REG - Unilever PLC - Half-year Report
25/07/2023 07:00
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RNS Number : 0853H Unilever PLC 25 July 2023
2023 First Half Results
Solid first half performance, continued growth across all Business Groups
Underlying
performance
GAAP measures
(unaudited) 2023 vs 2022 2023 vs 2022
First Half
Underlying sales growth (USG) 9.1% Turnover €30.4bn 2.7%
Beauty & Wellbeing 9.1% Beauty & Wellbeing €6.2bn 8.6%
Personal Care 10.8% Personal Care €6.9bn 7.3%
Home Care 8.4% Home Care €6.2bn 3.0%
Nutrition 10.4% Nutrition €6.6bn (7.1)%
Ice Cream 5.7% Ice Cream €4.5bn 3.9%
Underlying operating profit €5.2bn 3.3% Operating profit €5.5bn 22.6%
Underlying operating margin 17.1% 10bps Operating margin 18.1% 290bps
Underlying earnings per share €1.39 3.9% Diluted earnings per share €1.40 23.6%
Free cash flow €2.5bn €0.2bn Net profit €3.9bn 20.7%
Second Quarter
USG 7.9% Turnover €15.7bn (0.4)%
Quarterly dividend payable in September 2023 €0.4268 per share (a)
(a) See note 10 for more information on dividends
First half highlights
• Underlying sales growth of 9.1%, driven by all Business Groups,
with 9.4% price growth and (0.2)% volume
• Turnover increased 2.7% to €30.4 billion, with (3.2)% from
currency and (2.7)% from disposals net of acquisitions
• Underlying operating profit improved 3.3% to €5.2 billion, with
a 10bps margin improvement to 17.1%
• Underlying earnings per share improved 3.9%, diluted EPS up 23.6%,
boosted by profit on disposals and lower restructuring spend
• Completed third €750 million tranche of our ongoing share
buyback programme of up to €3 billion
• Brand and marketing investment increased €0.4 billion in
constant exchange rates
• Our billion+ Euro brands, accounting for 55% of Group turnover,
delivered underlying sales growth of 10.8%, led by strong performances from
Rexona, Hellmann's, OMO, Sunsilk and Lux
• Continued portfolio reshaping with the announced acquisition of
the frozen yoghurt brand Yasso and the sale of the Suave brand in North
America
Chief Executive Officer statement
"Unilever's performance in the first half highlights the qualities that
attracted me to the business: an unmatched global footprint, a portfolio of
great brands and a team of talented people.
My early immersion in the business has confirmed my belief in Unilever's
strong fundamentals. The task ahead is to leverage these core strengths -
supported by our simplified operating model - to drive improved performance
and competitiveness. This is our absolute priority and it will mean bringing
greater focus and sharper execution, with science-backed innovations and
investment behind our brands.
This opportunity to step up our performance and unlock our full potential
makes it an exciting time to lead Unilever. I look forward to sharing further
details when we report our Q3 results in October."
Hein Schumacher
Outlook
In a volatile and high-cost environment, we will deliver another year of
strong underlying sales growth in 2023. We expect underlying sales growth for
the full year to be above 5%, ahead of our multi-year range, with underlying
price growth continuing to moderate through the year.
Our expectation for net material inflation (NMI) for 2023 is around €2
billion of which €0.4 billion is anticipated in the second half. We continue
to expect a modest improvement in underlying operating margin for the full
year, reflecting higher gross margin and increased investment behind our
brands.
First Half Review: Unilever Group
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €30.4bn 9.1% (0.2)% 9.4% (2.7)% (3.2)% 2.7% 17.1% 10bps
Second Quarter €15.7bn 7.9% (0.3)% 8.2% (2.6)% (5.2)% (0.4)%
Performance
Underlying sales growth in the first half was 9.1%, with 9.4% from price and
(0.2)% from volume. As underlying price growth has sequentially moderated from
13.3% in the fourth quarter of 2022, volumes were virtually flat with a step-
up in performance in Beauty & Wellbeing and Personal Care offsetting
volume declines elsewhere.
The percentage of our business winning market share* on a rolling 12
month-basis has reduced to 41%, reflecting the impact of a 17% SKU reduction,
pricing dynamics, and consumer shifts in certain markets. These included Tea
and Laundry value segments in India and Brazil respectively, and super-premium
segments in Personal Care North America. We continue to focus on the
longer-term health and competitiveness of the business while developing the
portfolio into high-growth spaces and channels.
Beauty & Wellbeing grew underlying sales by 9.1%. Volume growth of 3.8%
was led by continued double-digit growth in Prestige Beauty and Health &
Wellbeing, as well as strong growth in Hair Care. Personal Care underlying
sales were up 10.8%, driven by price and 3.2% volume growth with strong sales
of Deodorants. Home Care grew 8.4% with volumes almost flat in emerging
markets and down in Europe. Nutrition grew 10.4% with strong growth of
Dressings, while underlying volumes of (1.9)% reflect a challenging European
market. Ice Cream underlying sales growth was 5.7%, with volumes down 5.2% due
to the in-home segment.
Emerging markets grew underlying sales by 10.6% with price of 10.0% and a
return to positive volume growth at 0.6%. Latin America delivered 16.3%
underlying sales growth with price moderating and volume up 1.6%. South Asia
grew double-digit through price and some volume, driven by India. China grew
7.9%, with improved volumes following the lifting of pandemic-related
restrictions. Growth in South East Asia was muted due to a sales decline in
Indonesia, while Turkey delivered strong volume growth in a continued
hyper-inflationary economy. Developed markets grew underlying sales by 6.9%,
with 8.4% from price and (1.4)% from volume. Volumes held up well in North
America, while underlying price growth remained elevated in Europe given its
higher exposure to categories with significant cost inflation.
Turnover increased 2.7% to €30.4 billion, which included a currency impact
of (3.2)% and (2.7)% from disposals net of acquisitions. Underlying operating
profit was €5.2 billion, up 3.3% versus the prior year. Underlying operating
margin improved by 10bps to 17.1%. Gross margin increased by 30bps despite
€1.6 billion of net material inflation and increased production and
logistics costs. The cost increases were fully mitigated by pricing, savings
and improved mix. After several periods of high cost inflation, gross margin
remains 270bps below its level at H1 2019. Brand and marketing investment
stepped up by €0.4 billion in constant exchange rates, a 30bps increase as a
percentage of turnover in current exchange rates. Overheads improved by 10bps
due to growth leverage while we continued to invest in capabilities and our
Prestige Beauty and Health & Wellbeing businesses.
*Competitiveness % Business Winning measures the aggregate turnover of the
portfolio components (country/category cells) gaining value market share as a
% of the total turnover measured by market data. As such, it assesses what
percentage of our revenue is being generated in areas where we are gaining
market share
Operating model and capital allocation
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 continue to
expect around €600 million of cost savings, with the majority delivered by
the end of 2023.
After completing two €750 million tranches in 2022 of our ongoing share
buyback programme of up to €3 billion, we completed a third €750 million
tranche on 2 June 2023. The quarterly interim dividend for the second quarter
is maintained at €0.4268.
We completed the sale of the Suave brand in North America on 1 May 2023. On 14
June, we announced the acquisition of Yasso Holdings, Inc., a premium frozen
Greek yogurt brand in the United States.
Conference Call
Following the release of this trading statement on 25 July 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
(http://www.unilever.com/investor-relations/results-and-presentations/latest-results)
.
(http://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.
First Half Review: Business Groups
First Half 2023 Second Quarter 2023
(unaudited) Turnover USG UVG UPG Change in UOM Turnover USG UVG UPG
Unilever €30.4bn 9.1% (0.2)% 9.4% 10bps €15.7bn 7.9% (0.3)% 8.2%
Beauty & Wellbeing €6.2bn 9.1% 3.8% 5.1% 0bps €3.1bn 8.8% 4.9% 3.7%
Personal Care €6.9bn 10.8% 3.2% 7.3% (10)bps €3.5bn 9.0% 3.4% 5.4%
Home Care €6.2bn 8.4% (2.5)% 11.2% 30bps €3.0bn 6.7% (2.1)% 9.0%
Nutrition €6.6bn 10.4% (1.9)% 12.6% 80bps €3.3bn 8.9% (2.6)% 11.8%
Ice Cream €4.5bn 5.7% (5.2)% 11.5% (100)bps €2.8bn 5.6% (5.8)% 12.1%
Beauty & Wellbeing
20% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €6.2bn 9.1% 3.8% 5.1% 2.6% (3.0)% 8.6% 18.9% 0bps
Second Quarter €3.1bn 8.8% 4.9% 3.7% 1.9% (5.5)% 4.8%
Beauty & Wellbeing underlying sales grew 9.1%, with 5.1% from price and
3.8% from volume.
Hair Care grew high single-digit with positive volume growth driven by the
Americas. Sunsilkand TRESemmé delivered double-digit growth helped by
successful relaunches.
Core Skin Care grew mid-single digit with Vaseline performing strongly, as we
extended the successful Gluta-Hya range into the pro age segment, offering
additional benefits and bringing new consumers to the brand. In North Asia,
sales of AHC declined double-digit as we reset the cross-border channel.
Prestige Beauty and Health & Wellbeing delivered another period of
volume-led, double-digit growth. In Prestige, Paula's Choice, Dermalogica and
Hourglass delivered strong growth supported by new product launches backed by
cutting-edge science and technology such as Dermalogica's phyto nature oxygen
cream. In Health & Wellbeing, Liquid IV continued to perform well, and we
launched three sugar-free variants of its hydration technology without
compromise on flavour or function.
Underlying operating margin was flat with an improvement in gross margin
offset by an increase in overheads.
Personal Care
23% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €6.9bn 10.8% 3.2% 7.3% (0.3)% (2.9)% 7.3% 20.0% (10)bps
Second Quarter €3.5bn 9.0% 3.4% 5.4% (0.6)% (5.0)% 2.9%
Personal Care underlying sales grew 10.8% with price growth of 7.3% and volume
growth of 3.2%.
Deodorants delivered high double-digit growth driven by Europe and the
Americas, where volumes were boosted by a recovery in service levels and
associated pipeline fill. Axe grew double-digit as we rolled out the Fine
Fragrance range, combining odour protection with fine fragrances. We launched
new variants under Rexona which build on our superior 72-hour technology,
delivering high double-digit growth for the brand. The Dove Personal Care
portfolio also grew double-digit.
Skin Cleansing grew high single-digit with strong growth in Latin America and
South Asia.
Oral Care grew high single-digit as we relaunched Pepsodent in South East
Asia.
Underlying operating margin decreased 10bps with an improvement in gross
margin and a reduction in overheads more than offset by a step-up in brand and
marketing investment.
Home Care
20% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €6.2bn 8.4% (2.5)% 11.2% -% (5.0)% 3.0% 12.3% 30bps
Second Quarter €3.0bn 6.7% (2.1)% 9.0% -% (7.3)% (1.1)%
Home Care underlying sales grew 8.4%, with 11.2% from price and (2.5)% from
volume.
Fabric Cleaning grew double-digit. In Europe, we rolled out OMO capsules with
plastic free packaging to more countries, delivering top cleaning performance
with less plastic and less chemicals and contributing to improved volumes and
double-digit growth for the brand.
Fabric Enhancers grew mid single-digit driven by price. In China, Comfort
Beads were relaunched with improved fragrance that lasts longer.
In Latin America, we introduced the first product range specifically designed
for the Launderette and Hospitality segment, delivering the perfect white
wash, under both the OMO and Comfort brands.
Home & Hygiene grew mid-single digit while the Air Wellness business
declined.
Underlying operating margin improved 30bps led by an improvement in gross
margin.
Nutrition
22% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €6.6bn 10.4% (1.9)% 12.6% (13.1)% (3.2)% (7.1)% 18.4% 80bps
Second Quarter €3.3bn 8.9% (2.6)% 11.8% (12.6)% (4.7)% (9.3)%
Nutrition underlying sales grew 10.4%, with 12.6% from price and (1.9)% from
volume.
Scratch Cooking Aids grew high single-digit. Growth was price-led with
negative volume, particularly in Europe and North America.
Dressings continued to grow double-digit with Hellmann's driving sales during
the Easter and BBQ season, combining the "make taste, not waste" campaign with
innovation such as spicy mayonnaise in the United States.
Unilever Food Solutions accelerated its double-digit growth through the first
half with China returning to double- digit growth in the second quarter.
Underlying operating margin increased by 80bps, mainly driven by a reduction
in overheads, partially offset by lower gross margin as a result of continued
input cost inflation.
Ice Cream
15% of Group turnover
(unaudited) Turnover USG UVG UPG A&D Currency Turnover change UOM% Change in UOM
First Half €4.5bn 5.7% (5.2)% 11.5% -% (1.7)% 3.9% 15.0% (100)bps
Second Quarter €2.8bn 5.6% (5.8)% 12.1% -% (3.3)% 2.1%
Ice Cream underlying sales grew 5.8%, with 11.5% from price and (5.2)% from
volume.
In-home Ice Cream grew low-single digit as volumes continued to be impacted by
lower consumption due to the discretionary nature of the category in an
inflationary environment.
Out-of-home Ice Cream grew double-digit with positive price and positive
volume. In Europe, poor weather in April and May was largely offset by good
weather in June.
Magnumgrew high single-digit with the Starchaser and Sunlover limited edition
innovation performing well. In North America, we launched Talenti mini gelato
and sorbetto bars, the perfect indulgent snack to be enjoyed on the go. The
Heart brand grew mid-single digit, supported by a new plant-based variant
under the Twister range.
Underlying operating margin declined 100bps due to an input cost driven
reduction in gross margin.
First Half Review: Geographical Areas
First Half 2023 Second Quarter 2023
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
Unilever €30.4bn 9.1% (0.2)% 9.4% €15.7bn 7.9% (0.3)% 8.2%
Asia Pacific Africa €13.4bn 9.1% 1.1% 8.0% €6.7bn 8.3% 1.8% 6.5%
The Americas €10.9bn 10.6% 1.8% 8.6% €5.7bn 9.5% 2.9% 6.4%
Europe €6.1bn 6.4% (6.8)% 14.2% €3.3bn 4.3% (9.7)% 15.5%
First Half 2023 Second Quarter 2023
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
Emerging markets €17.7bn 10.6% 0.6% 10.0% €9.0bn 9.7% 1.3% 8.3%
Developed markets €12.7bn 6.9% (1.4)% 8.4% €6.7bn 5.4% (2.4)% 8.0%
North America €6.7bn 7.4% 2.0% 5.3% €3.5bn 6.7% 3.0% 3.6%
Latin America €4.2bn 16.3% 1.6% 14.5% €2.2bn 14.3% 2.8% 11.1%
Asia Pacific Africa
44% of Group turnover
Underlying sales growth was 9.1% with price growth of 8% and volume growth of
1.1%.
India delivered high single-digit growth through price and volume. China grew
high single-digit as growth recovered in the second quarter with volume-led,
double-digit growth against a softer prior year comparator which was impacted
by lockdowns. In South East Asia, Indonesia declined mid single-digit as
volumes softened and we adjusted pricing to build back competitiveness. The
Philippines, Thailand and Vietnam all grew with contributions from both price
and volume. Turkey grew double-digit with positive volume and high
double-digit pricing in a difficult and hyperinflationary environment. Africa
grew double-digit led by strong price growth that was partially offset by
volume decline.
The Americas
36% of Group turnover
Underlying sales growth in North America was 7.4% with 5.3% from price and 2%
from volume. Performance was led by double-digit growth in Nutrition and
Beauty & Wellbeing, driven by Dressings, Prestige Beauty and Health &
Wellbeing. Volumes improved in Nutrition, Beauty and Wellbeing and Personal
Care but declined in Ice Cream.
In Latin America, underlying sales grew 16.3% with 14.5% from price and 1.6%
from volume. Brazil grew double-digit with price growth slowing through the
first half. Despite high price growth and a difficult environment, Mexico and
Argentina delivered positive volume growth.
Europe
20% of Group turnover
Underlying sales growth was 6.4% with price at 14.2% and volume at (6.8)%.
Pricing remained elevated due to the high exposure to Nutrition and Ice Cream
which see continued input cost inflation. Beauty & Wellbeing and Personal
Care grew double-digit with positive volume growth while volumes declined in
the other three Business Groups. Home Care underlying sales were flat, while
Nutrition and Ice Cream grew high and low single-digit respectively.
Growth was broad-based and price-led across countries, with the United Kingdom
and Spain growing double-digit, driven by Personal Care.
Additional commentary on the financial statements - First Half
Finance costs and tax
Net finance costs increased by €32 million to €259 million in 2023. The
increase was largely driven by higher cost of debt on bonds and commercial
paper. This was partially offset by higher interest income and a higher
interest credit from pensions. We continue to expect net finance costs to be
in the range of 2.5% to 3.0% on average net debt for 2023.
The underlying effective tax rate for the first half decreased to 24.2% from
24.4% in the prior year, largely due to changes in profit mix. The effective
rate was 26.9% and includes the adverse impact from the Suave disposal. This
compares with 26.8% in the prior year, which included tax costs related to the
separation of the tea business.
Joint ventures, associates and other income from non-current investments
Net profit from joint ventures and associates was €118 million, an increase
of €21 million compared to 2022, mainly driven by the Pepsi-Lipton JVs.
Other income from non-current investments was negative at €(10) million,
versus €27 million in the prior year.
Earnings per share
Underlying earnings per share increased by 3.9% to €1.39, including a
negative impact of 5.3% from currency. Constant underlying earnings per share
increased by 9.2%. The increase was mainly driven by the operational
performance. The reduction in the average number of shares as a result of our
share buybacks contributed 1.2%. Diluted earnings per share increased by 23.6%
to €1.40, helped by profit on disposals and lower restructuring spend.
Free cash flow
Free cash flow in the first half of 2023 was €2.5 billion, up from the
€2.2 billion delivered in the first half of 2022. The increase was driven by
higher operating profit, partially offset by higher working capital.
Net debt
Closing net debt was €24.3 billion compared to €23.7 billion as at 31
December 2022. The increase was driven by dividends paid and €750 million of
the executed share buy back programme during the first half. The increase was
partially offset by free cash flow delivery and net disposal proceeds.
Pensions
Pension assets net of liabilities were in surplus of €2.8 billion at 30 June
2023 versus a surplus of €2.6 billion at the end of 2022. The increase was
primarily driven by changes in interest rates reducing liabilities more than
assets.
Financial implications and impairment risk in Russia
Our Russia business employs approximately 3,000 people in Russia and in the
first six months of 2023 the business represented 1.2% of the Group's turnover
and 1.5% of the Group's net profit. As at 30 June 2023, our Russia business
had net assets of around €800 million, 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 remains a risk
that our operations in Russia are unable to continue, leading to loss of
turnover, profit and a write-down of assets.
Share buyback programme
On 2 June 2023, we completed the third €750 million tranche of our share
buyback programme of up to €3 billion, initiated on 10 February 2022. The
total consideration paid for the repurchase of 15,552,684 shares is recorded
within other reserves. All shares purchased are held by Unilever as treasury
shares. A total of 112,746,434 ordinary shares held in treasury reflecting the
shares purchased as part of the company's share buyback programmes in 2021,
2022 and in the first half of 2023 will be cancelled in Q3 2023.
Finance and liquidity
In the first six months of 2023, the following notes matured and were repaid:
· February: €600 million 0.375% fixed rate notes
· March: $550 million 3.125% fixed rate notes
· June: €500 million 1.00% fixed rate notes
The following notes were issued:
· February: €500 million 3.25% fixed rate notes maturing in February
2031 and €500 million 3.50% fixed rate notes due February 2035
· June: €550 million 3.30% fixed rate notes due June 2029 and €700
million 3.40% fixed rate notes due June 2033
On 30 June 2023, Unilever had undrawn revolving 364-day bilateral credit
facilities in aggregate of $5,200 million and €2,600 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 of France
and South Africa. These proceedings and investigations are at different stages
and concern different 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. At the same time, we are vigorously defending
Unilever when we feel that allegations are unwarranted. The Group continues to
reinforce and enhance its internal competition law 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 2023 First half average rate in 2022
Brazilian Real (€1 = BRL) 5.493 5.538
Chinese Yuan (€1 = CNY) 7.475 7.083
Indian Rupee (€1 = INR) 88.860 83.337
Indonesia Rupiah (€1 = IDR) 16,277 15,798
Philippine Peso (€1 = PHP) 59.674 56.969
UK Pound Sterling (€1 = GBP) 0.877 0.842
US Dollar (€1 = US $) 1.081 1.094
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) 2023 2022
Operating profit 5,516 4,500
Non-underlying items within operating profit (see note 2) (308) 544
Underlying operating profit 5,208 5,044
Turnover 30,428 29,623
Operating margin (%) 18.1 15.2
Underlying operating margin (%) 17.1 17.0
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) 2023 2022
Taxation 1,385 1,143
Tax impact of:
Non-underlying items within operating profit((a)) (111) 102
Non-underlying items not in operating profit but within net profit((a)) (80) (63)
Taxation before tax impact of non-underlying items 1,194 1,182
Profit before taxation 5,267 4,359
Share of net (profit)/loss of joint ventures and associates (118) (97)
Profit before tax excluding share of net profit/(loss) of joint ventures and 5,149 4,262
associates
Non-underlying items within operating profit before tax((a)) (308) 544
Non-underlying items not in operating profit but within net profit before tax 103 38
Profit before tax excluding non-underlying items before tax and share of net 4,944 4,844
profit/ (loss) of joint ventures and associates
Effective tax rate (%) 26.9 26.8
Underlying effective tax rate (%) 24.2 24.4
(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 First Half
(unaudited) 2023 2022
Underlying profit attributable to shareholders' equity (see note 6) 3,534 3,440
Impact of translation from current to constant exchange rates and 330 -
translational hedges
Impact of price growth in excess of 26% per year in hyperinflationary (149) -
economies
Constant underlying earnings attributable to shareholders' equity 3,715 3,440
Diluted average number of share units (millions of units) 2,536.8 2,566.2
Constant underlying EPS (€) 1.46 1.34
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 30 June 2023 As at 31 December 2022 As at 30 June 2022
(unaudited)
Total financial liabilities (30,708) (29,488) (33,961)
Current financial liabilities (6,715) (5,775) (9,032)
Non-current financial liabilities (23,993) (23,713) (24,929)
Cash and cash equivalents as per balance sheet 4,994 4,326 5,411
Cash and cash equivalents as per cash flow statement 4,870 4,225 5,274
Add: bank overdrafts deducted therein 124 101 157
Less: cash and cash equivalents held for sale - - (20)
Other current financial assets 1,376 1,435 1,435
Non-current financial asset derivatives that relate to financial liabilities 31 51 60
Net debt (24,307) (23,676) (27,055)
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) 2023 2022
Cash flow from operating activities 4,377 4,344
Income tax paid (1,011) (1,295)
Net capital expenditure (548) (593)
Net interest paid (364) (217)
Free cash flow 2,454 2,239
Net cash flow (used in)/from investing activities (200) (432)
Net cash flow (used in)/from financing activities (2,489) (924)
USG, UVG, UPG, UOP, UOM, underlying EPS, constant underlying EPS, underlying
effective tax rate, FCF and net debt are non-GAAP measures (see pages 8
(#_bookmark0) to 11)
Other Information
This document represents Unilever's half-yearly report for the purposes of the
Disclosure Guidance 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 consolidated financial statements can be found on pages 15 to
27; (ii) pages 2 to 12 comprise the interim management report; and (iii) the
Directors' responsibility statement can be found on page 13. This report has
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. Whilst Unilever has previously produced a half-yearly report
containing condensed consolidated financial statements, those financial
statements have not previously been subject to a review by an independent
auditor. As a consequence, review procedures in accordance with ISRE 2410 have
not been performed in respect of the comparative period for the six months
ended 30 June 2022.
Principal Risk Factors
On pages 68 to 75 of our 2022 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 2023.
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 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. A number of these
risks have increased as a result of the current war in Ukraine. 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 2022 and the Unilever Annual Report and Accounts 2022.
Directors' Responsibility Statement
The Directors declare that, to the best of their knowledge:
· these condensed consolidated 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
Guidance 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 2022.
Details of all current Directors are available on our website at
www.unilever.com (http://www.unilever.com/)
By order of the Board
Hein Schumacher Graeme Pitkethly
Chief Executive Officer Chief Financial Officer
24 July 2023
Enquiries
Media: Media Relations Team Investors: Investor Relations Team
UK +44 78 2527 3767 lucila.zambrano@unilever.com investor.relations@unilever.com (mailto:investor.relations@unilever.com)
(mailto:lucila.zambrano@unilever.com)
or +44 77 7999 9683 jonathan.sibun@teneo.com (mailto:jonathan.sibun@teneo.com)
NL +31 62 375 8385 marlous- (mailto:marlous-den.bieman@unilever.com)
den.bieman@unilever.com (mailto:marlous-den.bieman@unilever.com)
or +31 61 500 8293 fleur-van.bruggen@unilever.com
After the conference call on 25 July 2023 at 8AM (UK time), the webcast of the
presentation will be available at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
(http://www.unilever.com/investor-relations/results-and-presentations/latest-results)
Independent Review Report to Unilever PLC
Conclusion
We have been engaged by Unilever Plc ("the Company") to review the condensed
consolidated financial statements of Unilever Plc and its subsidiaries ("the
Group") in the 2023 First Half Results for the six months ended 30 June 2023
which comprises the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity, the
consolidated balance sheet, the consolidated cash flow statement and the
related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated financial statements in the 2023 First
Half Results for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the 2023 First Half Results and consider whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed consolidated financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The 2023 First Half Results is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the 2023 First
Half Results in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with international financial reporting standards (IFRS)
as issued by the International Accounting Standards Board (IASB) and UK-
adopted international accounting standards.
The directors are responsible for preparing the condensed consolidated
financial statements included in the 2023 First Half Results in accordance
with IAS 34 as adopted for use in the UK.
In preparing the condensed consolidated financial statements, the directors
are responsible for assessing the Group's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated financial statements in the 2023 First Half Results based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
24 July 2023
Consolidated income statement
€ million First Half
(unaudited) 2023 2022 Change
Turnover 30,428 29,623 2.7%
Operating profit 5,516 4,500 22.6%
Net finance costs (259) (227)
Pensions and similar obligations 50 22
Finance income 208 105
Finance costs (517) (354)
Net monetary gain/(loss) arising from hyperinflationary economies (98) (38)
Share of net profit/(loss) of joint ventures and associates 118 97
Other income/(loss) from non-current investments and associates (10) 27
Profit before taxation 5,267 4,359 20.8%
Taxation (1,385) (1,143)
Net profit 3,882 3,216 20.7%
Attributable to:
Non-controlling interests 334 311
Shareholders' equity 3,548 2,905 22.1%
Earnings per share
Basic earnings per share (euros) 1.41 1.14 23.7%
Diluted earnings per share (euros) 1.40 1.13 23.6%
Consolidated statement of comprehensive income
€ million First Half
(unaudited) 2023 2022
Net profit 3,882 3,216
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 (34) 52
comprehensive income
Remeasurement of defined benefit pension plans (47) 1,463
Items that may be reclassified subsequently to profit or loss, net of tax:
Gains/(losses) on cash flow hedges (22) 51
Currency retranslation gains/(losses) (555) 1,309
Total comprehensive income 3,224 6,091
Attributable to:
Non-controlling interests 284 384
Shareholders' equity 2,940 5,707
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 - 2023
01 January 2023 92 52,844 (73,364) (10,804) 50,253 19,021 2,680 21,701
Profit or loss for the period - - - - 3,548 3,548 334 3,882
Other comprehensive income, net of tax:
Gains/(losses) on:
Equity instruments - - - (33) - (33) (1) (34)
Cash flow hedges - - - (22) - (22) - (22)
Remeasurements of defined benefit pension plans - - - - (48) (48) 1 (47)
Currency retranslation gains/(losses)(e) - - - (736) 231 (505) (50) (555)
Total comprehensive income - - - (791) 3,731 2,940 284 3,224
Dividends on ordinary capital - - - - (2,172) (2,172) - (2,172)
Repurchase of shares(a) - - - (753) - -753 - (753)
Movements in treasury shares(b) - - - 69 (68) 1 - 1
Share-based payment credit(c) - - - - 159 159 - 159
Dividends paid to non-controlling interests - - - - - - (276) (276)
Hedging gain/(loss) transferred to non-financial assets - - - 78 - 78 - 78
Other movements in equity - - - 5 (22) (17) (24) (41)
30 June 2023 92 52,844 (73,364) (12,196) 51,881 19,257 2,664 21,921
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)
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
(a) Repurchase of shares reflects the cost of acquiring ordinary
shares as part of the share buyback program announced on 10 February 2022.
(b) 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.
(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) Includes a hyperinflation adjustment of €235 million in
relation to Argentina.
(e) Includes a hyperinflation adjustment of €247 million in
relation to Argentina and Turkey.
Consolidated balance sheet
(unaudited)
€ million As at 30 June 2023 As at 31 December 2022 As at 30 June 2022
Non-current assets
Goodwill 21,299 21,609 21,571
Intangible assets 18,664 18,880 18,935
Property, plant and equipment 10,590 10,770 10,733
Pension asset for funded schemes in surplus 4,244 4,260 6,581
Deferred tax assets 1,084 1,049 1,559
Financial assets 1,220 1,154 1,286
Other non-current assets 952 942 1,023
58,053 58,664 61,688
Current assets
Inventories 5,668 5,931 5,893
Trade and other current receivables 8,046 7,056 7,309
Current tax assets 254 381 324
Cash and cash equivalents 4,994 4,326 5,411
Other financial assets 1,376 1,435 1,435
Assets held for sale 18 28 2,832
20,356 19,157 23,204
Total assets 78,409 77,821 84,892
Current liabilities
Financial liabilities 6,715 5,775 9,032
Trade payables and other current liabilities 17,367 18,023 17,151
Current tax liabilities 891 877 1,327
Provisions 634 748 640
Liabilities held for sale - 4 788
25,607 25,427 28,938
Non-current liabilities
Financial liabilities 23,993 23,713 24,929
Non-current tax liabilities 280 94 163
Pensions and post-retirement healthcare liabilities:
Funded schemes in deficit 431 613 362
Unfunded schemes 1,040 1,078 1,189
Provisions 547 550 621
Deferred tax liabilities 4,410 4,375 5,523
Other non-current liabilities 180 270 301
30,881 30,693 33,088
Total liabilities 56,488 56,120 62,026
Equity
Shareholders' equity 19,257 19,021 20,141
Non-controlling interests 2,664 2,680 2,725
Total equity 21,921 21,701 22,866
Total liabilities and equity 78,409 77,821 84,892
Consolidated cash flow statement
(unaudited) First Half
€ million 2023 2022
Net profit 3,882 3,216
Taxation 1,385 1,143
Share of net (profit)/loss of joint ventures/associates and other (108) (124)
(income)/loss from non-current investments and associates
Net monetary (gain)/loss arising from hyperinflationary economies 98 38
Net finance costs 259 227
Operating profit 5,516 4,500
Depreciation, amortisation and impairment 754 842
Changes in working capital (1,331) (1,116)
Pensions and similar obligations less payments (103) (49)
Provisions less payments (122) 135
Elimination of (profits)/losses on disposals (507) (28)
Non-cash charge for share-based compensation 159 93
Other adjustments 11 (33)
Cash flow from operating activities 4,377 4,344
Income tax paid (1,011) (1,295)
Net cash flow from operating activities 3,366 3,049
Interest received 139 106
Net capital expenditure (548) (593)
Acquisitions and disposals 352 2
Other investing activities (143) 53
Net cash flow (used in)/from investing activities (200) (432)
Dividends paid on ordinary share capital (2,202) (2,176)
Interest paid (503) (323)
Change in financial liabilities 1,230 2,500
Repurchase of shares (753) (648)
Other financing activities (261) (277)
Net cash flow (used in)/from financing activities (2,489) (924)
Net increase/(decrease) in cash and cash equivalents 677 1,693
Cash and cash equivalents at the beginning of the period 4,225 3,387
Effect of foreign exchange rate changes (32) 194
Cash and cash equivalents at the end of the period 4,870 5,274
Notes to the condensed consolidated financial statements
(unaudited)
1. Accounting information and policies
These condensed consolidated financial statements are prepared in accordance
with IAS 34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board (IASB) and as adopted for use in the UK.
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed consolidated financial statements have been
prepared applying the accounting policies and presentation that were applied
in the preparation of the Group's published consolidated financial statements
for the year ended 31 December 2022. In preparing these condensed consolidated
financial statements, judgements and estimates that affect the application of
accounting policies used by management have remained consistent with those
applied in the consolidated financial statements for the year ended 31
December 2022.
These condensed consolidated financial statements have been reviewed by our
independent auditor KPMG LLP. The comparative information presented in the
condensed consolidated financial statements have not previously been subject
to a review by an independent auditor.
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 2023 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 condensed consolidated financial
statements. Accordingly, they continue to adopt the going concern basis in
preparing the half year condensed consolidated financial statements.
The condensed consolidated financial statements are shown at current exchange
rates with year-on-year changes shown to facilitate comparison. The
consolidated income statement on page 15, the consolidated statement of
comprehensive income on page 15, the consolidated statement of changes in
equity on page 16 and the consolidated cash flow statement on page 18 are
translated at exchange rates current in each period. The consolidated balance
sheet on page 17 is translated at period-end rates of exchange.
The condensed consolidated 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 2022 are not Unilever PLC's statutory accounts for that financial
year. The annual financial statements of the Group are prepared in accordance
with international financial reporting standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and UK adopted international
accounting standards and in accordance with the requirements of the UK
Companies Act 2006. Those accounts for the year ended 31 December 2022 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.
New accounting standards
As of 1 January 2023, IFRS 17 'Insurance Contracts' has been adopted by the
Group. The standard introduces a new model for accounting for insurance
contracts. We have reviewed existing arrangements and concluded that IFRS 17
does not impact the condensed consolidated financial statements.
As of 23 May 2023, amendments to IAS 12 'Income Taxes' came into effect
relating to International Tax Reform - Pillar Two Model Rules, which were
endorsed by the UK Endorsement Board on 19 July, whereby an entity shall
disclose qualitative and quantitative information about its exposure to Pillar
Two income taxes at the end of the reporting period. The amendments provide a
temporary mandatory exemption from deferred tax accounting for the top-up tax,
which is effective immediately. The expected impact of this amendment will be
disclosed within the 2023 Annual Report.
All other new standards or amendments issued by the IASB and UK Endorsement
Board that are effective or not yet effective, are either not applicable or
not material to the Group.
(unaudited)
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 First Half
2023 2022
Acquisition and disposal-related credits/(costs) ((a)) (52) (87)
Gain/(loss) on disposal of group companies((b)) 528 21
Restructuring costs((c)) (184) (359)
Impairments((d)) (1) (4)
Other((e)) 17 (115)
Non-underlying items within operating profit before tax 308 (544)
Tax on non-underlying items within operating profit (111) 102
Non-underlying items within operating profit after tax 197 (442)
Interest related to the UK tax audit of intangible income and centralised (5) -
services
Net monetary gain/(loss) arising from hyperinflationary economies (98) (38)
Non-underlying items not in operating profit but within net profit before tax (103) (38)
Tax impact of non-underlying items not in operating profit but within net
profit:
Taxes related to separation of Ekaterra (6) (39)
Taxes related to the UK tax audit of intangible income and centralised 1 -
services
Hyperinflation adjustment for Argentina and Turkey deferred tax (75) (24)
Non-underlying items not in operating profit but within net profit after tax (183) (101)
Non-underlying items after tax((f)) 14 (543)
Attributable to:
Non-controlling interests - (8)
Shareholders' equity 14 (535)
(a) 2023 includes a charge of €4 million (2022: €56 million)
relating to the disposal of ekaterra and other acquisition and disposal
activities.
(b) 2023 includes a gain of €497 million related to the disposal
of Suave business in North America.
(c) Restructuring costs are comprised of organisational change
programmes including Compass and various technology and supply chain
optimisation projects.
(d) Impairments include write downs of leased land and building
assets.
(e) 2022 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.
(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.
(unaudited)
3. Segment information - Business Groups
Second Quarter Beauty & Wellbeing Personal Care Home Care Nutrition Ice Cream Total
Turnover (€ million)
2022 2,999 3,420 3,092 3,596 2,703 15,810
2023 3,143 3,519 3,057 3,260 2,760 15,739
Change (%) 4.8 2.9 (1.1) (9.3) 2.1 (0.4)
Impact of:
Acquisitions (%) 3.7 - - - - 0.7
Disposals (%) (1.7) (0.6) - (12.6) - (3.3)
Currency-related items (%), of which: (5.5) (5) (7.3) (4.7) (3.3) (5.2)
Exchange rates changes (%) (6.7) (6.6) (9.9) (6.1) (5.8) (7)
Extreme price growth in hyperinflationary markets* (%) 1.4 1.7 2.8 1.4 2.7 2
Underlying sales growth (%) 8.8 9.0 6.7 8.9 5.6 7.9
Price* (%) 3.7 5.4 9.0 11.8 12.1 8.2
Volume (%) 4.9 3.4 (2.1) (2.6) (5.8) (0.3)
First Half Beauty & Wellbeing Personal Care Home Care Nutrition Ice Cream Total
Turnover (€ million)
2022 5,731 6,445 6,024 7,107 4,316 29,623
2023 6,225 6,911 6,205 6,601 4,486 30,428
Change (%) 8.6 7.3 3 (7.1) 3.9 2.7
Impact of:
Acquisitions (%) 3.6 - - - - 0.7
Disposals (%) (1) (0.3) - (13.1) - (3.4)
Currency-related items (%), of which: (3) (2.9) (5) (3.2) (1.7) (3.2)
Exchange rates changes (%) (4.3) (4.5) (7.7) (4.5) (4) (5)
Extreme price growth in hyperinflationary markets* (%) 1.3 1.7 2.9 1.3 2.4 1.9
Underlying sales growth (%) 9.1 10.8 8.4 10.4 5.7 9.1
Price* (%) 5.1 7.3 11.2 12.6 11.5 9.4
Volume (%) 3.8 3.2 (2.5) (1.9) (5.2) (0.2)
Operating profit (€ million)
2022 995 1,174 609 1,124 598 4,500
2023 1,237 1,691 731 1,213 644 5,516
Underlying operating profit (€ million)
2022 1,083 1,295 723 1,253 690 5,044
2023 1,179 1,381 763 1,214 671 5,208
Operating margin (%)
2022 17.4 18.2 10.1 15.8 13.9 15.2
2023 19.9 24.5 11.8 18.4 14.4 18.1
Underlying operating margin (%)
2022 18.9 20.1 12.0 17.6 16.0 17.0
2023 18.9 20.0 12.3 18.4 15.0 17.1
*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.
(unaudited)
4. Segment information - Geographical area
Second Quarter Asia Pacific Africa The Americas Europe Total
Turnover (€ million)
2022 7,061 5,414 3,335 15,810
2023 6,699 5,700 3,340 15,739
Change (%) (5.1) 5.3 0.1 (0.4)
Impact of:
Acquisitions (%) - 2.0 - 0.7
Disposals (%) (3.3) (3.4) (3.1) (3.3)
Currency-related items (%), of which: (9.4) (2.4) (0.9) (5.2)
Exchange rate changes (%) (11.2) (5.4) (0.9) (7.0)
Extreme price growth in hyperinflationary markets* (%) 1.9 3.2 - 2.0
Underlying sales growth (%) 8.3 9.5 4.3 7.9
Price* (%) 6.5 6.4 15.5 8.2
Volume (%) 1.8 2.9 (9.7) (0.3)
First Half Asia Pacific Africa The Americas Europe Total
Turnover (€ million)
2022 13,701 9,941 5,982 29,623
2023 13,421 10,956 6,051 30,428
Change (%) (2.0) 10.2 1.2 2.7
Impact of:
Acquisitions (%) - 2.0 - 0.7
Disposals (%) (3.6) (2.9) (3.7) (3.4)
Currency-related items (%), of which (6.9) 0.5 (1.3) (3.2)
Exchange rate changes (%) (8.6) (2.3) (1.3) (5.0)
Extreme price growth in hyperinflationary markets* (%) 1.9 2.9 - 1.9
Underlying sales growth (%) 9.1 10.6 6.4 9.1
Price* (%) 8.0 8.6 14.2 9.4
Volume (%) 1.1 1.8 (6.8) (0.2)
*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.
(unaudited)
5. Taxation
The effective tax rate for the first half is 26.9% compared with 26.8% in
2022. 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:
First half
2023 2022
€ 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 (34) - (34) 49 3 52
Cash flow hedges (20) (2) (22) 26 25 51
Remeasurements of defined benefit pension plans (90) 43 (47) 2,037 (574) 1,463
Currency retranslation gains/(losses) (535) (20) (555) 1,317 (8) 1,309
Other comprehensive income (679) 21 (658) 3,429 (554) 2,875
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:
First Half
2023 2022
EPS - Basic
Net profit attributable to shareholders' equity (€ million) 3,548 2,905
Average number of shares (millions of share units) 2,523.9 2,557.3
EPS - basic (€) 1.41 1.14
EPS - Diluted
Net profit attributable to shareholders' equity (€ million) 3,548 2,905
Adjusted average number of shares (millions of share units) 2,536.8 2,566.2
EPS - diluted (€) 1.40 1.13
Underlying EPS
Net profit attributable to shareholders' equity (€ million) 3,548 2,905
Post-tax impact of non-underlying items attributable to shareholders' equity (14) 535
(see note 2)
Underlying profit attributable to shareholders' equity 3,534 3,440
Adjusted average number of shares (millions of share units) 2,536.8 2,566.2
Underlying EPS - diluted (€) 1.39 1.34
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 2022 (net of treasury shares) 2,529.0
Net movements in shares under incentive schemes 1.5
Shares repurchased under the share buyback programme (15.5)
Number of shares at 30 June 2023 2,515.0
7. Acquisitions and disposals
In the first half of 2023, the Group completed the following business
acquisitions and disposals:
Deal completion date Acquired/disposed business
10 January 2023 Acquired 51% of Zywie Ventures Private Limited ("OZiva"), a leading
plant-based, and clean-label consumer wellness brand focused on the need
spaces such as Lifestyle Protein, Hair & Beauty Supplements and Women's
health.
1 May 2023 Sold Suave brand in North America to Yellow Wood Partners LLC. The Suave
beauty and personal care brand includes hair care, skin care, skin cleansing
and deodorant products.
On 1 May 2023, Unilever sold the North America Suave business to Yellow Wood
Partners LLC for €592 million consideration. Profit on this disposal was
€497 million, recognised as a non-underlying item (see note 2).
In addition to the completed transactions above, on 14 June 2023 the Group
announced it had signed an agreement to acquire Yasso, a premium frozen Greek
yogurt brand in the United States. The transaction is expected to be completed
in Q3 2023.
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 the first half of 2023, the
Group repurchased 15,552,684 ordinary shares which are held by Unilever as
treasury shares. Consideration paid for the repurchase of shares including
transaction costs was €753 million which is recorded within other reserves.
(unaudited)
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 2023 and 2022. The Group's cash resources
and other financial assets are shown below.
30 June 2023 31 December 2022 30 June 2022
Current Non-current Total Current Non-current Total Current Non-current Total
Cash and cash equivalents
Cash at bank and in hand 2,790 - 2,790 2,553 - 2,553 2,730 - 2,730
Short-term deposits((a)) 1,804 - 1,804 1,743 - 1,743 2,481 - 2,481
Other cash equivalents((b)) 400 - 400 30 - 30 200 - 200
4,994 - 4,994 4,326 - 4,326 5,411 - 5,411
Other financial assets
Financial assets at amortised cost((c)) 727 352 1,079 772 232 1,004 756 220 976
Financial assets at fair value through other comprehensive income((d)) - 438 438 - 407 407 - 547 547
Financial assets at fair value through profit or loss:
Derivatives 36 31 67 238 51 289 264 60 324
Other((e)) 613 399 1,012 425 464 889 415 459 874
1,376 1,220 2,596 1,435 1,154 2,589 1,435 1,286 2,721
Total financial assets((f)) 6,370 1,220 7,590 5,761 1,154 6,915 6,846 1,286 8,132
(a) Short-term deposits typically have maturity of up to 3 months.
(b) Other cash equivalents include investments in overnight funds and
treasury bills.
(c) 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 €228 million (31 December 2022: €199 million; 30 June 2022:
€195 million).
(d) Included within non-current financial assets at fair value through other
comprehensive income are equity investments.
(e) 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.
(f) 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 2023 As at 31 December 2022 As at 30 June 2022 As at 30 June 2023 As at 31 December 2022 As at 30 June 2022
Financial assets
Cash and cash equivalents 4,994 4,326 5,411 4,994 4,326 5,411
Financial assets at amortised cost 1,079 1,004 976 1,079 1,004 976
Financial assets at fair value through other comprehensive income 438 407 547 438 407 547
Financial assets at fair value through profit and loss:
Derivatives 67 289 324 67 289 324
Other 1,012 889 874 1,012 889 874
7,590 6,915 8,132 7,590 6,915 8,132
Financial liabilities
Bank loans and overdrafts (606) (519) (540) (606) (519) (540)
Bonds and other loans (26,265) (25,136) (30,089) (27,599) (26,512) (31,007)
Lease liabilities (1,428) (1,408) (1,585) (1,428) (1,408) (1,585)
Derivatives (618) (631) (548) (618) (631) (548)
Other financial liabilities (457) (418) (281) (457) (418) (281)
(29,374) (28,112) (33,043) (30,708) (29,488) (33,961)
€ million As at 30 June 2023 As at 31 December 2022 As at 30 June 2022
Level 1 Level 2 Level 3 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 14 3 421 5 3 399 11 3 533
Financial assets at fair value through profit or loss:
Derivatives((a)) - 142 - - 378 - - 505 -
Other 613 - 399 428 - 461 420 - 454
Liabilities at fair value
Derivatives((b)) - (718) - - (784) - - (729) -
Contingent consideration - - (123) - - (164) - - (175)
(a) Includes €75 million (31 December 2022: €89 million; 30 June 2022:
€181 million) derivatives, reported within trade receivables, that hedge
trading activities.
(b) Includes €(100) million (31 December 2022: €(153) million; 30 June
2022: €(181) 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 2022. There were also no
significant movements between the fair value hierarchy classifications since
31 December 2022.
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 2023 and 2022.
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 2022.
10. Dividends
The Board has declared a quarterly interim dividend for Q2 2023 of £0.3700
per Unilever PLC ordinary share or
€0.4268 per Unilever PLC ordinary share at the applicable exchange rate
issued by WM/Reuters on 21 July 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): £0.3700
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam): €0.4268
Per Unilever PLC American Depositary Receipt: US$0.4746
The euro and US dollar amounts above have been determined using the applicable
exchange rates issued by WM/ Reuters on 21 July 2023.
US dollar cheques for the quarterly interim dividend will be mailed on 31
August 2023 to holders of record at the close of business on 4 August 2023.
The quarterly dividend calendar for the remainder of 2023 will be as follows:
Announcement date Ex-Dividend Date Record Date Payment Date
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
(unaudited)
11. Events after the balance sheet date
There are no material post balance sheet events other than those mentioned
elsewhere in this report.
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