REG - Unilever PLC - Final Results
09/02/2023 07:00
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RNS Number : 4280P Unilever PLC 09 February 2023
2022 Full Year Results
Strong sales growth and continued progress against strategy
Underlying performance GAAP measures
(unaudited) 2022 vs 2021 2022 vs 2021
Full Year
Underlying sales growth (USG) 9.0% Turnover €60.1bn 14.5%
Beauty & Wellbeing 7.8% Beauty & Wellbeing €12.3bn 20.8%
Personal Care 7.9% Personal Care €13.6bn 15.9%
Home Care 11.8% Home Care €12.4bn 17.3%
Nutrition 8.6% Nutrition €13.9bn 6.1%
Ice Cream 9.0% Ice Cream €7.9bn 14.8%
Underlying operating profit €9.7bn 0.5% Operating profit €10.8bn 23.6%
Underlying operating margin 16.1% (230)bps Operating margin 17.9% 130bps
Underlying earnings per share €2.57 (2.1)% Diluted earnings per share €2.99 28.8%
Free cash flow €5.2bn €(1.2)bn Net profit €8.3bn 24.9%
Fourth Quarter
USG 9.2% Turnover €14.6bn 11.4%
Quarterly dividend payable in March 2023 €0.4268 per share ((a))
(a) See note 10 for more information on dividends
USG, UVG, UPG, UOP, UOM, underlying EPS, constant underlying EPS, underlying
effective tax rate, FCF, net debt, ROIC and UEBITDA are non-GAAP
measures
Full year highlights
• Underlying sales growth accelerated to 9.0%, driven by all
Business Groups, with price growth of 11.3% and volumes declining 2.1%
• Turnover increased 14.5% to €60.1 billion, including 6.2% from
currency and (1.0)% from disposals net of acquisitions
• Underlying operating profit improved slightly to €9.7 billion
despite margin decline of 230bps driven by input cost inflation
• Underlying earnings per share decreased 2.1%, diluted EPS up 28.8%
helped by profit on disposals
• Free cash flow €5.2 billion, including €0.3 billion of tax
paid on separation of ekaterra, the global Tea business, reflects 97% cash
conversion
• €1.5 billion share buyback and €4.3 billion dividends during
2022
• Brand and marketing investment increased €0.5 billion in
constant exchange rates
• Our billion+ Euro brands, accounting for 53% of Group turnover,
delivered underlying sales growth of 10.9%, led by strong performances from
OMO, Hellmann's, Rexona, Sunsilk and Magnum
• Simpler, more category-focused organisation, in place since 1
July, is driving greater operational focus and faster decisions
Chief Executive Officer statement
"Unilever delivered a year of strong topline growth in challenging
macroeconomic conditions. Underlying sales growth was 9.0%, driven by
disciplined pricing action in response to high input cost inflation. Growth
was broad-based across each of our five Business Groups, led by strong
performances from our billion+ Euro brands. Despite sharp rises in material
costs, we have prioritised stepping up our brand and marketing investment.
Underlying operating margin was delivered in line with our guidance, with
underlying operating profit up for the year.
We have made further progress in the transformation of Unilever and continued
to deliver against our strategic priorities. Our new operating model is
already unlocking a culture of bolder and more rapid decision-making with
improved accountability. We continue to improve our growth profile, with the
sale of the global Tea business and the acquisition of Nutrafol. We are
increasingly realising the benefits from the reshaped portfolio, accelerated
savings delivery and improved execution. There is more to do, but the changes
we have made mean that we start 2023 with momentum, setting us up well for
delivering another year of higher growth, which remains our first priority."
Alan Jope
9 February 2023
Outlook for 2023
In 2022, we carefully balanced price growth, volume and competitiveness to
navigate through the high cost inflation environment. We will again deliver
strong underlying sales growth in 2023, with improving volume performance and
competitiveness as the year progresses. We will continue to price and drive
our cost savings programmes, in order to allow us to invest behind our brands
and deliver improved margin.
We expect cost inflation to continue in 2023. Our expectation for net material
inflation (NMI) in the first half of 2023 is around €1.5 billion. We
anticipate significantly lower NMI in the second half, with a wide range of
possible outcomes, though we do not expect cost deflation.
In the first half, underlying price growth will remain high, and volume growth
will be negative. Volume will improve as price growth softens, but it is too
early to say whether volume will turn positive in the second half. We expect
2023 underlying sales growth to be at least in the upper half of our
multi-year range of 3 - 5%.
We will deliver only a modest improvement in underlying operating margin in
the full year, as we plan for another year of increased investment, and with
cost inflation remaining high, underlying operating margin will be around 16%
in the first half.
Full Year Review: Unilever Group
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €60.1bn 9.0% (2.1)% 11.3% (1.0)% 6.2% 14.5% 16.1% (230)bps
Fourth Quarter €14.6bn 9.2% (3.6)% 13.3% (3.1)% 5.3% 11.4%
Performance
Underlying sales growth stepped up to 9.0% in 2022, led by pricing, in the
face of significant input cost inflation across our markets. Price growth has
sequentially improved in each of the past eight quarters, reaching 13.3% in
the fourth quarter and taking the full year underlying price growth to 11.3%.
This had, as expected, some negative impact on volumes, which declined 2.1%.
Beauty & Wellbeing grew underlying sales by 7.8% driven by price. Volumes
were slightly positive, helped by another year of strong growth in Prestige
Beauty and Health & Wellbeing, which now account for more than €2.5
billion of turnover. Personal Care underlying sales were up 7.9%, driven by
strong pricing. Volumes grew in Deodorants, but declined in other categories.
Home Care, which was particularly exposed to rising input costs, delivered the
highest price growth and some volume decline, leading to underlying sales
growth of 11.8%. Nutrition grew 8.6%, led by high price growth of Dressings
and a continued recovery of Unilever Food Solutions. Ice Cream improved
underlying sales by 9.0%, with strong volume growth in out-of-home channels,
benefiting from a good summer season, but not quite compensating for lower
in-home volumes.
Emerging markets grew underlying sales by 11.2% with price of 13.5% and volume
down 2.0%. South Asia grew strongly through both price and volume. Price
growth in Latin America increased to 20.4% with volumes contracting by 4.6%.
China declined slightly as it was affected by pandemic-related restrictions,
particularly in the second and fourth quarters. South East Asia achieved
double-digit price growth with virtually flat volumes. Turkey delivered high
single-digit volume growth in a very inflationary environment. Developed
markets increased by 5.9%, with 8.4% from price and (2.3)% from volume.
Volumes held up better in North America than in Europe.
Turnover increased 14.5% to €60.1 billion, which included a currency impact
of 6.2% and (1.0)% from disposals net of acquisitions. Underlying operating
profit was €9.7 billion, up 0.5% versus the prior year. Underlying operating
margin declined by 230bps to 16.1%. Gross margin decreased by 210bps which
reflected €4.3 billion of net material inflation, and increased production
and logistics costs that were only partially mitigated by our pricing action
and savings delivery. Brand and marketing investment was stepped up by €0.5
billion in constant exchange rates. This equated to a 10bps contribution to
margin in current exchange rates. Overheads increased by 30bps largely due to
investments in capabilities to drive growth and increased scale of our
Prestige Beauty and Health & Wellbeing businesses.
Capital allocation and operating model
On 22 July and 19 December 2022, we completed the first and second €750
million tranches of our ongoing share buyback programme of up to €3 billion.
The quarterly interim dividend for the fourth quarter is maintained at
€0.4268. Since 1 July 2022, our simpler, more category-focused operating
model for Unilever has been in place, organised around five Business Groups
and a technology-driven backbone, Unilever Business Operations. We are on
track to deliver the new structure within existing restructuring plans, and to
generate around €600 million of cost savings over the first two years after
1 July 2022, with the majority in 2023.
Conference Call
Following the release of this trading statement on 9 February 2023 at 7:00 AM
(UK time), there will be a live webcast at 8:00 AM available on the website
www.unilever.com/investor-relations/results-and-presentations/latest-results.
A replay of the webcast and the slides of the presentation will be made
available after the live meeting.
Full Year Review: Business Groups
Full Year 2022 Fourth Quarter 2022
(unaudited) Turnover USG UVG UPG Change in UOM Turnover USG UVG UPG
Unilever €60.1bn 9.0% (2.1)% 11.3% (230)bps €14.6bn 9.2% (3.6)% 13.3%
Beauty & Wellbeing €12.3bn 7.8% 0.3% 7.5% (340)bps €3.2bn 7.7% (0.6)% 8.4%
Personal Care €13.6bn 7.9% (3.7)% 12.1% (170)bps €3.5bn 9.1% (3.5)% 13.0%
Home Care €12.4bn 11.8% (3.5)% 15.9% (260)bps €3.2bn 12.3% (3.8)% 16.7%
Nutrition €13.9bn 8.6% (2.1)% 10.9% (170)bps €3.5bn 10.1% (4.1)% 14.7%
Ice Cream €7.9bn 9.0% (0.7)% 9.7% (220)bps €1.2bn 2.9% (9.9)% 14.2%
Beauty & Wellbeing
20% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €12.3bn 7.8% 0.3% 7.5% 3.7% 8.1% 20.8% 18.7% (340)bps
Fourth Quarter €3.2bn 7.7% (0.6)% 8.4% 3.4% 6.9% 19.0%
Beauty & Wellbeing underlying sales grew 7.8% with 7.5% from price and
0.3% from volume. Growth was price-led in core Skin Care and Hair Care, while
it was volume-led in Prestige Beauty and Health & Wellbeing.
Hair Care grew mid-single digit, helped by strong performances of Sunsilk and
Nexxus. Growth was driven by Latin America, India and Turkey, partially offset
by Europe and China where sales were affected by pandemic-related
restrictions. Skin Care grew low-single digit. South Asia and South East Asia
delivered strong growth, helped by Lifebuoy and rollout of the Vaseline
premium Gluta-Hya innovation, while sales of AHC declined in North Asia.
Prestige Beauty delivered another year of double-digit growth, with strong
contributions from Paula's Choice and Hourglass which continued its expansion
into China, as well as Living Proof, which entered into the bond-building
premium hair care category. Liquid IV and Olly drove strong double-digit
growth in Health & Wellbeing. The acquisition of Nutrafol, a leading
provider of hair wellness products, was completed in July.
Underlying operating margin declined 340bps due to input cost increases and
the biggest step-up in brand and marketing investment across the five Business
Groups.
Personal Care
23% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €13.6bn 7.9% (3.7)% 12.1% -% 7.4% 15.9% 19.6% (170)bps
Fourth Quarter €3.5bn 9.1% (3.5)% 13.0% -% 6.4% 16.1%
Personal Care underlying sales grew 7.9% with 12.1% from price and (3.7)% from
volume. The volume decline was higher in Skin Cleansing which was particularly
affected by the commodity cost inflation.
Deodorants performed strongly, delivering double-digit price and positive
volume growth. This was supported by continued premiumisation and strong
innovations, such as the 72-hour protection technology from Rexona. Skin
Cleansing grew high single-digit with strong price increases in response to
the input cost inflation. While this led to a volume decline, volumes held up
better in North America, supported by premium innovations such as the Dove
deep moisture body wash with microbiome nutrient serum that delivers a further
improved skin care experience. Oral Care achieved price-led growth, helped by
the relaunch of Pepsodent with increased naturals and efficacy credentials in
South East Asia, Africa and the Middle East, partially offset by a sales
decline in Europe. Sales of Dollar Shave Club declined during the year, and an
impairment charge was recognised related to the business.
Underlying operating margin declined 170bps as a result of an input cost
driven gross margin decline.
Home Care
21% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €12.4bn 11.8% (3.5)% 15.9% -% 4.9% 17.3% 10.8% (260)bps
Fourth Quarter €3.2bn 12.3% (3.8)% 16.7% -% 3.3% 15.9%
Home Care underlying sales grew 11.8%, with 15.9% from price and (3.5)% from
volume. Price growth was led by Fabric Cleaning which faced the highest
commodity cost impact.
Fabric Cleaning grew high double-digit while holding volumes almost flat. This
was driven by very strong performances in South Asia, Brazil, Turkey and
Vietnam with modest sales growth in Europe and China. The growth, which was
broad-based across formats, benefitted from our continuous market development
of the liquids market, with particularly strong contributions from OMO and
Radiant. Fabric Enhancers grew high single-digit with modest volume decline.
Comfort delivered high growth in Latin America, South Asia and Turkey, but
declined in Europe where consumers reduced their spending in the category.
Home & Hygiene grew slightly, with high single-digit volume losses across
most markets, while Air Wellness declined in 2022.
Underlying operating margin declined 260bps driven by gross margin contraction
as a result of significant input cost inflation despite having the highest
price growth across all Business Groups.
Nutrition
23% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €13.9bn 8.6% (2.1)% 10.9% (6.9)% 4.9% 6.1% 17.6% (170)bps
Fourth Quarter €3.5bn 10.1% (4.1)% 14.7% (14.2)% 3.9% (1.9)%
Nutrition underlying sales grew 8.6%, with 10.9% from price and (2.1)% from
volume.
Scratch Cooking Aids, the biggest category, delivered mid single-digit growth.
South East Asia, Africa and Latin America performed strongly, led by Knorr,
while China declined high single-digit as a result of pandemic-related
restrictions particularly in the second and fourth quarters. Dressings had a
strong year with broad-based, double-digit price growth and a modest volume
decline, supported by continued high growth of Hellmann's, particularly in the
United States. Despite a decline in China, Unilever Food Solutions delivered
double-digit growth and almost recovered to pre-pandemic volume levels, helped
by extended distribution and consumers eating out-of-home more frequently.
Underlying operating margin declined 170bps due to an input cost driven
reduction in gross margin.
Ice Cream
13% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
Full Year €7.9bn 9.0% (0.7)% 9.7% -% 5.4% 14.8% 11.7% (220)bps
Fourth Quarter €1.2bn 2.9% (9.9)% 14.2% -% 7.5% 10.6%
Ice Cream underlying sales grew 9.0%, with 9.7% from price and (0.7)% from
volume. Strong volume growth in out-of-home was offset by volume declines in
in-home, reversing some of the pandemic-related trends.
Out-of-home Ice Cream achieved double-digit price and high single-digit volume
growth. The business continued to recover sales lost during the pandemic but
is yet to return to 2019 volumes. The in-home business grew mid single-digit
despite mid single-digit volume declines. Volumes were particularly weak in
the fourth quarter as a result of lapping strong in-home sales that were
boosted by lockdowns in the prior two years. Magnum, Cornetto and Carte d'Or
delivered positive volume growth, supported by new variant innovations such as
Magnum Remix, which has launched across 65 countries, and new Cornetto
variants in Turkey, South East Asia and China.
Underlying operating margin declined 220bps primarily due to high input cost
inflation which affected gross margin.
Full Year Review: Geographical Areas
Full Year 2022 Fourth Quarter 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
Unilever €60.1bn 9.0% (2.1)% 11.3% €14.6bn 9.2% (3.6)% 13.3%
Asia Pacific Africa €27.5bn 10.3% (0.9)% 11.3% €6.6bn 10.7% (2.0)% 12.9%
The Americas €20.9bn 10.4% (2.6)% 13.3% €5.4bn 9.3% (4.0)% 13.9%
Europe €11.7bn 4.1% (3.9)% 8.3% €2.6bn 5.5% (6.8)% 13.2%
Full Year 2022 Fourth Quarter 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
Emerging markets €35.3bn 11.2% (2.0)% 13.5% €8.7bn 11.6% (2.8)% 14.8%
Developed markets €24.8bn 5.9% (2.3)% 8.4% €5.9bn 5.7% (4.8)% 11.0%
North America €13.0bn 7.9% (1.4)% 9.4% €3.3bn 5.7% (4.0)% 10.1%
Latin America €7.9bn 14.9% (4.6)% 20.4% €2.1bn 15.0% (4.1)% 19.9%
Asia Pacific Africa
46% of Group turnover
Underlying sales grew 10.3% with 11.3% from price and (0.9)% from volume,
driven by strong performances from Home Care and Ice Cream. India delivered
strong double-digit growth through pricing and positive volume growth,
supported by market development and continued strength of its premium
portfolio. China declined slightly for the year as lower market growth
reflected Covid lockdown effects, particularly affecting Unilever Food
Solutions and Home Care in the second and fourth quarters. Indonesia delivered
mid single-digit, price-driven growth, while volumes were affected by a
planned reduction in stock-in-trade levels. Philippines and Vietnam delivered
broad-based double-digit growth with positive volumes. Turkey saw consistent,
strong volume growth, led by Home Care and Ice Cream, in a hyperinflationary
environment. In line with our treatment of other hyperinflationary countries,
the UPG in Turkey was capped from the second quarter. Africa grew
double-digit, with increasing price growth and volume reductions through the
year.
The Americas
35% of Group turnover
Underlying sales growth in North America was 7.9% with 9.4% from price and
(1.4)% from volume, helped by double-digit growth in Beauty & Wellbeing
and Nutrition, notably Dressings. Ice Cream grew high single-digit despite
volumes being negatively affected by some service issues earlier in the year.
Deodorants performed strongly, and the Air Wellness business declined sharply
in a competitive market. Health & Wellbeing and Prestige Beauty grew
double-digit, while growth in core Skin Care and Hair Care was modest.
Latin America delivered underlying sales growth of 14.9%, with 20.4% from
price and (4.6)% from volume. Growth was broad-based, with all Business Groups
landing strong double-digit pricing coupled with mid single-digit volume
declines. Volumes were helped by consumer-relevant innovations and a portfolio
that spans across price points and channels.
Europe
19% of Group turnover
Underlying sales grew 4.1% with 8.3% from price and (3.9)% from volume.
Although price growth stepped up through the year, the negative gross margin
impact from high input cost inflation was materially higher than in the other
geographies. Ice Cream contributed strongly to growth for the year, driven by
out-of-home sales and a strong summer season, which was partially offset by a
weak fourth quarter. Nutrition was boosted by double-digit growth of Dressings
and Unilever Food Solutions. Home Care sales declined low single-digit, driven
by Home & Hygiene. Deodorants were the main driver of underlying sales
growth in Personal Care, while Beauty & Wellbeing grew slightly.
Additional commentary on the financial statements - Full Year
Finance costs and tax
Net finance costs increased €139 million to €493 million in 2022. The
increase was driven by a higher cost of debt on bonds and commercial papers.
This was partially offset by higher interest income due to higher rates and
cash balances than in the prior year. Going forward, we expect net finance
costs to be in the range of 2.5% to 3.0% on average net debt. The negative
impact from rising interest rates is partially offset by a bigger interest
credit in 2023 from our pension plans which have a surplus position.
The underlying effective tax rate was 24.1% compared with 22.6% in 2021,
primarily due to changes in the geographical profit footprint as well as
reduced benefits in tax settlements and other one-off items. Our guidance for
the underlying effective tax rate remains around 25%. In 2022, the effective
tax rate was 20.4% compared with 23.1% in 2021, primarily due to the
significant favourable impact of the ekaterra Tea disposal which benefited
from the participation exemption in the Netherlands.
Joint ventures, associates and other income from non-current investments
Net profit from joint ventures and associates was €208 million, an increase
of €17 million compared to 2021. Other income from non-current investments
was €24 million, versus €91 million in the prior year that included higher
gains related to investments made by Unilever Ventures.
Earnings per share
Underlying earnings per share decreased by 2.1% to €2.57, including a
positive impact of 6.1% from currency. Constant underlying earnings per share
decreased by 8.2%. The decrease was mainly driven by the margin decline, a
higher tax rate, lower income from non-current investments and an increase in
finance costs. This was partially offset by a reduction in the average number
of shares as a result of our share buybacks, contributing 1.9%. Diluted
earnings per share were up 28.8% at €2.99, including a gain of €2.3
billion related to the disposal of ekaterra and an impairment charge of €192
million related to Dollar Shave Club.
Free cash flow
Free cash flow was €5.2 billion in 2022, including €0.3 billion tax paid
on the ekaterra separation. It was down from the €6.4 billion delivered in
2021 due to increases in capital expenditure and working capital, notably
inventory.
Net debt
Closing net debt was €23.7 billion compared to €25.5 billion as at 31
December 2021 driven largely by net disposal proceeds that were partially
offset by €1.5 billion share buyback executed during the year and a negative
currency impact. Net debt to underlying EBITDA was 2.1x as at 31 December
2022, in line with our guidance of around 2x and slightly down versus 2.2x in
the prior year.
Pensions
Pension assets net of liabilities were in surplus of €2.6 billion at 31
December 2022 versus a surplus of €3.0 billion at the end of 2021. Both
pension assets and pension liabilities reduced materially in 2022, primarily
due to the impact of higher interest rates on these values.
Underlying return on invested capital
Underlying return on invested capital was 16.0%, compared to 17.2% in the
prior year. This was mainly due to increased goodwill and intangibles, driven
by Paula's Choice and Nutrafol acquisitions and a currency impact.
Financial implications and impairment risk in Russia
We employ over 3,000 people in Russia and in 2022 the business contributed
1.4% of the Group's turnover and 2% of the Group's net profit. As at 31
December 2022, we had an asset position of around €900 million in Russia,
including four factories. In March 2022, we announced our decision to suspend
all imports and exports of Unilever products into and out of Russia and cease
any capital flows in and out of the country.
We will continue to review and disclose the financial implications from the
conflict. While the potential impacts remain uncertain, there is a risk that
the operations in Russia are unable to continue, leading to loss of turnover,
profit and a write-down of assets.
Share buyback programme
On 22 July and 19 December 2022, we completed the first and second €750
million tranches of our share buyback programme of up to €3 billion,
initiated on 10 February 2022. The total consideration paid for the repurchase
of 34,217,605 shares is recorded within other reserves. All shares purchased
are held by Unilever as treasury shares.
Finance and liquidity
In 2022, the following notes matured and were repaid:
• February: €750 million 0.50% fixed rate notes, £350 million
1.125% fixed rate notes
• March: $500 million 3.00% fixed rate notes
• May: $850 million 2.20% fixed rate notes
The following notes were issued:
• February: €500 million 0.75% fixed rate notes due February 2026,
€650 million 1.25% fixed rate notes due February 2031, £300 million 2.125%
fixed rate notes due February 2028
• May: €650 million 1.75% fixed rate notes due November 2028;
€850 million 2.25% fixed rate notes due May 2034
On 31 December 2022, Unilever had undrawn revolving 364-day bilateral credit
facilities in aggregate of $5,200 million and €2,550 million with a 364-day
term out.
Competition Investigations
As previously disclosed, Unilever is involved in a number of ongoing
investigations by national competition authorities, including those within
France 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 2022 Annual average rate in 2021
Brazilian Real (€1 = BRL) 5.414 6.366
Chinese Yuan (€1 = CNY) 7.047 7.663
Indian Rupee (€1 = INR) 82.303 87.599
Indonesia Rupiah (€1 = IDR) 15,535 16,983
Philippine Peso (€1 = PHP) 57.194 58.401
UK Pound Sterling (€1 = GBP) 0.851 0.861
US Dollar (€1 = US $) 1.050 1.187
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) 2022 2021
Operating profit 10,755 8,702
Non-underlying items within operating profit (see note 2) (1,072) 934
Underlying operating profit 9,683 9,636
Turnover 60,073 52,444
Operating margin (%) 17.9 16.6
Underlying operating margin (%) 16.1 18.4
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) 2022 2021
Operating profit 10,755 8,702
Depreciation and amortisation 1,725 1,746
Non-underlying items within operating profit (1,072) 934
Underlying earnings before interest, taxes, depreciation and amortisation 11,408 11,382
(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) 2022 2021
Taxation 2,068 1,935
Tax impact of:
Non-underlying items within operating profit((a)) 273 219
Non-underlying items not in operating profit but within net profit((a)) (121) (41)
Taxation before tax impact of non-underlying items 2,220 2,113
Profit before taxation 10,337 8,556
Share of net (profit)/loss of joint ventures and associates (208) (191)
Profit before tax excluding share of net profit/(loss) of joint ventures and 10,129 8,365
associates
Non-underlying items within operating profit before tax((a)) (1,072) 934
Non-underlying items not in operating profit but within net profit before tax 164 64
Profit before tax excluding non-underlying items before tax and share of net 9,221 9,363
profit/(loss) of joint ventures and associates
Effective tax rate (%) 20.4 23.1
Underlying effective tax rate (%) 24.1 22.6
(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) 2022 2021
Underlying profit attributable to shareholders' equity (see note 6) 6,568 6,839
Impact of translation from current to constant exchange rates and (307) (106)
translational hedges
Impact of price growth in excess of 26% per year in hyperinflationary (200) -
economies
Constant underlying earnings attributable to shareholders' equity 6,061 6,733
Diluted average number of share units (millions of units) 2,559.8 2,609.6
Constant underlying EPS (€) 2.37 2.58
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 Full Year
(unaudited) 2022 2021
Total financial liabilities (29,488) (30,133)
Current financial liabilities (5,775) (7,252)
Non-current financial liabilities (23,713) (22,881)
Cash and cash equivalents as per balance sheet 4,326 3,415
Cash and cash equivalents as per cash flow statement 4,225 3,387
Add: bank overdrafts deducted therein 101 106
Less: cash and cash equivalents held for sale - (78)
Other current financial assets 1,435 1,156
Non-current financial asset derivatives that relate to financial liabilities 51 52
Net debt (23,676) (25,510)
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) 2022 2021
Cash flow from operating activities 10,089 10,305
Income tax paid (2,807) (2,333)
Net capital expenditure (1,627) (1,239)
Net interest paid (457) (340)
Free cash flow 5,198 6,393
Net cash flow (used in)/from investing activities 2,453 (3,246)
Net cash flow (used in)/from financing activities (8,890) (7,099)
Underlying return on invested capital (ROIC)
Underlying 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 low returns and long
payback. Underlying 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) 2022 2021
Operating profit 10,755 8,702
Non-underlying items within operating profit (see note 2) (1,072) 934
Underlying operating profit before tax 9,683 9,636
Tax on underlying operating profit((a)) (2,331) (2,175)
Underlying operating profit after tax 7,352 7,461
Goodwill 21,609 20,330
Intangible assets 18,880 18,261
Property, plant and equipment 10,770 10,347
Net assets held for sale 24 1,581
Inventories 5,931 4,683
Trade and other current receivables 7,056 5,422
Trade payables and other current liabilities (18,023) (14,861)
Period-end invested capital 46,247 45,763
Average invested capital for the period 46,005 43,279
Underlying return on invested capital (%) 16.0 17.2
(a) Tax on underlying operating profit is calculated as underlying operating
profit before tax multiplied by the underlying effective tax rate of 24.1%
(2021: 22.6%) which is shown on page 23.
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 2021 and the Unilever Annual Report and Accounts 2021.
Enquiries
Media: Media Relations Team Investors: Investor Relations Team
UK +44 78 2527 3767 lucila.zambrano@unilever.com investor.relations@unilever.com
or +44 77 7999 9683 JSibun@tulchangroup.com
NL +31 62 375 8385 marlous-den.bieman@unilever.com
or +31 61 500 8293 fleur-van.bruggen@unilever.com
After the conference call on 9 February 2023 at 8AM (UK time), the webcast of
the presentation will be available at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
Income statement
€ million Full Year
2022 2021 Increase/ (Decrease)
(unaudited) Current Constant
rates rates
Turnover 60,073 52,444 14.5% 9.5%
Operating profit 10,755 8,702 23.6% 19.2%
Net finance costs (493) (354)
Pensions and similar obligations 44 (10)
Finance income 281 147
Finance costs (818) (491)
Net monetary gain/(loss) arising from hyperinflationary economies (157) (74)
Share of net profit/(loss) of joint ventures and associates 208 191
Other income/(loss) from non-current investments and associates 24 91
Profit before taxation 10,337 8,556 20.8% 17.9%
Taxation (2,068) (1,935)
Net profit 8,269 6,621 24.9% 23.2%
Attributable to:
Non-controlling interests 627 572
Shareholders' equity 7,642 6,049 26.3% 25.1%
Earnings per share
Basic earnings per share (euros) 3.00 2.33 28.9% 27.7%
Diluted earnings per share (euros) 2.99 2.32 28.8% 27.5%
Statement of comprehensive income
€ million Full Year
(unaudited) 2022 2021
Net profit 8,269 6,621
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 36 166
comprehensive income
Remeasurement of defined benefit pension plans (473) 1,734
Items that may be reclassified subsequently to profit or loss, net of tax:
Gains/(losses) on cash flow hedges (91) 279
Currency retranslation gains/(losses) 614 1,177
Total comprehensive income 8,355 9,977
Attributable to:
Non-controlling interests 507 749
Shareholders' equity 7,848 9,228
Statement of changes in equity
(unaudited)
€ million Called Share Unification Other Retained Total Non- Total
up share premium reserve reserves profit controlling equity
capital account interest
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((a)) - (20,626) - - 20,626 - - -
Repurchase of shares((b)) - - - (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((e)) - (2) - (82) 231 147 7 154
31 December 2021 92 52,844 (73,364) (9,210) 46,745 17,107 2,639 19,746
Hyperinflation restatement to 1 January 2022 (Turkey) - - - - 154 154 - 154
Adjusted opening balance 92 52,844 (73,364) (9,210) 46,899 17,261 2,639 19,900
Profit or loss for the period - - - - 7,642 7,642 627 8,269
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments - - - 45 - 45 (9) 36
Cash flow hedges - - - (92) - (92) 1 (91)
Remeasurements of defined benefit pension plans - - - - (474) (474) 1 (473)
Currency retranslation gains/(losses)((f)) - - - 240 487 727 (113) 614
Total comprehensive income - - - 193 7,655 7,848 507 8,355
Dividends on ordinary capital - - - - (4,356) (4,356) - (4,356)
Repurchase of shares((b)) - - - (1,509) - (1,509) - (1,509)
Movements in treasury shares((c)) - - - 106 (137) (31) - (31)
Share-based payment credit((d)) - - - - 177 177 - 177
Dividends paid to non-controlling interests - - - - - - (572) (572)
Hedging gain/(loss) transferred to non-financial assets - - - (126) - (126) (1) (127)
Other movements in equity ((g)) - - - (258) 15 (243) 107 (136)
31 December 2022 92 52,844 (73,364) (10,804) 50,253 19,021 2,680 21,701
(a) 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.
(b) Repurchase of shares reflects the cost of acquiring ordinary shares as
part of the share buyback program announced on 29 April 2021 and 10 February
2022.
(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
purchase and grant price of share awards.
(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) Includes €280 million related to hyperinflation adjustment and €82
million related to the Welly acquisition.
(f) Includes a hyperinflation adjustment of €514 million in relation to
Argentina and Turkey.
(g) Includes the following items related to the acquisition of Nutrafol:
€(269) million non-controlling interest purchase option in other reserves
and €99 million non-controlling interest recognised on acquisition.
Balance sheet
(unaudited)
€ million As at 31 December 2022 As at 31 December 2021
Non-current assets
Goodwill 21,609 20,330
Intangible assets 18,880 18,261
Property, plant and equipment 10,770 10,347
Pension asset for funded schemes in surplus 4,260 5,119
Deferred tax assets 1,049 1,465
Financial assets 1,154 1,198
Other non-current assets 942 974
58,664 57,694
Current assets
Inventories 5,931 4,683
Trade and other current receivables 7,056 5,422
Current tax assets 381 324
Cash and cash equivalents 4,326 3,415
Other financial assets 1,435 1,156
Assets held for sale 28 2,401
19,157 17,401
Total assets 77,821 75,095
Current liabilities
Financial liabilities 5,775 7,252
Trade payables and other current liabilities 18,023 14,861
Current tax liabilities 877 1,365
Provisions 748 480
Liabilities held for sale 4 820
25,427 24,778
Non-current liabilities
Financial liabilities 23,713 22,881
Non-current tax liabilities 94 148
Pensions and post-retirement healthcare liabilities:
Funded schemes in deficit 613 831
Unfunded schemes 1,078 1,295
Provisions 550 611
Deferred tax liabilities 4,375 4,530
Other non-current liabilities 270 275
30,693 30,571
Total liabilities 56,120 55,349
Equity
Shareholders' equity 19,021 17,107
Non-controlling interests 2,680 2,639
Total equity 21,701 19,746
Total liabilities and equity 77,821 75,095
Cash flow statement
(unaudited) Full Year
€ million 2022 2021
Net profit 8,269 6,621
Taxation 2,068 1,935
Share of net (profit)/loss of joint ventures/associates and other (232) (282)
(income)/loss from non-current investments and associates
Net monetary (gain)/loss arising from hyperinflationary economies 157 74
Net finance costs 493 354
Operating profit 10,755 8,702
Depreciation, amortisation and impairment 1,946 1,763
Changes in working capital (422) (47)
Pensions and similar obligations less payments (119) (183)
Provisions less payments 203 (61)
Elimination of (profits)/losses on disposals (2,335) 23
Non-cash charge for share-based compensation 177 161
Other adjustments (116) (53)
Cash flow from operating activities 10,089 10,305
Income tax paid (2,807) (2,333)
Net cash flow from operating activities 7,282 7,972
Interest received 287 148
Net capital expenditure (1,627) (1,239)
Acquisitions and disposals 3,643 (2,088)
Other investing activities 150 (67)
Net cash flow (used in)/from investing activities 2,453 (3,246)
Dividends paid on ordinary share capital (4,329) (4,483)
Interest paid (744) (488)
Change in financial liabilities (1,727) 1,390
Repurchase of shares (1,509) (3,018)
Other financing activities (581) (500)
Net cash flow (used in)/from financing activities (8,890) (7,099)
Net increase/(decrease) in cash and cash equivalents 845 (2,373)
Cash and cash equivalents at the beginning of the period 3,387 5,475
Effect of foreign exchange rate changes (7) 285
Cash and cash equivalents at the end of the period 4,225 3,387
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 2021. 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 Standard
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 19, the
statement of comprehensive income on page 19, the statement of changes in
equity on page 20 and the cash flow statement on page 22 are translated at
exchange rates current in each period. The balance sheet on page 21 is
translated at period-end rates of exchange.
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 2021
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.
Change in reporting segments
On 1 July 2022, Unilever implemented a new, more category-focused operating
model organised around five Business Groups. The company replaced its previous
matrix structure with distinct Business Groups: Beauty & Wellbeing,
Personal Care, Home Care, Nutrition, Ice Cream. Each Business Group is fully
responsible and accountable for its strategy, growth, and profit delivery
globally.
From 1 July 2022 our segmental information is based on the five Business
Groups as this reflects how the Group's performance will be monitored and
managed going forward. We have presented the full year and 2021 segmental
information on this basis.
Change in cash generating units (CGUs)
The Group has revised its cash generating units (CGUs) to align with the new
Compass Organisation. In 2021, the Group had eleven cash generating units
based on the three Divisions by geography, Health & Wellbeing and
ekaterra. From 1 July 2022, the Group's CGUs are based on the Compass
organisation structure of Business Units and Global Business Units. For the
purpose of impairment testing, goodwill is allocated to groups of CGUs (GCGUs)
which are based on the Business Groups. Goodwill and indefinite-life
intangible assets which were previously allocated to the eleven CGUs for the
purpose of impairment testing have been reallocated respectively to the GCGUs
and CGUs.
New accounting standards
All standards or amendments to standards that have been issued by the IASB and
were effective by 1 January 2022 were not applicable or material to Unilever.
IFRS 17 'Insurance Contracts' has been released but is not yet adopted by the
Group. The standard is effective from the year ended 31 December 2023 and
introduces a new model for accounting for insurance contracts. We have
reviewed existing arrangements and concluded that IFRS 17 is not expected to
be material for Unilever. All other new standards or amendments that are not
yet effective that have been issued by the IASB are not applicable or material
to 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, 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.
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
2022 2021
Acquisition and disposal-related credits/(costs) ((a)) (50) (332)
Gain/(loss) on disposal of group companies((b)) 2,335 36
Restructuring costs((c)) (777) (632)
Impairments((d)) (221) (17)
Other((e)) (215) 11
Non-underlying items within operating profit before tax 1,072 (934)
Tax on non-underlying items within operating profit 273 219
Non-underlying items within operating profit after tax 1,345 (715)
Interest related to the UK tax audit of intangible income and centralised (7) 10
services
Net monetary gain/(loss) arising from hyperinflationary economies (157) (74)
Non-underlying items not in operating profit but within net profit before tax (164) (64)
Tax impact of non-underlying items not in operating profit but within net
profit:
Taxes related to separation of Ekaterra (35) -
Taxes related to the UK tax audit of intangible income and centralised (5) (29)
services
Taxes related to the reorganisation of our European business - 31
Hyperinflation adjustment for Argentina and Turkey deferred tax (81) (43)
Non-underlying items not in operating profit but within net profit after tax (285) (105)
Non-underlying items after tax((f)) 1,060 (820)
Attributable to:
Non-controlling interests (14) (30)
Shareholders' equity 1,074 (790)
(a) 2022 includes a charge of €42 million (2021: €196 million) relating to
the disposal of ekaterra and other acquisition and disposal activities.
(b) 2022 includes a gain of €2,303 million related to the disposal of
ekaterra.
(c) Restructuring costs are comprised of organisational change programmes
including Compass and various technology and supply chain optimisation
projects.
(d) 2022 includes an impairment charge of €192 million relating to Dollar
Shave Club and write downs of leased land and building assets.
(e) 2022 includes €89 million relating to a product recall and market
withdrawal by The Laundress, €82 million relating to legal provisions for
ongoing competition investigations and €42 million of asset write-downs
relating to our businesses in Russia and Ukraine.
(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 - Business Groups
Fourth Quarter Beauty & Wellbeing Personal care Home Care Nutrition Ice cream Total
Turnover (€ million)
2021 2,734 3,035 2,729 3,534 1,089 13,121
2022 3,255 3,522 3,162 3,468 1,204 14,611
Change (%) 19.0 16.1 15.9 (1.9) 10.6 11.4
Impact of:
Acquisitions (%) 3.5 - - - - 0.8
Disposals (%) (0.2) - - (14.2) - (3.9)
Currency-related items (%), of which: 6.9 6.4 3.3 3.9 7.5 5.3
Exchange rates changes (%) 5.2 4.3 - 2.0 7.5 3.3
Extreme price growth in hyperinflationary markets* (%) 1.6 2.0 3.3 1.9 - 2.0
Underlying sales growth (%) 7.7 9.1 12.3 10.1 2.9 9.2
Price* (%) 8.4 13.0 16.7 14.7 14.2 13.3
Volume (%) (0.6) (3.5) (3.8) (4.1) (9.9) (3.6)
Full Year Beauty & Wellbeing Personal care Home Care Nutrition Ice cream Total
Turnover (€ million)
2021 10,138 11,763 10,572 13,104 6,867 52,444
2022 12,250 13,636 12,401 13,898 7,888 60,073
Change (%) 20.8 15.9 17.3 6.1 14.8 14.5
Impact of:
Acquisitions (%) 3.8 - - 0.3 - 0.8
Disposals (%) (0.1) - - (7.1) - (1.8)
Currency-related items (%), of which: 8.1 7.4 4.9 4.9 5.4 6.2
Exchange rates changes (%) 6.9 6.2 2.6 3.6 3.9 4.7
Extreme price growth in hyperinflationary markets* (%) 1.0 1.1 2.2 1.2 1.5 1.4
Underlying sales growth (%) 7.8 7.9 11.8 8.6 9.0 9.0
Price* (%) 7.5 12.1 15.9 10.9 9.7 11.3
Volume (%) 0.3 (3.7) (3.5) (2.1) (0.7) (2.1)
Operating profit (€ million)
2021 2,135 2,336 1,294 2,104 833 8,702
2022 2,154 2,264 1,064 4,497 776 10,755
Underlying operating profit (€ million)
2021 2,237 2,505 1,417 2,525 952 9,636
2022 2,292 2,679 1,344 2,449 919 9,683
Operating margin (%)
2021 21.1 19.9 12.2 16.1 12.1 16.6
2022 17.6 16.6 8.6 32.4 9.8 17.9
Underlying operating margin (%)
2021 22.1 21.3 13.4 19.3 13.9 18.4
2022 18.7 19.6 10.8 17.6 11.7 16.1
*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 Pacific Africa The Americas Europe Total
Turnover (€ million)
2021 6,131 4,382 2,608 13,121
2022 6,640 5,374 2,597 14,611
Change (%) 8.3 22.6 (0.4) 11.4
Impact of:
Acquisitions (%) - 1.9 0.5 0.8
Disposals (%) (4.4) (2.4) (5.0) (3.9)
Currency-related items (%), of which: 2.3 12.8 (1.0) 5.3
Exchange rates changes (%) 0.7 9.0 (1.0) 3.3
Extreme price growth in hyperinflationary markets* (%) 1.7 3.6 - 2.0
Underlying sales growth (%) 10.7 9.3 5.5 9.2
Price* (%) 12.9 13.9 13.2 13.3
Volume (%) (2.0) (4.0) (6.8) (3.6)
Full Year Asia Pacific Africa The Americas Europe Total
Turnover (€ million)
2021 24,264 16,844 11,336 52,444
2022 27,504 20,905 11,664 60,073
Change (%) 13.4 24.1 2.9 14.5
Impact of:
Acquisitions (%) 0.2 1.7 0.8 0.8
Disposals (%) (2.1) (1.2) (2.1) (1.8)
Currency-related items (%), of which: 4.7 11.9 0.2 6.2
Exchange rates changes (%) 3.2 9.5 0.2 4.7
Extreme price growth in hyperinflationary markets* (%) 1.5 2.2 - 1.4
Underlying sales growth (%) 10.3 10.4 4.1 9.0
Price* (%) 11.3 13.3 8.3 11.3
Volume (%) (0.9) (2.6) (3.9) (2.1)
*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 2022 is 20.4% compared with 23.1% in 2021. The
decrease is primarily driven by the impact of the ekaterra disposal which
benefited from the participation exemption in the Netherlands.
Tax effects of components of other comprehensive income were as follows:
2022 2021
€ million Before tax Tax (charge)/credit After tax Before tax Tax (charge)/credit After tax
Gains/(losses) on:
Equity instruments at fair value through other comprehensive income 31 5 36 178 (12) 166
Cash flow hedges (121) 30 (91) 291 (12) 279
Remeasurements of defined benefit pension plans (537) 64 (473) 2,405 (671) 1,734
Currency retranslation gains/(losses) 547 67 614 1,237 (60) 1,177
Other comprehensive income (80) 166 86 4,111 (755) 3,356
6. Earnings per share
The earnings per share calculations are based on the average number of share
units representing the ordinary shares of 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:
Full Year
2022 2021
EPS - Basic
Net profit attributable to shareholders' equity (€ million) 7,642 6,049
Average number of shares (millions of share units) 2,548.2 2,599.9
EPS - basic (€) 3.00 2.33
EPS - Diluted
Net profit attributable to shareholders' equity (€ million) 7,642 6,049
Adjusted average number of shares (millions of share units) 2,559.8 2,609.6
EPS - diluted (€) 2.99 2.32
Underlying EPS
Net profit attributable to shareholders' equity (€ million) 7,642 6,049
Post tax impact of non-underlying items attributable to shareholders' equity (1,074) 790
(see note 2)
Underlying profit attributable to shareholders' equity 6,568 6,839
Adjusted average number of shares (millions of share units) 2,559.8 2,609.6
Underlying EPS - diluted (€) 2.57 2.62
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 2021 (net of treasury shares) 2,561.0
Net movements in shares under incentive schemes 2.2
Shares repurchased under the share buyback programme (34.2)
Number of shares at 31 December 2022 2,529.0
7. Acquisitions and disposals
In 2022, the Group completed the business acquisitions and disposals as listed
below. The net consideration for acquisitions in 2022 is €811 million (2021:
€2,117 million for acquisitions completed during that year).
Deal completion date Acquired/disposed business
29 April 2022 Sold Unilever Life, the direct selling business in Thailand, to RS Group.
1 July 2022 Sold ekaterra (Global Tea business excluding India, Indonesia, Nepal and Ready
to Drink) to CVC Capital Partners. ekaterra includes brands such as Lipton,
Brooke Bond and PG Tips. Further details are provided below.
7 July 2022 Acquired a further 67% of Nutraceutical Wellness, Inc. (Nutrafol) bringing
total investment to 80%, a producer based in the US of hair growth solutions
for men and women. The acquisition complements Unilever's existing Health and
Wellbeing portfolio, bringing to market a science-led approach to hair
wellness. Further details are provided below.
Goodwill represents the future value that the Group believes it will obtain
through operational synergies and the application of acquired company ideas to
existing Unilever channels and businesses.
Nutrafol Acquisition
On 7 July 2022, Unilever acquired a further 67% of the shares of Nutrafol, a
U.S. based hair wellness company in which Unilever Ventures previously held a
minority stake (13%) to bring Unilever's total equity interest to 80%.
Strategically, Nutrafol expands our Health & Wellbeing portfolio, bringing
to market a science led approach to hair wellness supported by digital-first
capabilities. We believe Unilever's capabilities and sustainability principles
will allow us to protect the legacy of the brand while strengthening it.
The total consideration paid for the 67% share of Nutrafol was €811 million,
all of which was settled in cash on completion.
The provisional fair value of net assets recognised on the balance sheet is
€487 million. The main asset acquired was the brand intangible valued using
an income approach model by estimating future cash flows generated by the
brand and discounting them to present value using rates in line with a market
participant expectation. The key assumptions in the brand valuation are the
revenue growth and discount rates. As part of the acquisition, goodwill of
€580 million has been recognised and is not deductible for tax purposes.
Since the acquisition date, the goodwill balance has decreased by €25
million as a result of foreign exchange.
Acquisitions
Effect on consolidated income statement
The acquisition deals completed in 2022 have contributed €174 million to the
Group turnover and €31 million to the Group operating profit since the date
of acquisition. If the acquisition deals completed in 2022 had all taken place
at the beginning of the year, Group turnover would have been €60,206
million, and Group operating profit would have been €10,772 million.
Effect on consolidated balance sheet
The following table summarises the consideration and net assets acquired for
the Nutrafol acquisition. The fair values currently used for opening balances
of the Nutrafol acquisition are provisional. These balances remain provisional
due to there being outstanding relevant information in regard to facts and
circumstances that existed as of the acquisition date and/or where valuation
work is still ongoing.
In 2022, the net assets acquired and total payment for the Nutrafol
acquisition consists of:
Total 2022
(€ million)
Intangible assets 603
Other non-current assets -
Trade and other receivables 11
Other current assets((a)) 70
Non-current liabilities((b)) (160)
Current liabilities (37)
Net assets acquired 487
Non-controlling interest (99)
Goodwill 580
Total Consideration 968
Of which:
Cash consideration paid for 67% stake 811
Fair value of 13% stake previously held by Unilever Ventures 157
(a) Other current assets include inventories of €41 million and cash and
cash equivalents of €29 million.
(b) Non-current liabilities include deferred tax of €153 million.
Disposals
Total consideration for 2022 disposals is €4,606 million (2021: €49
million for disposals completed during that year). The following table sets
out the effect of the disposals in 2022 and comparative years on the
consolidated balance sheet. The results of disposed businesses are included in
the consolidated financial statements up until their date of disposal.
2022 (€ million) 2021 (€ million)
Goodwill and intangible assets ((a)) 948 3
Other non-current assets ((b)) 1,075 4
Current assets ((c)) 833 10
Liabilities ((d)) (649) (3)
Net assets sold 2,207 14
(Gain)/loss on recycling of currency retranslation on disposal 65 -
Profit/(loss) on sale attributable to Unilever 2,334 35
Consideration 4,606 49
Of which:
Cash 4,606 40
Cash balances of businesses sold 20 3
Non-cash items and deferred consideration (20) 6
(a) Includes €548 million of allocated goodwill and €395 million related
to intangibles to Tazo, T2, Pukka & Glen related to the disposal of
ekaterra.
(b) Non-current assets include PPE of €453 million and deferred tax assets
of €595 million related to the disposal of ekaterra.
(c) Current assets include inventories of €301 million and trade and other
receivables of €487 million related to the disposal of ekaterra.
(d) Liabilities include €518 million of trade payables, €59 million of
financial liabilities and €31 million deferred tax liabilities related to
the disposal of ekaterra.
ekaterra Disposal
On 1 October 2021, Unilever completed the internal reorganisation whereby it
separated elements of its Tea business into ekaterra, a separate legal
structure, which at the time was still 100% owned by Unilever. In November
2021, Unilever Group signed an agreement to sell ekaterra to CVC Capital
Partners.
On 1 July 2022, Unilever sold ekaterra, to CVC Capital Partners for €4,594
million cash consideration. The transaction involved the sale of 100% shares
of ekaterra Holdings B.V. and tea business assets in a small number of
jurisdictions that were delayed for local tax and/or legal reasons.
Profit on this disposal was €2,303 million, recognised as a non-underlying
item.
8. Share-buy back
On 10 February 2022, we announced a share buyback programme of up to €3
billion to be completed over 2022 and 2023. During 2022, the Group repurchased
34,217,605 ordinary shares which are held by Unilever as treasury shares.
Consideration paid for the repurchase of shares including transaction costs
was €1,509 million which is recorded within other reserves.
9. Financial instruments
The Group's Treasury function 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 2022 and 2021. The Group's cash resources
and other financial assets are shown below.
31 December 2022 31 December 2021
Current Non-current Total Current Non-current Total
Cash and cash equivalents
Cash at bank and in hand 2,553 - 2,553 2,505 - 2,505
Short-term deposits((a)) 1,743 - 1,743 811 - 811
Other cash equivalents 30 - 30 99 - 99
4,326 - 4,326 3,415 - 3,415
Other financial assets
Financial assets at amortised cost((b)) 772 232 1,004 750 208 958
Financial assets at fair value through other comprehensive income((c)) - 407 407 1 526 527
Financial assets at fair value through profit or loss:
Derivatives 238 51 289 76 52 128
Other((d)) 425 464 889 329 412 741
1,435 1,154 2,589 1,156 1,198 2,354
Total financial assets((e)) 5,761 1,154 6,915 4,571 1,198 5,769
(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 €199 million (2021: €157 million).
(c) Included within non-current financial assets at fair value through other
comprehensive income are equity investments of €402 million (2021: €521
million)
(d) Other Financial assets at fair value through profit or loss include money
market funds, marketable securities, other capital market instruments and
investments in 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 2022 As at 31 December 2021 As at 31 December 2022 As at 31 December 2021
Financial assets
Cash and cash equivalents 4,326 3,415 4,326 3,415
Financial assets at amortised cost 1,004 958 1,004 958
Financial assets at fair value through other comprehensive income 407 527 407 527
Financial assets at fair value through profit and loss:
Derivatives 289 128 289 128
Other 889 741 889 741
6,915 5,769 6,915 5,769
Financial liabilities
Bank loans and overdrafts (519) (402) (519) (402)
Bonds and other loans (25,136) (29,133) (26,512) (27,621)
Lease liabilities (1,408) (1,649) (1,408) (1,649)
Derivatives (631) (184) (631) (184)
Other financial liabilities (418) (277) (418) (277)
(28,112) (31,645) (29,488) (30,133)
€ million As at 31 December 2022 As at 31 December 2021
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets at fair value
Financial assets at fair value through other comprehensive income 5 3 399 6 3 518
Financial assets at fair value through profit or loss:
Derivatives((a)) - 378 - - 289 -
Other 428 - 461 331 - 410
Liabilities at fair value
Derivatives((b)) - (784) - - (235) -
Contingent consideration - - (164) - - (180)
(a) Includes €89 million (2021: €161 million) derivatives, reported within
trade receivables, that hedge trading activities.
(b) Includes €(153) million (2021: €(51) 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 2021. There were also no
significant movements between the fair value hierarchy classifications since
31 December 2021.
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. The fair
value of financial assets and financial liabilities (excluding listed bonds)
is considered to be same as the carrying amount for 2022 and 2021.
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 2021.
10. Dividends
The Board has declared a quarterly interim dividend for Q4 2022 of £0.3812
per Unilever PLC ordinary share or €0.4268 per Unilever PLC ordinary share
at the applicable exchange rate issued by WM/Reuters on 7 February 2023.
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): £0.3812
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam): €0.4268
Per Unilever PLC American Depositary Receipt: US$0.4569
The euro and US dollar amounts above have been determined using the applicable
exchange rates issued by WM/Reuters on 7 February 2023.
US dollar cheques for the quarterly interim dividend will be mailed on
21 March 2023 to holders of record at the close of business on 24 February
2023.
The quarterly dividend calendar for the remainder of 2023 will be as follows:
Announcement Date Ex-Dividend Date Record Date Payment Date
Q4 2022 Dividend 09 February 2023 23 February 2023 24 February 2023 21 March 2023
Q1 2023 Dividend 27 April 2023 18 May 2023 19 May 2023 15 June 2023
Q2 2023 Dividend 25 July 2023 03 August 2023 04 August 2023 31 August 2023
Q3 2023 Dividend 26 October 2023 16 November 2023 17 November 2023 08 December 2023
11. Events after the balance sheet date
On 27 January 2023, following a block listing of 5,000,000 ordinary shares of
3 1/9 pence each made in December 2022, an initial tranche of 50,000 new
ordinary shares was issued by Unilever PLC to meet its obligations under
employee share schemes.
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