Unilever at CAGNY
Graeme Pitkethly & Richard Williams
18th February 2020
Richard Williams
Unilever at CAGNY
18th February 2020
Safe harbour statement
This announcement may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as 'will', 'aim', 'expects', 'anticipates', 'intends', 'looks', 'believes', 'vision', or the negative
of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Unilever Group (the 'Group'). They are not historical facts, nor are they guarantees of future performance.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever's global brands not meeting consumer preferences; Unilever's ability to innovate and remain competitive; Unilever's investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth including to plastic packaging; the effect of climate change on Unilever's business; 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 2018 and the Unilever Annual Report and Accounts 2018.
3
Unilever today
190 countries
Developed
markets
40% Emerging markets
60%
2.5 billion consumers | 85% leading positions |
Home | |
Care | Beauty & |
21% | |
Personal | |
Care | |
Foods & | 42% |
Refreshment | |
37% |
80% local leaders. #1 CPG employer in 52 countries
4
2019 Results
Growth | Margin | Earnings | Cash |
Underlying Sales Growth | Underlying Operating Margin | Underlying EPS | Free Cash Flow |
+2.9% | +50 bps | +8.1% | €6.1bn |
+1.2% | +30 bps | +5.8% | +€0.7bn |
Underlying Volume Growth | Gross Margin | Constant Underlying EPS | vs 2018 |
5
Progress against 2020 strategic plan
USG in 3-5% range
Simpler, faster organisation
Accelerated margin progression
Faster portfolio evolution
Simpler capital/legal structure
Increased leverage & returns
3% CAGR 2017-19
Closer to the markets, delayered
UOM 16.4% → 19.1%, >€6bn savings 2017-19
BPC increased to > 40% of portfolio New Prestige business built to >€600m
Preference shares cancelled, trust office closed,
unification withdrawn
High teens ROIC, net debt at 2X
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Graeme Pitkethly
Unilever at CAGNY
18th February 2020
2019: Setting foundations
Jan | April | July | Dec |
Management changes
Accelerate Turnaround
growth growth
Sustain growth Unlock | ||
margin | ||
One Strategy | Delayering | Roles by cell |
Role changes
Promotion
External
Top line growth: our diagnosis
- Focus on fundamentals
- Consistent execution
- More operational grip
- Improve channel capability
- Strengthen innovation, particularly BPC
- Greater leverage from emerging market strongholds
- Bolder portfolio shift
9
Today's themes
FOCUSED | POWERING OUR | ACTIVE |
EXECUTION | MARKETS | PORTFOLIO |
MANAGEMENT |
5 growth fundamentals | Emerging markets | Reshaping the business |
10
Today's themes
FOCUSED | POWERING OUR | ACTIVE |
EXECUTION | MARKETS | PORTFOLIO |
MANAGEMENT |
5 growth fundamentals | Emerging markets | Reshaping the business |
11
2020 growth fundamentals
1
2
3
4
5
Mental and physical availability in key cells
Product superiority
Decisive choices
Focused channel capability
100% product & purpose integration
€2bn+ savings p/a
12
Improved penetration
Product | Product | Advertising |
availability | superiority | superiority |
Increasing mental and physical availability
13
India penetration
Surf Excel penetration | Skin cleansing penetration |
2016 | 2017 | 2018 | 2019 | 2016 | 2017 | 2018 | MAT 2019 |
Laundry business results | Skin cleansing business results | ||
CAGR | While driving | Two biggest | |
10% | USG% | ||
brands: | |||
market | |||
development | Declining | ||
through | |||
penetration | |||
premiumization | |||
14
Impactful innovation - rebalancing
GLOBAL: Dial up | LOCAL:More choiceful |
15
Impactful innovation - technology led
2019: > 10 markets
Premium pricing
~150 index
Margin accretive
Rexona Clinical Protection
> 3% Market share of
deos market in Y1
16
Design for channel
Capturing growth in fast growing channels
- Focused channel capability
- Future fit portfolio
- Agile R&D and Net Revenue Management
- Execution
- Design for complexity & agile supply chain
- Content & demand creation
- Data driven marketing driving conversion
E-commerce | Health & beauty |
Out of home | Professional |
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Purposeful brands
% of global adult population | |
2020 = 55% | % of global adult population |
2020 = 45% | |||
75 | 72 | 63 | 56 |
Gen Z | Millennial | Gen X | Baby boomers |
% motivated to be brand loyal to brands making positive impact
Source: GlobeScan, Healthy & Sustainable Living Report 2019 / UN population data
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Fuel for growth
Robust pipeline of savings programmes
€2bn | |||||||
p.a. | |||||||
Change | Grow | ||||||
Programmes | Power | ||||||
Run | |||||||
Savings per year | |||||||
2017 - 2019 | |||||||
Enabled through €3.5bn restructuring spend |
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Reinvesting in the business
BrandsInnovation
Brand Power
76%
Stable or
increasing
Brand Power - Kantar Millward Brown, MAT Q4 2019
Capabilities
>1500
Digital talent recruited in 2018/19
>500
Talent in Digital Hubs & People Data Centres
>20U-Studios
>30People Data Centres
Piloting Insight Hubs
20
Today's themes
FOCUSED | POWERING OUR | ACTIVE |
EXECUTION | MARKETS | PORTFOLIO |
MANAGEMENT |
5 growth fundamentals | Emerging markets | Reshaping the business |
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Future market growth
16 emerging markets > €500m | 21 emerging markets €100 to €500m |
€bn
5
3
2
1 | ||
0 | ||
>€500m | Turnover | >€100m |
>60%of global GDP growth to 2030 | Seeding the future |
GDP growth (PPP adjusted) 2020 - 2030. Source: IMF, IFS | 22 |
EM powerhouses
India: 9% of turnover
10%
5% | Softer | ||
0% | 2020+ | ||
2014-16 | 2017-19 | ||
Market growth | Our view |
Indonesia: 5% of turnover
10%
5%
Stronger
0%
2014-16 | 2017-19 | 2020+ |
Market growth | Our view |
Brazil:6% of turnover
15%
10%
Stronger
5% | |||
0% | 2020+ | ||
2014-16 | 2017-19 | ||
Our view | |||
Market growth | |||
China:5% of turnover
5%
?
0%
2014-16 | 2017-19 | 2020+ |
Our view | ||
Market growth | ||
23 |
Nielsen data, China adjusted for non-tracked channels
Managing through volatility
Crises are all different | Rapid responses | Competitive growth |
USG 6%
Market growth
20152019
Hyper recession | Value brands | Brazil USG % |
Argentina:
Volume ahead of the market
Hyper stagflation | Counter-cyclical premium |
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Developing our route to market
• Brazil B2B hub focused on small retailers
• Multi-industry marketplace
• Growing >50%
• Rolling out to Argentina
25
Today's themes
FOCUSED | POWERING OUR | ACTIVE |
EXECUTION | MARKETS | PORTFOLIO |
MANAGEMENT |
5 growth fundamentals | Emerging markets | Reshaping the business |
26
Capital allocation
Operational investment | Portfolio reshape | Returns to shareholders | |||
• | Brands | • | Bolt on acquisitions | • | Dividends |
• | Innovation | • | Large acquisitions | • | Event driven share |
• | Capital expenditure | • | Disposals | buybacks | |
• | Restructuring | Regular share buybacks | |||
• | |||||
- Capabilities
- Sustainability
- Minority buybacks
Net debt leverage ratio of approximately 2X
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Portfolio reshape
Beauty & Personal Care
% Turnover
2009 BPC
30%
2019 BPC
42%
Foods & Refreshment | Home Care |
% Turnover | % Turnover |
2009 | F&R | 2009 | HC |
53% | 17% | ||
2019 | F&R | 2019 | HC |
37% | 21% | ||
€11bn outflow, €8bn inflow
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Maintaining high ROIC while changing the portfolio
19.2%
ROIC % | 18.5% | 18.1% | 19.2% |
No of | 4 | 9 | 7 | 8 |
acquisitions |
Acquisition examples
2016 | 2017 | 2018 | 2019 |
2018 restated for IFRS 16
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Future growth categories
€600m
€350m
2019
Double
digit
growth
201520172019
Luxury beauty | Health, wellness, |
personal nutrition | |
Focus skin care | Focus VMS |
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Global tea
31
Today's themes
FOCUSED | POWERING OUR | ACTIVE |
EXECUTION | MARKETS | PORTFOLIO |
MANAGEMENT |
5 growth fundamentals | Emerging markets | Reshaping the business |
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Unilever at CAGNY
Graeme Pitkethly & Richard Williams
18th February 2020
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Unilever plc published this content on 18 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 February 2020 15:23:04 UTC