REG - Unilever PLC - Half-year Report
26/07/2022 07:00
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RNS Number : 6838T Unilever PLC 26 July 2022
2022 FIRST HALF YEAR RESULTS
DELIVERING CONSISTENCY IN CHALLENGING CONDITIONS
Performance highlights (unaudited)
Underlying performance GAAP measures
vs 2021 vs 2021
First Half
Underlying sales growth (USG) 8.1% Turnover €29.6bn 14.9%
Underlying operating profit €5.0bn 4.1% Operating profit €4.5bn 1.7%
Underlying operating margin 17.0% (180)bps Operating margin 15.2% (200)bps
Underlying earnings per share €1.34 1.0% Diluted earnings per share €1.13 (4.7%)
Second Quarter
USG 8.8% Turnover €15.8bn 17.5%
Quarterly dividend payable in September 2022 €0.4268 per share
First half highlights
• Underlying sales growth of 8.1%, with 9.8% price and (1.6)%
volume
• Turnover increased 14.9%, including a currency impact of 5.6%
• Underlying operating margin of 17.0%, a decrease of 180bps
driven by input cost inflation
• Underlying earnings per share up 1.0%, including a currency
impact of 4.9%
• The billion+ Euro brands, accounting for more than 50% of Group
turnover, grew 9.4%
• €750 million share buyback tranche completed on 22 July,
intention to launch second tranche in third quarter
Alan Jope: Chief Executive Officer statement
"Unilever has delivered a first half performance which builds on our momentum
of 2021, despite the challenges of high inflation and slower global growth.
Underlying sales growth of 8.1% was driven by strong pricing to mitigate input
cost inflation, which, as expected, had some impact on volume. We are now
raising our sales guidance for the year. Underlying operating margin was on
track at 17% for the first half.
We have made further progress against our strategic priorities. We are
maintaining strong investment in our brands, supporting 9.4% underlying sales
growth in our billion+ Euro brands. eCommerce sales now represent 14% of
turnover, up from 6% in 2019. Of our three priority markets, the USA and India
again grew strongly, while sales in China were affected by the lockdowns in
the second quarter. We continue to reshape our portfolio, completing the sale
of the global tea business ekaterra, and the acquisition of Nutrafol, a
leading provider of hair wellness products. Prestige Beauty and Health &
Wellbeing, now 4% of Group turnover, again grew double-digit.
Our simpler, more category-focused organisation came into effect as planned on
1 July. This major change to Unilever's operating model is an important
further step that will underpin the delivery of consistent growth, which
remains our first priority. The challenges of inflation persist and the global
macroeconomic outlook is uncertain, but we remain intensely focused on
operational excellence and delivery in 2022 and beyond."
26 July 2022
OUTLOOK
Our guidance for underlying sales growth in 2022 was previously at the top end
of a range of 4.5% to 6.5%. We now expect underlying sales growth to be above
that range, driven by price with some further pressure on volume.
We expect net material inflation for the year to remain high at around €4.6
billion with our forecast for the second half largely unchanged at around
€2.6 billion. We will continue to invest in the health of our brands. In the
first half, we increased absolute brand and marketing investment, and we will
again invest competitively in marketing, R&D and capital expenditure in
the second half. Our full year underlying operating margin expectation remains
at 16%, which is within our guided range of 16% to 17%.
The medium-term macroeconomic and cost inflation outlooks are uncertain and
volatile, but delivering growth remains our first priority. Against this
backdrop, we continue to expect to improve margin in 2023 and 2024, through
pricing, mix and savings.
FIRST HALF OPERATIONAL REVIEW
Our market context: High input cost inflation has been widespread across our
markets, and it is expected to remain elevated in the second half. While
Covid-19 restrictions have been eased in most markets, the lockdown in China
affected consumers particularly in the second quarter.
In the majority of markets in which we operate, market growth was driven by
price which had an impact on market volumes. Food service and out-of-home ice
cream channels benefitted in markets which reopened after lockdowns in the
prior year, although tourism has not yet returned to pre-Covid levels.
Unilever overall performance: Underlying sales growth in the first half was
8.1% with 9.8% from price and (1.6)% from volume. Growth was broad-based
across all Divisions. Price has sequentially stepped up over the past two
quarters, reaching 11.2% in the second quarter, which had, as expected, some
negative impact on volume. This was more pronounced in Home Care, which was
particularly exposed to rising input costs and took the highest pricing
action, leading to underlying sales growth of 10.7%. Beauty & Personal
Care grew 7.5%, driven by price and continued strong growth in Prestige Beauty
and Health & Wellbeing, which is Unilever's vitamins, minerals and
supplements business. Foods & Refreshment grew 7.3% with slightly negative
volume at (0.9)%, although volumes were flat excluding ekaterra. Ice cream
out-of-home and Unilever Food Solutions showed strong double-digit growth in
the first half, compensating for lower growth of in-home ice cream.
Emerging markets grew by 10.0% with a 12.1% contribution from price and volume
at (1.8)%, including an estimated adverse impact of around 70bps from the
lockdowns in China. Pricing in Latin America was strong at 19.1% with volumes
contracting by (4.8)%. South Asia grew strongly through both price and volume.
Turkey delivered double-digit volume growth by managing dynamically through a
high inflation environment. Developed markets increased by 5.5%, with 6.7%
from price and (1.2)% from volume. North America grew 8.7%, helped by strong
performances of dressings and our businesses in high growth areas such as
Health & Wellbeing.
Turnover increased 14.9% to €29.6 billion, which included a currency impact
of 5.6% and 0.6% from acquisitions net of disposals. Underlying operating
profit was €5.0 billion, up 4.1% versus the prior year. Underlying operating
margin declined by 180bps to 17.0%. Gross margin decreased by 210bps which
reflected the very high inflation in input costs that was only partially
mitigated by the strong pricing action and savings delivery. Brand and
marketing investment was stepped up by €0.2 billion in constant exchange
rates, which equated to a 40bps contribution to margin. Overheads increased by
10bps largely due to increased investment in business models with a higher
overheads structure.
We completed the announced sale of our global tea business, ekaterra, on 1
July 2022. On 7 July, we completed the acquisition of a majority stake in
Nutrafol, a leading provider of hair wellness products, which had been
announced on 30 May 2022.
On 23 March, we commenced the first tranche of €750 million of the share
buyback programme of up to €3 billion. As at 30 June, total consideration
for the repurchase of shares was €648 million. This tranche completed on 22
July. It is our intention to launch a second €750 million tranche of our
planned share buyback during the third quarter of 2022. This will be confirmed
with a launch announcement in due course.
In January 2022, we announced a new, simpler, more category-focused operating
model for Unilever organised around five Business Groups and a
technology-driven backbone, Unilever Business Operations. The reorganisation
is on schedule with the new structure in place on 1 July. We expect it to be
achieved within existing restructuring plans, and to generate around €600
million of cost savings over two years, with the majority in 2023.
FIRST HALF OPERATIONAL REVIEW: DIVISIONS
Second Quarter 2022 First Half 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG Change in underlying operating margin
€bn % % % €bn % % % bps
Unilever 15.8 8.8 (2.1) 11.2 29.6 8.1 (1.6) 9.8 (180)
Beauty & Personal Care 6.4 8.0 (2.3) 10.5 12.2 7.5 (1.3) 9.0 (180)
Home Care 3.1 12.2 (3.8) 16.6 6.0 10.7 (3.4) 14.5 (200)
Foods & Refreshment 6.3 8.1 (1.2) 9.4 11.4 7.3 (0.9) 8.3 (170)
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 7.5% with 9.0% from price and
(1.3)% from volume. Strong price increases landed across most categories, and
were particularly pronounced in Latin America, South Asia and Turkey.
Deodorants delivered double-digit growth, helped by continued premiumisation
and strong innovations, such as the 72-hour protection technology launched
with Rexona. Skin care grew low single-digit on the back of a strong prior
year base, with strong growth of Pond's in India partially offset by a decline
in China. Skin cleansing returned to growth, with Dove landing strong pricing
and flat volume supported by the launch of premium innovations in North
America. Overall skin cleansing volumes declined mid single-digit,
particularly affected by the pricing in Europe and South Asia. Hair care grew
mid single-digit, driven by India and North America, partially offset by
declines in North Asia and Europe. Mid single-digit growth in oral care was
driven by a strong performance in Indonesia with modest growth elsewhere.
Prestige Beauty continued its double-digit growth momentum with Tatcha
successfully launching in the United Kingdom and expanding in premium channels
in China.
Underlying operating margin decreased 180bps as gross margin declined as a
result of high input cost inflation.
Home Care
Home Care underlying sales grew 10.7% with 14.5% from price and (3.4)% from
volume. Double-digit pricing landed across most geographies in response to
very high increases in raw material costs.
Fabric cleaning continued its momentum, posting strong double-digit growth
with marginal volume decline. The growth was broad-based across all formats,
with strong contributions from OMO and Radiant. South Asia and Turkey achieved
double-digit pricing and positive volumes, supported by the continuous
development of the liquids market. Fabric enhancers grew mid single-digit with
accelerated performance in the second quarter. Comfort continued its growth
momentum in Brazil and China but faced declining markets in South-East Asia
and Europe. Home & hygiene grew low single-digit with double-digit pricing
offset by volume declines across most geographies. Household cleaner volumes
declined as a result of a slowdown in consumers' disinfecting habits, while
dishwash sales grew driven by India and South-East Asia.
Underlying operating margin declined 200bps driven by a substantial gross
margin reduction partially offset by lower brand and marketing investment.
Foods & Refreshment
Foods & Refreshment underlying sales grew 7.3% with 8.3% from price and
(0.9)% from volume. Pricing was broad-based and particularly high in dressings
given the input cost increases.
Ice cream underlying sales grew high single-digit driven by strong growth in
the out-of-home business which landed double-digit price and volume growth.
Magnum and Cornetto continued their growth momentum supported by new variant
innovations, while ice cream suffered from supply issues in the United States.
In-home sales were slightly up, although volumes declined in Europe and North
America where markets contracted as a result of some post-Covid channel
switching by consumers.
Foods also grew high single-digit with slightly negative volumes. Unilever
Food Solutions, our food service business, landed strong double-digit growth
and achieved sales above pre-Covid levels despite the severe China lockdown
impact in the second quarter. In-home foods grew high single-digit driven by
high pricing and marginally negative volumes, on the back of a strong
comparator. Hellmann's delivered double-digit, price-driven growth, which was
supported by its global purpose campaign "Turn nothing into something".
Underlying operating margin decreased 170bps predominantly driven by lower
gross margin.
FIRST HALF OPERATIONAL REVIEW: GEOGRAPHICAL AREA
Second Quarter 2022 First Half 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG Change in underlying operating margin
€bn % % % €bn % % % bps
Unilever 15.8 8.8 (2.1) 11.2 29.6 8.1 (1.6) 9.8 (180)
Asia/AMET/RUB 7.1 9.0 (2.6) 11.9 13.7 9.0 (1.1) 10.2 (90)
The Americas 5.4 11.7 (1.7) 13.6 9.9 10.4 (1.4) 11.9 (200)
Europe 3.3 4.6 (1.8) 6.5 6.0 2.9 (2.9) 6.0 (320)
Second Quarter 2022 First Half 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
€bn % % % €bn % % %
Emerging markets 9.1 10.5 (3.1) 14.0 17.4 10.0 (1.8) 12.1
Developed markets 6.7 6.6 (0.9) 7.6 12.2 5.5 (1.2) 6.7
North America 3.4 8.9 (0.5) 9.4 6.2 8.7 0.6 8.1
Latin America 2.0 16.8 (4.0) 21.7 3.7 13.4 (4.8) 19.1
Asia/AMET/RUB
Underlying sales grew 9.0% with 10.2% from price and (1.1)% from volume. China
declined low single-digit with the strong start of the year being reversed in
the second quarter due to the Covid lockdowns that particularly impacted
Unilever Food Solutions and Beauty & Personal Care. South Asia continued
its growth momentum with strong pricing and positive volumes. Growth
accelerated in the second quarter, driven by the performance of Home Care and
hair care. Indonesia grew high single-digit, after another quarter of
price-driven growth, supported by strong performance of oral care, deodorants
and scratch cooking aids, but overall volumes were still down, most notably in
Home Care. Vietnam landed high pricing and positive volumes across all
categories. We have announced that we will no longer invest in Russia, but we
will continue providing the local population with basic products. Our Russian
business represented around 1% of turnover and had a minor negative impact on
the growth of the Group. Turkey posted very strong, broad-based growth across
all categories, driven by both price and volume. In line with our treatment of
other hyperinflationary countries, the underlying price growth in Turkey was
capped from the second quarter.
Underlying operating margin declined 90bps as a result of lower gross margin
due to higher input costs. This was partially offset by the turnover leverage
benefit on brand and marketing investment as well as overheads.
The Americas
Underlying sales growth in North America was 8.7%, with 8.1% from price and
0.6% from volume. Double-digit growth in Beauty & Personal Care was driven
by strong performance in deodorants and Health & Wellbeing, including high
growth from Liquid IV. Prestige Beauty also continued its growth momentum,
helped by consumers returning to the offline channels. Foods & Refreshment
grew high single-digit, boosted by strong sales in dressings and out-of-home
ice cream. Customer service challenges persisted in the second quarter,
largely due to labour availability.
Latin America delivered underlying sales growth of 13.4%, with 19.1% from
price and (4.8)% from volume. All Divisions delivered double-digit growth. In
the context of high double-digit pricing, volumes declined in Brazil, Mexico
and Chile, while volumes held up in Argentina.
Underlying operating margin decreased by 200bps primarily driven by lower
gross margin and higher overheads.
Europe
Underlying sales grew 2.9% with price of 6.0% and (2.9)% from volume. Growth
sequentially improved in the second quarter, helped by out-of-home ice cream
sales as the channel re-opened. Unilever Food Solutions also posted strong
double-digit growth with sales exceeding pre-Covid levels, driven by extended
distribution and price growth. The United Kingdom, France and Germany posted
low single-digit growth with pricing largely offset by volume declines.
Underlying operating margin declined 320bps driven largely by lower gross
margin as higher input costs outweighed pricing.
ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FIRST HALF 2022
Finance costs and tax
Net finance costs increased by €74 million to €227 million in the first
half of 2022. The increase was largely driven by a higher cost of debt on
bonds and commercial papers as well as higher other interest costs. This was
partially offset by an increase in finance income from higher cash balances
and positive rate variances. The interest rate on average net debt increased
to 1.9% from 1.4% in the prior year.
The underlying effective tax rate for H1 2022 increased to 24.4% from 21.9% in
H1 2021 due to changes in profit mix and the lapping of favourable one-offs in
the prior year. The effective tax rate for H1 2022 was 26.8% compared with
22.7% in H1 2021. The 2022 figure included tax costs related to the separation
of the ekaterra business.
Joint ventures, associates and other income from non-current investments
Net profit from joint ventures and associates was €97 million, compared with
€91 million in 2021. Other income from non-current investments was €27
million, slightly down versus prior year.
Earnings per share
Underlying earnings per share increased by 1.0%, including a positive impact
of 4.9% from currency. Constant underlying earnings per share decreased by
3.9%. The decline was mainly driven by lower margin, higher tax and finance
costs, partially offset by turnover growth and a reduction in the number of
shares. Diluted earnings per share decreased 4.7% to €1.13.
Restructuring costs
Restructuring costs in the first half increased to €359 million, compared to
€306 million in the prior year. For the full year, we expect restructuring
costs of around €1 billion, including those linked to the implementation of
the new operating model. From 2023, restructuring costs are anticipated to be
around 1% of Group turnover.
Free cash flow
Free cash flow in the first half of 2022 was €2.2 billion, down from the
€2.4 billion delivered in the first half of 2021. This decrease was due to
higher cash tax and increased capital expenditure, partially offset by
improved operating profit and working capital.
Net debt
Closing net debt increased to €27.1 billion compared with €25.5 billion at
31 December 2021. The increase was driven by dividends paid, the share buyback
programme and an adverse currency impact, partially offset by free cash flow
delivery.
Pensions
Pension assets net of liabilities were in surplus of €5.0 billion at the end
of June 2022 versus €3.0 billion as at 31 December 2021. The increase was
primarily driven by lower liabilities as a result of increased interest rates
in the European Union, the United Kingdom and the United States. This was
partially offset by investment losses on pension assets reflecting the
declines in equity and bond markets in the first half.
Finance and liquidity
During the first half, 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 30 June 2022, Unilever had undrawn revolving 364-day bilateral credit
facilities in aggregate of $7,215 million and €750 million with a 364-day
term out.
Share buyback programme
On 10 February 2022, we announced a share buyback programme of up to €3
billion to be completed over 2022 and 2023. On 23 March 2022, we announced we
would commence the first tranche of this buyback programme for an aggregate
market value equivalent to €750 million. As at 30 June 2022, Unilever had
repurchased 15,508,723 ordinary shares. Total consideration for the repurchase
of shares was €648 million which is recorded within other reserves. The
first tranche for an aggregate market value of €750 million completed on 22
July 2022. Between 23 March 2022 and 22 July 2022, a total of 17,802,472
Unilever PLC ordinary shares were purchased.
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.
First half average rate in 2022 First half average rate in 2021
Brazilian Real (€1 = BRL) 5.538 6.492
Chinese Yuan (€1 = CNY) 7.083 7.800
Indian Rupee (€1 = INR) 83.337 88.365
Indonesia Rupiah (€1 = IDR) 15798 17231
Philippine Peso (€1 = PHP) 56.969 58.153
UK Pound Sterling (€1 = GBP) 0.842 0.868
US Dollar (€1 = US $) 1.094 1.206
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 First Half
(unaudited) 2022 2021
Operating profit 4,500 4,426
Non-underlying items within operating profit (see note 2) 544 421
Underlying operating profit 5,044 4,847
Turnover 29,623 25,791
Operating margin (%) 15.2 17.2
Underlying operating margin (%) 17.0 18.8
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 First Half
(unaudited) 2022 2021
Taxation 1,143 972
Tax impact of:
Non-underlying items within operating profit((a)) 102 97
Non-underlying items not in operating profit but within net profit((a)) (63) (34)
Taxation before tax impact of non-underlying items 1,182 1,035
Profit before taxation 4,359 4,369
Non-underlying items within operating profit before tax((a)) 544 421
Non-underlying items not in operating profit but within net profit before 38 29
tax((a))
Share of net (profit)/loss of joint ventures and associates (97) (91)
Profit before tax excluding non-underlying items before tax and share of net 4,844 4,728
profit/(loss) of joint ventures and associates
Underlying effective tax rate 24.4% 21.9%
((a) ) Refer to note 2 for further details on these items.
( )
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 First Half
(unaudited) 2022 2021
Underlying profit attributable to shareholders' equity (see note 6) 3,440 3,488
Impact of translation from current to constant exchange rates and (92) 8
translational hedges
Impact of price growth in excess of 26% per year in hyperinflationary (66)
economies -
Constant underlying earnings attributable to shareholders' equity 3,282 3,496
Diluted average number of share units (millions) 2,566.2 2,627.2
Constant underlying EPS (€) 1.28 1.33
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 As at 31 December 2021 As at
30 June 30 June
2022 2021
(unaudited)
Total financial liabilities (33,961) (30,133) (27,542)
Current financial liabilities (9,032) (7,252) (6,720)
Non-current financial liabilities (24,929) (22,881) (20,822)
Cash and cash equivalents as per balance sheet 5,411 3,415 4,182
Cash and cash equivalents as per cash flow statement 5,274 3,387 4,072
Add: bank overdrafts deducted therein 157 106 110
Less: cash and cash equivalents held for sale((a)) (20) (78)
-
Other current financial assets 1,435 1,156 885
Non-current financial asset derivatives that relate to financial liabilities 60 52 33
Net debt (27,055) (25,510) (22,442)
((a) ) Cash and cash equivalents held for sale of €20 million
are net of bank overdrafts of €6 million.
( )
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 First Half
(unaudited) 2022 2021
Cash flow from operating activities 4,344 3,961
Income tax paid (1,295) (917)
Net capital expenditure (593) (386)
Net interest paid (217) (227)
Free cash flow 2,239 2,431
Net cash flow (used in)/from investing activities (432) (570)
Net cash flow (used in)/from financing activities (924) (4,097)
OTHER INFORMATION
This document represents Unilever's half-yearly report for the purposes of the
Disclosure and Transparency Rules (DTR) issued by the UK Financial Conduct
Authority (DTR 4.2) and the Dutch Act on Financial Supervision, section 5:25d
(8)/(9) (Half-yearly financial reports). In this context: (i) the condensed
set of financial statements can be found on pages 11 to 23; (ii) pages 2 to 10
comprise the interim management report; and (iii) the Directors'
responsibility statement can be found on page 23. This half-yearly report has
not been reviewed in accordance with ISRE 2410 by our external auditors. No
material related party transactions have taken place in the first six months
of the year.
EXTERNAL AUDIT TENDER
The Board of Unilever announces its intention to reappoint KPMG as its
external auditor for the financial year end 31 December 2024, subject to
shareholder approval at its 2024 Annual General Meeting.
This follows an extensive competitive tender process, which was overseen by
the Company's Audit Committee. The selection to re-appoint KPMG was
unanimously recommended by the Committee and has been approved by the Unilever
Board.
Adrian Hennah, Chair of the Audit Committee, commented "We conducted a
thorough and competitive tender process. Our decision to re-appoint KPMG was
based on their strong performance during the tender process across a
comprehensive set of criteria and our satisfaction with their effectiveness as
our current auditor. We would also like to extend our thanks to all firms who
participated in the thorough tender process."
PRINCIPAL RISK FACTORS
On pages 46 to 50 of our 2021 Annual Report and Accounts we set out our
assessment of the principal risk issues that would face the business under the
headings: brand preference; portfolio management; climate change; plastic
packaging; customer; talent; supply chain; safe and high quality products;
systems and information; business transformation; economic and political
instability; treasury and tax; ethical; and legal and regulatory. In our view,
the nature and potential impact of such risks remain essentially unchanged as
regards our performance over the second half of 2022.
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. Forward-looking statements also include, but are not limited to,
statements and information regarding the Unilever Group's (the 'Group')
emissions reduction targets and other climate change related matters
(including actions, potential impacts and risks associated therewith). These
forward-looking statements are based upon current expectations and assumptions
regarding anticipated developments and other factors affecting the Group. They
are not historical facts, nor are they guarantees of future performance or
outcomes.
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.
These forward-looking statements speak only as of the date of this
announcement. 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 +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
(http://www.unilever.com/investor-relations/results-and-presentations/latest-results)
CONSOLIDATED INCOME STATEMENT
(unaudited)
€ million First Half
2022 2021 Increase/
(Decrease)
Current Constant
rates rates
Turnover 29,623 25,791 14.9% 10.2%
Operating profit 4,500 4,426 1.7% (1.8%)
Which includes non-underlying items credits/(charges) of (544) (421)
Net finance costs (227) (153)
Finance income 105 68
Finance costs (354) (216)
Pensions and similar obligations 22 (5)
Non-underlying item net monetary gain/(loss) arising from hyperinflationary (38) (29)
economies
Share of net profit/(loss) of joint ventures and associates 97 91
Other income/(loss) from non-current investments and associates 27 34
Profit before taxation 4,359 4,369 (0.2%) (3.4%)
Taxation (1,143) (972)
Which includes tax impact of non-underlying items of 39 63
Net profit 3,216 3,397 (5.3%) (7.9%)
Attributable to:
Non-controlling interests 311 276
Shareholders' equity 2,905 3,121 (6.9%) (9.1%)
Combined earnings per share
Basic earnings per share (euros) 1.14 1.19 (4.7%) (6.9%)
Diluted earnings per share (euros) 1.13 1.19 (4.7%) (7.0%)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
€ million Half Year
2022 2021
Net profit 3,216 3,397
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 52 55
comprehensive income
Remeasurement of defined benefit pension plans((a)) 1,463 968
Items that may be reclassified subsequently to profit or loss, net of tax:
Gains/(losses) on cash flow hedges 51 137
Currency retranslation gains/(losses)((b)) 1,309 617
Total comprehensive income 6,091 5,174
Attributable to:
Non-controlling interests 384 299
Shareholders' equity 5,707 4,875
((a) ) Remeasurement of defined benefit pension plans in 2022
is due to a significant decrease in liabilities as interest rates continued to
rise, more than offsetting the reduction in asset values.
((b) ) 2022 gain is primarily due to strengthening of the US
Dollar, Brazilian Real and Indian Rupee against the Euro. In 2021 the gain was
largely due to strengthening of the US Dollar, British Pound, Brazilian Real
and Indian Rupee against the Euro.
( )
CONSOLIDATED 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
First half - 2022
1 January 2022 92 52,844 (73,364) (9,210) 46,745 17,107 2,639 19,746
Profit or loss for the period - - 2,905 2,905 311 3,216
- -
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments - 44 - 44 8 52
- -
Cash flow hedges - 48 - 48 3 51
- -
Remeasurements of defined benefit pension plans - - 1,462 1,462 1 1,463
- -
Currency retranslation gains/(losses) - 1,240 8 1,248 61 1,309
- -
Total comprehensive income - 1,332 4,375 5,707 384 6,091
- -
Dividends on ordinary capital - (2,195) (2,195) (2,195)
- - - -
Repurchase of shares((a)) - (648) (648) (648)
- - - -
Other movements in treasury shares((b)) - 99 (107) (8) (8)
- - -
Share-based payment credit((c)) - - 93 93 93
- - -
Dividends paid to non-controlling interests - - - - (309) (309)
- -
Hedging gain/(loss) transferred to non-financial assets - (133) - (133) (3) (136)
- -
Other movements in equity((d)) - 2 216 218 14 232
- -
30 June 2022 92 52,844 (73,364) (8,558) 49,127 20,141 2,725 22,866
First half - 2021
1 January 2021 as previously reported 92 73,472 (73,364) (7,482) 22,548 15,266 2,389 17,655
Profit or loss for the period 3,121 3,121 276 3,397
- - - -
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments 67 67 (12) 55
- - - -
Cash flow hedges 136 136 1 137
- - - -
Remeasurements of defined benefit pension plans 968 968 968
- - - - -
Currency retranslation gains/(losses) 576 7 583 34 617
- - -
Total comprehensive income 779 4,096 4,875 299 5,174
- - -
Dividends on ordinary capital (2,252) (2,252) (2,252)
- - - - -
Share capital reduction((e)) (20,626) 20,626 - -
- - -
Repurchase of shares((a)) (897) (897) (897)
- - - - -
Other movements in treasury shares((b)) 78 (101) (23) (23)
- - - -
Share-based payment credit((c)) 82 82 82
- - - - -
Dividends paid to non-controlling interests - (258) (258)
- - - - -
Currency retranslation gains/(losses) net of tax (3) (3) (3)
- - - - -
Hedging gain/(loss) transferred to non-financial assets (89) (89) (1) (90)
- - - -
Other movements in equity((d)) (83) 140 57 14 71
- - -
30 June 2021 92 52,843 (73,364) (7,694) 45,139 17,016 2,443 19,459
( )
((a) ) Repurchase of shares reflects the cost of acquiring
ordinary shares as part of the share buyback programmes announced on 29 April
2021 and 10 February 2022.
((b) ) Includes purchases and sales of treasury stock, and
transfer from treasury stock to retained profit of share-settled schemes
arising from prior years and differences between exercise and grant price of
share options.
((c) ) 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.
((d) ) The 2022 movement consists primarily of a hyperinflation
adjustment of €235 million. 2021 includes a hyperinflation adjustment of
€137 million and €83 million related to the Welly acquisition.
((e) ) 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.
( )
CONSOLIDATED BALANCE SHEET
(unaudited)
€ million As at As at As at
30 June 31 December 30 June
2022 2021 2021
Non-current assets
Goodwill 21,571 20,330 19,239
Intangible assets 18,935 18,261 16,064
Property, plant and equipment 10,733 10,347 10,521
Pension asset for funded schemes in surplus 6,581 5,119 4,017
Deferred tax assets 1,559 1,465 1,320
Financial assets 1,286 1,198 960
Other non-current assets 1,023 974 1,032
61,688 57,694 53,153
Current assets
Inventories 5,893 4,683 4,766
Trade and other current receivables 7,309 5,422 6,478
Current tax assets 324 324 272
Cash and cash equivalents 5,411 3,415 4,182
Other financial assets 1,435 1,156 885
Assets held for sale 2,832 2,401 828
23,204 17,401 17,411
Total assets 84,892 75,095 70,564
Current liabilities
Financial liabilities 9,032 7,252 6,720
Trade payables and other current liabilities 17,151 14,861 14,799
Current tax liabilities 1,327 1,365 1,597
Provisions 640 480 514
Liabilities held for sale 788 820 158
28,938 24,778 23,788
Non-current liabilities
Financial liabilities 24,929 22,881 20,822
Non-current tax liabilities 163 148 143
Pensions and post-retirement healthcare liabilities:
Funded schemes in deficit 362 831 832
Unfunded schemes 1,189 1,295 1,298
Provisions 621 611 592
Deferred tax liabilities 5,523 4,530 3,361
Other non-current liabilities 301 275 269
33,088 30,571 27,317
Total liabilities 62,026 55,349 51,105
Equity
Shareholders' equity 20,141 17,107 17,016
Non-controlling interests 2,725 2,639 2,443
Total equity 22,866 19,746 19,459
Total liabilities and equity 84,892 75,095 70,564
CONSOLIDATED CASH FLOW STATEMENT
(unaudited)
€ million First Half
2022 2021
Net profit 3,216 3,397
Taxation 1,143 972
Share of net (profit)/loss of joint ventures/associates and other (124) (125)
(income)/loss from non-current investments and associates
Net monetary (gain)/loss arising from hyperinflationary economies 38 29
Net finance costs 227 153
Operating profit 4,500 4,426
Depreciation, amortisation and impairment 842 860
Changes in working capital (1,116) (1,233)
Pensions and similar obligations less payments (49) (126)
Provisions less payments 135 (29)
Elimination of (profits)/losses on disposals (28)
-
Non-cash charge for share-based compensation 93 82
Other adjustments (33) (19)
Cash flow from operating activities 4,344 3,961
Income tax paid (1,295) (917)
Net cash flow from operating activities 3,049 3,044
Interest received 106 61
Net capital expenditure (593) (386)
Other acquisitions and disposals 2 (275)
Other investing activities 53 30
Net cash flow (used in)/from investing activities (432) (570)
Dividends paid on ordinary share capital (2,176) (2,277)
Interest paid (323) (288)
Change in financial liabilities 2,500 (430)
Repurchase of shares (648) (845)
Other financing activities (277) (257)
Net cash flow (used in)/from financing activities (924) (4,097)
Net increase/(decrease) in cash and cash equivalents 1,693 (1,623)
Cash and cash equivalents at the beginning of the period 3,387 5,475
Effect of foreign exchange rate changes 194 220
Cash and cash equivalents at the end of the period 5,274 4,072
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(unaudited)
1 ACCOUNTING INFORMATION AND POLICIES
The condensed interim financial statements are prepared in accordance with IAS
34 'Interim Financial Reporting' as issued by the International Accounting
Standard Board (IASB), as adopted for use in the UK and are consistent with
the year ended 31 December 2021.
Management have produced forecasts which have been modelled for different
plausible scenarios. These scenarios confirm the Group is able to generate
profits and cash in the year ended 31 December 2022 and beyond. As a result,
the Directors have a reasonable expectation that the Group has adequate
resources to meet its obligations as they fall due for a period of at least 12
months from the date of signing these financial statements. Accordingly, they
continue to adopt the going concern basis in preparing the half year financial
statements.
The condensed interim 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 consolidated income
statement on page 11, the consolidated statement of comprehensive income on
page 11, the consolidated statement of changes in equity on page 12 and the
consolidated cash flow statement on page 14 are translated at exchange rates
current in each period. The consolidated balance sheet on page 13 is
translated at period-end rates of exchange.
The condensed interim financial statements attached do not constitute the full
financial statements within the meaning of section 434 of the UK Companies Act
2006. The comparative figures for the financial year ended 31 December 2021
are not Unilever PLC's statutory accounts for that financial year. Those
accounts of Unilever for the year ended 31 December 2021 have been reported on
by the Group's auditor and delivered to the Registrar of Companies. The report
of the auditor on these accounts was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the UK Companies Act 2006.
Change in reporting segments
In January 2022, the Group announced a new, simpler, more category focused
operating model which came into effect on 1 July 2022. This model is
structured around five Business Groups: Beauty & Wellbeing, Personal Care,
Home Care, Nutrition, and Ice Cream. Each Business Group will be fully
responsible for their strategy, growth, and profit delivery globally.
From 1 July 2022 our segmental information will be based on the five Business
Groups as this reflects how the Group's performance will be monitored and
managed going forward.
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 First Half
2022 2021
Acquisition and disposal-related credits/(costs) (87) (122)
Gain/(loss) on disposal of group companies 21 7
Restructuring costs (359) (306)
Impairments (4)
-
Other((a)) (115)
-
Non-underlying items within operating profit before tax (544) (421)
Tax on non-underlying items within operating profit 102 97
Non-underlying items within operating profit after tax (442) (324)
Net monetary gain/(loss) arising from hyperinflationary economies (38) (29)
Non-underlying items not in operating profit but within net profit before tax (38) (29)
Tax impact of non-underlying items not in operating profit but within net
profit:
Taxes related to the UK tax audit of intangible income and centralised (6)
services -
Taxes related to the separation of ekaterra (39)
-
Hyperinflation adjustment for Argentina deferred tax (24) (28)
Non-underlying items not in operating profit but within net profit after tax (101) (63)
Non-underlying items after tax((b)) (543) (387)
Attributable to:
Non-controlling interests (8) (20)
Shareholders' equity (535) (367)
((a) ) Comprised of €40 million of asset write-downs relating to
our businesses in Russia and Ukraine and €75 million relating to legal
provisions for ongoing competition investigations.
((b) ) 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
Second Quarter Beauty & Home Foods & Refreshment Total
Personal Care
Care
Turnover (€ million)
2021 5,367 2,575 5,509 13,451
2022 6,419 3,092 6,299 15,810
Change (%) 19.6 20.1 14.3 17.5
Impact of:
Acquisitions (%) 1.6 0.6
- -
Disposals (%) (0.1) (0.2) (0.1)
-
Currency-related items (%), of which: 9.1 7.0 6.0 7.5
Exchange rates changes (%) 8.2 4.9 4.6 6.1
Extreme price growth in hyperinflationary markets* (%) 0.8 2.0 1.4 1.3
Underlying sales growth (%) 8.0 12.2 8.1 8.8
Price* (%) 10.5 16.6 9.4 11.2
Volume (%) (2.3) (3.8) (1.2) (2.1)
First Half Beauty & Home Foods & Refreshment Total
Personal Care
Care
Turnover (€ million)
2021 10,407 5,182 10,202 25,791
2022 12,176 6,024 11,423 29,623
Change (%) 17.0 16.2 12.0 14.9
Impact of:
Acquisitions (%) 1.6 0.2 0.7
-
Disposals (%) 0.0 (0.2) (0.1)
-
Currency-related items (%), of which: 7.1 5.0 4.4 5.6
Exchange rate changes (%) 6.5 3.7 3.5 4.7
Extreme price growth in hyperinflationary markets* (%) 0.6 1.3 0.9 0.8
Underlying sales growth (%) 7.5 10.7 7.3 8.1
Price* (%) 9.0 14.5 8.3 9.8
Volume (%) (1.3) (3.4) (0.9) (1.6)
Operating profit (€ million)
2021 2,089 655 1,682 4,426
2022 2,169 609 1,722 4,500
Underlying operating profit (€ million)
2021 2,215 727 1,905 4,847
2022 2,378 723 1,943 5,044
Operating margin (%)
2021 20.1 12.6 16.5 17.2
2022 17.8 10.1 15.1 15.2
Underlying operating margin (%)
2021 21.3 14.0 18.7 18.8
2022 19.5 12.0 17.0 17.0
* 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
Second Quarter Asia / The Europe Total
AMET / Americas
RUB
Turnover (€ million)
2021 6,081 4,216 3,154 13,451
2022 7,061 5,414 3,335 15,810
Change (%) 16.1 28.4 5.8 17.5
Impact of:
Acquisitions (%) 0.2 1.3 0.6 0.6
Disposals (%) (0.2) (0.1) (0.1)
-
Currency-related items (%), of which: 6.6 13.5 0.5 7.5
Exchange rates changes (%) 4.9 11.7 0.5 6.1
Extreme price growth in hyperinflationary markets* (%) 1.6 1.6 1.3
-
Underlying sales growth (%) 9.0 11.7 4.6 8.8
Price* (%) 11.9 13.6 6.5 11.2
Volume (%) (2.6) (1.7) (1.8) (2.1)
First Half Asia / The Europe Total
AMET / Americas
RUB
Turnover (€ million)
2021 12,040 8,022 5,729 25,791
2022 13,700 9,941 5,982 29,623
Change (%) 13.8 23.9 4.4 14.9
Impact of:
Acquisitions (%) 0.3 1.4 0.7 0.7
Disposals (%) (0.2) (0.1) (0.1)
-
Currency- related items (%), of which: 4.2 10.8 0.9 5.6
Exchange rates changes (%) 3.3 9.3 0.9 4.7
Extreme price growth in hyperinflationary markets* (%) 0.9 1.4 0.8
-
Underlying sales growth (%) 9.0 10.4 2.9 8.1
Price* (%) 10.2 11.9 6.0 9.8
Volume (%) (1.1) (1.4) (2.9) (1.6)
Operating profit (€ million)
2021 2,289 1,303 834 4,426
2022 2,442 1,443 615 4,500
Underlying operating profit (€ million)
2021 2,413 1,429 1,005 4,847
2022 2,615 1,575 854 5,044
Operating margin (%)
2021 19.0 16.2 14.6 17.2
2022 17.8 14.5 10.3 15.2
Underlying operating margin (%)
2021 20.0 17.8 17.5 18.8
2022 19.1 15.8 14.3 17.0
* 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 the first half was 26.8% compared to 22.7% in 2021.
The tax rate is calculated by dividing the tax charge by pre-tax profit
excluding the contribution of joint ventures and associates.
Tax effects of components of other comprehensive income were as follows:
€ million First Half 2022 First Half 2021
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 49 3 52 56 (1) 55
Cash flow hedges 26 25 51 143 (6) 137
Remeasurements of defined benefit pension plans((a)) 2,037 (574) 1,463 1,404 (436) 968
Currency retranslation gains/(losses) 1,317 (8) 1,309 653 (36) 617
Other comprehensive income 3,429 (554) 2,875 2,256 (479) 1,777
((a) ) Remeasurement of defined benefit pension plans in 2022 is due
to a significant decrease in liabilities as interest rates continued to rise,
more than offsetting the reduction in asset values.
( )
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 six months were calculated as
follows:
2022 2021
EPS - Basic
Net profit attributable to shareholders' equity (€ million) 2,905 3,121
Average number of shares (millions of share units) 2,557.3 2,618.7
EPS - basic (€) 1.14 1.19
EPS - Diluted
Net profit attributable to shareholders' equity (€ million) 2,905 3,121
Diluted average number of share units (millions) 2,566.2 2,627.2
EPS - diluted (€) 1.13 1.19
Underlying EPS
Net profit attributable to shareholders' equity (€ million) 2,905 3,121
Post tax impact of non-underlying items attributable to shareholders' equity 535 367
(see note 2)
Underlying profit attributable to shareholders' equity 3,440 3,488
Diluted average number of share units (millions) 2,566.2 2,627.2
Underlying EPS - diluted (€) 1.34 1.33
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
Shares repurchased under the share buyback programme (15.5)
Net movement in shares under incentive schemes 2.0
Number of shares at 30 June 2022 2,547.5
7 SHARE BUYBACK PROGRAMME
On 10 February 2022 we announced our intention to start a share buyback
programme of up to €3 billion to be completed over 2022 and 2023. On 23
March 2022 we announced we would commence the first tranche of this buyback
programme for an aggregate market value equivalent to €750 million. As at
30 June 2022 the Group had repurchased 15,508,723 ordinary shares. Total
consideration for the repurchase of shares was €648 million which is
recorded within other reserves. The first tranche for an aggregate market
value of €750 million completed on 22 July 2022. Between 23 March 2022 and
22 July 2022, a total of 17,802,472 Unilever PLC ordinary shares were
purchased.
8 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.
€ million 30 June 2022 31 December 2021 30 June 2021
Current Non-current Total Current Non-current Total Current Non-current Total
Cash and cash equivalents
Cash at bank and in hand 2,730 2,730 2,505 2,505 2,625 2,625
- - -
Short-term deposits((a)) 2,481 2,481 811 811 1,411 1,411
- - -
Other cash equivalents 200 200 99 99 146 146
- - -
5,411 5,411 3,415 3,415 4,182 4,182
- - -
Other financial assets
Financial assets at amortised cost((b)) 756 220 976 750 208 958 514 148 662
Financial assets at fair value through other comprehensive income((c)) 547 547 1 526 527 9 413 422
-
Financial assets at fair value through profit or loss:
Derivatives that relate to financial liabilities 264 60 324 76 52 128 40 32 72
Other((d)) 415 459 874 329 412 741 322 367 689
1,435 1,286 2,721 1,156 1,198 2,354 885 960 1,845
Total financial assets((e)) 6,846 1,286 8,132 4,571 1,198 5,769 5,067 960 6,027
(a) Short-term deposits typically have a 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 €195 million (31 December 2021: €157 million, 30
June 2021: €107 million).
(c) Included within non-current financial assets at fair value
through other comprehensive income are equity investments of €540 million
(31 December 2021: €521 million, 30 June 2021: €408 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 30 June 2022 As at 31 December 2021 As at 30 June 2021 As at 30 June 2022 As at 31 December 2021 As at 30 June 2021
Financial assets
Cash and cash equivalents 5,411 3,415 4,182 5,411 3,415 4,182
Financial assets at amortised cost 976 958 662 976 958 662
Financial assets at fair value through other comprehensive income 547 527 422 547 527 422
Financial assets at fair value through profit and loss:
Derivatives 324 128 72 324 128 72
Other 874 741 689 874 741 689
8,132 5,769 6,027 8,132 5,769 6,027
Financial liabilities
Bank loans and overdrafts (540) (402) (593) (540) (402) (593)
Bonds and other loans (30,089) (29,133) (26,587) (31,007) (27,621) (24,683)
Lease liabilities (1,585) (1,649) (1,694) (1,585) (1,649) (1,694)
Derivatives (548) (184) (224) (548) (184) (224)
Other financial liabilities (281) (277) (348) (281) (277) (348)
(33,043) (31,645) (29,446) (33,961) (30,133) (27,542)
€ million Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
As at 30 June 2022 As at 31 December 2021 As at 30 June 2021
Assets at fair value
Financial assets at fair value through other comprehensive income 11 3 533 6 3 518 7 3 412
Financial assets at fair value through profit or loss:
Derivatives((a)) - 505 - - 289 - - 187 -
Other 420 - 454 331 - 410 323 - 366
Liabilities at fair value
Derivatives((b)) - (729) - (235) (311)
- - - -
Contingent consideration - - (175) (180) (159)
- - - -
((a) ) Includes €181 million (31 December 2021:
€161 million, 30 June 2021: €115 million) of derivatives reported within
trade receivables that hedge trading activities.
((b) ) Includes €181 million (31 December 2021: €51 million,
30 June 2021: €87 million) of derivatives reported within trade payables
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.
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.
9 ASSETS AND LIABILITIES HELD FOR SALE
On 18 November 2021, Unilever announced that it had entered into an agreement
to sell its global tea business, ekaterra, to CVC Capital Partners Fund VIII.
This deal was completed on 1 July 2022 for consideration of €4.7 billion
which is subject to final working capital adjustments. As a result, the assets
and liabilities of ekaterra remain classified as held for sale as at 30 June
2022.
Following the classification of assets and liabilities as held for sale, they
are recognised as current on the balance sheet.
30 June 2022 30 June 2022 30 June 2022 31 December 2021
Total
ekaterra Others Total
Property, plant and equipment held for sale 2 2 2
-
Non-Current assets
Goodwill and intangible assets 927 2 929 901
Property, plant and equipment 471 22 493 447
Deferred tax assets 609 609 329
-
Other non-current assets 26 26 25
-
2,033 24 2,057 1,702
Current assets
Inventories 337 337 258
-
Trade and other receivables 392 392 336
-
Current tax assets 13 13 11
-
Cash and cash equivalents 26 26 90
-
Other current assets 5 5 2
-
773 773 697
-
Assets held for sale 2,806 26 2,832 2,401
Current liabilities
Trade payables and other current liabilities 646 646 652
-
Current tax liabilities 9 9 9
-
Financial liabilities 31 31 49
-
Provisions 13 13 8
-
699 699 718
-
Non-Current liabilities
Pensions and post-retirement healthcare liabilities 12 12 12
-
Financial Liabilities 29 29 31
-
Other non-current liabilities 1 1 2
-
Deferred tax liabilities 47 47 57
-
89 89 102
-
Liabilities held for sale 788 788 820
-
On disposal of an asset or disposal group, the associated currency translation
difference, including amounts previously reported within equity, is
reclassified to the income statement as part of the gain or loss on disposal.
This is estimated to be a €63 million loss.
10 DIVIDENDS
The Board has declared a quarterly interim dividend for Q2 2022 of £0.3633
per Unilever PLC ordinary share or €0.4268 per Unilever PLC ordinary share
at the applicable exchange rate issued by WM/Reuters on 22 July 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): £ 0.3633
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam): € 0.4268
Per Unilever PLC American Depositary Receipt: US$ 0.4343
The euro and US dollar amounts above have been determined using the applicable
exchange rates issued by WM/Reuters on
22 July 2022.
US dollar cheques for the quarterly interim dividend will be mailed on 1
September 2022 to holders of record at the close of business on 5 August 2022.
The quarterly dividend calendar for the remainder of 2022 will be as follows:
Announcement Ex-Dividend Date Record Date Payment Date
Date
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
11 EVENTS AFTER THE BALANCE SHEET DATE
There were no material post balance sheet events other than those mentioned
elsewhere in this report.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
• this condensed set of interim financial statements, which have
been prepared in accordance with IAS 34 'Interim Financial Reporting', as
issued by the International Accounting Standard Board and endorsed and adopted
by the UK and the EU gives a true and fair view of the assets, liabilities,
financial position and profit or loss of Unilever; and
• the interim management report gives a fair review of the
information required pursuant to regulations 4.2.7 and 4.2.8 of the Disclosure
and Transparency Rules (DTR) issued by the UK Financial Conduct Authority and
section 5:25d (8)/(9) of the Dutch Act on Financial Supervision (Wet op het
financieel toezicht).
Unilever's Directors are listed in the Annual Report and Accounts for 2021.
Details of all current Directors are available on our website at
www.unilever.com
By order of the Board
Alan Jope
Graeme Pitkethly
Chief Executive Officer
Chief Financial Officer
26 July 2022
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