPS - diluted (€) 2.32 2.12
Underlying EPS
Net profit attributable to shareholders' equity (€ million) 6,049 5,581
Post tax impact of non-underlying items attributable to shareholders' equity 790 951
(see note 2)
Underlying profit attributable to shareholders' equity 6,839 6,532
Adjusted average number of shares (millions of share units)((a)) 2609.6 2,629.8
Underlying EPS - diluted (€) 2.62 2.48
((a) )In the calculation of the weighted average number of share
units, NV shares are included only for the period they were issued, until 29
November 2020. Following Unification (see note 1 for more information on
Unification), all NV shares were cancelled and the shareholders of NV were
issued PLC ordinary shares on a 1:1 ratio. Accordingly, there is no
significant impact on the calculation of average number of share units.
In calculating underlying earnings per share, net profit attributable to
shareholders' equity is adjusted to eliminate the post-tax impact of
non-underlying items.
During the period the following movements in shares have taken place:
Millions
Number of shares at 31 December 2020 (net of treasury shares) 2,622.0
Net movements in shares under incentive schemes 2.0
Shares repurchased under the share buyback programme -63.0
Number of shares at 31 December 2021 2,561.0
( )
7 ACQUISITIONS AND DISPOSALS
In 2021, the Group completed the business acquisitions listed below. The total
consideration for acquisitions in 2021 is €2,117 million (2020: €6,337
million for acquisitions completed during that year). Total consideration for
2021 disposals is €49 million (2020: €35 million for disposals completed
during that year).
On 18 November 2021, the Group announced that it has entered into an
agreement to sell its global Tea business (ekaterra) to CVC Capital Partners
Fund VIII for €4.5 billion on a cash-free, debt-free basis with completion
expected in the second half of 2022.
Deal completion date Acquired/Disposed business
29 January 2021 Acquired 51% of Welly Health, a producer of bandages and other healthcare
related items. The acquisition helps to expand our existing Health and
Wellbeing portfolio.
28 May 2021 Acquired Onnit Lab Inc., a holistic wellness and lifestyle company based in
the US. The acquisition complements our growing portfolio of innovative
wellness and supplement brands.
2 August 2021 Acquired Paula's Choice Inc., a Prestige Skin Care company based in the U.S.
The acquisition strengthens our presence in Prestige Beauty, with an
established direct to consumer e-commerce business.
Paula's Choice Acquisition
On 2 August 2021, the Group acquired 100% of the shares of Paula's Choice
Inc., a U.S. based Prestige Skin Care company. The total consideration paid
was €1,832 million which comprised of €1,818 million cash paid on the
completion date and €14 million of deferred consideration. The provisional
fair value of net assets recognised on the balance sheet is €1,223 million.
Currently all balances remain provisional as we finalise our review of the
asset valuations. As part of the acquisition, goodwill of €609 million has
been recognized and which is not deductible for tax purposes. Since the
acquisition date, the goodwill balance has increased by €37 million as a
result of foreign exchange effects.
Impact of all acquisitions
Effect on consolidated income statement
The acquisition deals completed in 2021 have contributed €196 million to
Group turnover and €16 million to Group operating profit since the relevant
acquisition dates. If the acquisition deals completed in 2021 had all taken
place at the beginning of the year, Group turnover would have been €52,637
million and Group operating profit would have been €8,738 million.
Effect on consolidated balance sheet
The following table summarises the consideration and net assets acquired for
the Paula's Choice acquisition and other acquisitions. The fair value
currently used for the opening balance of the Paula's Choice acquisition is
provisional. These balances remain provisional due to outstanding relevant
information about the facts and circumstances that existed as of the
acquisition date and/or where valuation work is still ongoing.
Other Total
Paula's Choice acquisitions 2021
€ million € million € million
Intangible assets 1,584 160 1,744
Other non-current assets 4 4 8
Trade and other receivables 15 6 21
Other current assets((a)) 48 35 83
Non-current liabilities((b)) (385) (43) (428)
Current liabilities((c)) (43) (13) (56)
Net assets acquired 1,223 149 1,372
Non-controlling interest (14) (14)
Goodwill 609 150 759
Total consideration 1,832 285 2,117
Of which:
Cash consideration paid 1,818 270 2,088
Deferred consideration 14 15 29
((a) )Other current assets include inventories of €29
million and cash of €17 million in Paula's Choice, with the remaining €35
million split between cash of €14 million and inventories of €13 million
in Onnit.
((b) )Non-current liabilities include deferred tax of €384
million related to Paula's Choice.
((c) )Current liabilities include trade and other payable of
€36 million in Paula's Choice.
8 SHARE-BUY BACK
On 29 April 2021 we announced a share buyback programme of up to
€3 billion, which was completed on 3 December 2021. The
Group has repurchased 62,976,145
ordinary shares as part of the programme which are held by Unilever as treasury shares. Consideration paid for the repurchase of shares including
transaction costs was €3,018
million which is recorded within other reserves.
9 FINANCIAL INSTRUMENTS
The Group's Treasury team aims to protect the Group's financial investments,
while maximising returns. The fair value of financial assets is the same as
the carrying amount for 2021 and 2020. The Group's cash resources and other
financial assets are shown below.
31 December 2021 31 December 2020
€ million
Current Non-current Total Current Non-current Total
Cash and cash equivalents
Cash at bank and in hand 2,505 - 2,505 2,764 - 2,764
Short-term deposits((a)) 811 - 811 2,764 - 2,764
Other cash equivalents 99 - 99 20 - 20
3,415 - 3,415 5,548 - 5,548
Other financial assets
Financial assets at amortised cost((b)) 750 208 958 468 138 606
Financial assets at fair value through other comprehensive income((c)) 1 526 527 9 361 370
Financial assets at fair value through profit or loss:
Derivatives 76 52 128 59 21 80
Other((d)) 329 412 741 272 356 628
1,156 1,198 2,354 808 876 1,684
Total financial assets((e)) 4,571 1,198 5,769 6,356 876 7,232
(a) Short-term deposits typically have maturity of up to 3 months.
(b) Current financial assets at amortised cost include short term
deposits with banks with maturities longer than three months excluding
deposits which are part of a recognised cash management process and loans to
joint venture entities. Non-current financial assets at amortised cost include
judicial deposits of €157 million (2020: €101 million).
(c) Included within non-current financial assets at fair value through
other comprehensive income are equity investments of €521 million (2020:
€356 million)
(d) Included within current financial assets at fair value through
profit or loss are highly liquid debt mutual funds. Included within
non-current financial assets at fair value through profit or loss are assets
in a trust to fund benefit obligations in the US, an option over a
non-controlling interest in a subsidiary in Hong Kong and investments in a
number of companies and financial institutions in North America, North Asia,
South Asia and Europe.
(e) Financial assets exclude trade and other current receivables.
The Group is exposed to the risks of changes in fair value of its financial
assets and liabilities. The following tables summarise the fair values and
carrying amounts of financial instruments and the fair value calculations by
category.
€ million Fair value Carrying amount
As at 31 December 2021 As at 31 December 2020 As at 31 December 2021 As at 31 December 2020
Financial assets
Cash and cash equivalents 3,415 5,548 3,415 5,548
Financial assets at amortised cost 958 606 958 606
Financial assets at fair value through other comprehensive income 527 370 527 370
Financial assets at fair value through profit and loss:
Derivatives 128 80 128 80
Other 741 628 741 628
5,769 7,232 5,769 7,232
Financial liabilities
Bank loans and overdrafts (402) (411) (402) (411)
Bonds and other loans (29,133) (26,936) (27,621) (24,585)
Lease liabilities (1,649) (1,771) (1,649) (1,771)
Derivatives (184) (315) (184) (315)
Other financial liabilities (277) (223) (277) (223)
(31,645) (29,656) (30,133) (27,305)
€ million Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
As at 31 December 2021 As at 31 December 2020
Assets at fair value
Financial assets at fair value through other comprehensive income 6 3 518 5 3 362
Financial assets at fair value through profit or loss:
Derivatives((a)) - 289 - - 158 -
Other 331 - 410 300 - 328
Liabilities at fair value
Derivatives((b)) - (235) - - (418) -
Contingent consideration - - (180) - - (140)
((a) )Includes €161 million (2020: €78 million)
derivatives, reported within trade receivables, that hedge trading activities.
((b) )Includes €(51) million (2020: €(103) million)
derivatives, reported within trade creditors, that hedge trading activities.
There were no significant changes in classification of fair value of financial
assets and financial liabilities since 31 December 2020. There were also no
significant movements between the fair value hierarchy classifications since
31 December 2020.
The fair value of trade receivables and payables is considered to be equal to
the carrying amount of these items due to their short-term nature.
Calculation of fair values
The fair values of the financial assets and liabilities are defined as the
price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
Methods and assumptions used to estimate the fair values are consistent with
those used in the year ended 31 December 2020.
10 ASSETS HELD FOR SALE
On 18 November 2021, Unilever announced that it has entered into an
agreement to sell its global Tea business (ekaterra) to CVC Capital Partners
Fund VIII for €4.5 billion on a cash-free, debt-free basis, with completion
expected in the second half of 2022. As a result, the assets and liabilities
of ekaterra have been classified as held for sale as at 31
December 2021. Following classification as held for sale, these assets and
liabilities are recognised as current on the balance sheet.
2021 2021 2021 2020
ekaterra Others((a)) Total Total
Property, plant and equipment held for sale ((b)) 2 2 17
Non-Current assets
Goodwill and intangible assets 899 2 901 1
Property, plant and equipment 425 22 447 4
Deferred tax assets 329 - 329 -
Other non-current assets 25 - 25 -
1,678 24 1,702 5
Current assets
Inventories 258 - 258 6
Trade and other receivables 336 - 336 -
Current tax assets 11 - 11 -
Cash and cash equivalents 90 - 90 -
Other current assets 2 - 2 -
697 - 697 6
Assets held for sale 2,375 26 2,401 28
Current liabilities
Trade payables and other current liabilities 652 - 652 1
Current tax liabilities 9 - 9 -
Financial liabilities 49 - 49 -
Provisions 8 - 8 -
718 - 718 1
Non-Current liabilities
Pensions and post-retirement healthcare liabilities 12 - 12 -
Financial Liabilities 31 - 31 -
Other non-current liabilities 2 - 2 -
Deferred tax liabilities 57 - 57 -
102 - 102 -
Liabilities held for sale 820 - 820 1
(a) In 2021, other disposal groups include assets related to the disposal of
the Calve and Baltimore brands in Russia. We reversed the held for sale
position of a number of small Beauty and Personal Care brands in the second
half of 2021.
(b) In 2020, disposal groups held for sale related to manufacturing assets.
11 DIVIDENDS AND SHARE BUYBACKS
The Board has declared a quarterly interim dividend for Q4 2021 of £0.3602
per Unilever PLC ordinary share or €0.4268 per Unilever PLC ordinary share
at the applicable exchange rate issued by WM/Reuters on 8 February 2022.
The following amounts will be paid in respect of this quarterly interim
dividend on the relevant payment date:
Per Unilever PLC ordinary share (traded on the London Stock Exchange): £ 0.3602
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam): € 0.4268
Per Unilever PLC American Depositary Receipt: US$ 0.4873
The euro and US dollar amounts above have been determined using the applicable
exchange rates issued by WM/Reuters on
8 February 2022.
US dollar cheques for the quarterly interim dividend will be mailed on 22
March 2022 to holders of record at the close of business on 25 February 2022.
The quarterly dividend calendar for the remainder of 2022 will be as follows:
Announcement Ex-Dividend Date Record Date Payment Date
Date
Q4 2021 Dividend 10 February 2022 24 February 2022 25 February 2022 22 March 2022
Q1 2022 Dividend 28 April 2022 19 May 2022 20 May 2022 16 June 2022
Q2 2022 Dividend 26 July 2022 4 August 2022 5 August 2022 1 September 2022
Q3 2022 Dividend 27 October 2022 17 November 2022 18 November 2022 9 December 2022
Unilever will commence a share buyback programme of up to €3 billion, in one
or more tranches, to be completed by the end of 2023. The programme is
expected to be commence during the first quarter of 2022. Any share buyback
tranche commenced after Unilever's 2022 AGM will be dependent on receipt of
the relevant AGM authority. A further announcement will be provided before
Trading begins.
12 EVENTS AFTER THE BALANCE SHEET DATE
On 25 January 2022, Unilever announced changes to its organisational model to
make it simpler and more category focused. The company will move away from its
current matrix structure and will be organised around five distinct Business
Groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice
Cream. Each Business Group will be fully responsible and accountable for their
strategy, growth, and profit delivery globally. We expect the new structure
to be fully operational from the middle of the year. All costs related to
setting up the new organisation will be managed within the existing
restructuring investment plans of €2 billion across 2021 and 2022.
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