Unilever PLC (NYSE:UL) Q3 2023 Earnings Call Transcript October 27, 2023
Hein Schumacher: Good morning, and welcome to Unilever’s Third Quarter Trading Statement and CEO update. Today’s agenda will run as follows. Firstly, Graeme will update you on our quarter three performance and the outlook. I will then share my action plan to lift Unilever’s performance to achieve our full potential. We will leave plenty of time to take your questions at the end. Before I hand over to Graeme, let me share a few key messages with you. The quarter reflected solid progress. Price growth moderated as expected and three of the business groups, Beauty and Well-being, Personal Care and Home Care delivered volume growth. Nutrition and Ice cream, however, continued to see volume declines and weaker overall performance.
In part, this reflects the fact that these business groups are later in the commodity cost inflationary cycle and had to price in the first half of the year, but our performance in Nutrition and Ice cream needs to improve from here. Overall growth remained above our 3% to 5% long-term range. It was driven by the biggest brands and the largest innovations, more of these teams later. I’m not happy with our overall competitiveness. And although there are positions where we are fully competitive and some areas where we have made conscious choices to delist unprofitable volume, there are still too many situations where we are losing share because for example, competition is premiumizing faster or executing better than we are. This is a focus area for my action plan.
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Overall, we remain on track to deliver our full year guidance, and our outlook remains unchanged. Let me hand over to Graham, who will take you through the third quarter trading performance.
Graeme Pitkethly: Thank you very much, Hein. We delivered underlying sales growth of 5.2%, driven by 5.8% of price, with volumes down 0.6%. This leaves year-to-date growth after nine months at 7.7%, with price up by 8.1% and volumes down 0.4%. Price growth has continued to moderate as expected, and as Hein just indicated, Beauty and Well-being and Personal Care are now delivering balanced volume growth and Home Care moved into positive volumes in Q3. Nutrition and Ice cream are still responding to high input cost inflation and also working on portfolio improvement, especially in Europe, and this has resulted in continued negative volumes for those two business groups. I’ll provide more detail in a few minutes, but although the landscape remains volatile, we do see the path back to positive overall volumes at group level as pricing moderates, and this gives us the confidence to maintain our outlook for the full year.
Business winning came in at 38%. Now that’s a drop versus the half year. Our competitiveness is simply not good enough, and Hein will lay out our action plan to address this in just a few minutes. Here is our third quarter underlying sales growth in perspective against the last four quarters. It shows that price growth has moderated as cost inflation eases. Volumes, whilst remaining negative overall, were positive in Beauty and Well-being in Personal Care and in Home Care. They were negative in Nutrition and Ice cream, which, as I said, are later in the inflation cycle with a larger footprint in Europe where we have not yet recovered the full extent of the cost inflation. Now this is important because our profitability in Europe has declined quite significantly, and European margins are now well below the Unilever average.
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