• Underlying Sales Growth: 4.2%, with volume growth of 2.9% and price growth of 1.3%.
• Gross Margin: Increased by 280 basis points to 45%.
• Underlying Operating Profit: EUR11.2 billion, up 12.6% from the previous year.
• Underlying Earnings Per Share: EUR2.98, up 14.7%.
• Free Cash Flow: EUR6.9 billion.
• Net Debt: EUR24.5 billion, with net debt to underlying EBITDA at 1.9 times.
• Brand and Marketing Investment: Increased by EUR0.9 billion to 15.5% of group turnover.
• Return on Invested Capital: Increased by 190 basis points to 18.1%.
• Capital Returns to Shareholders: EUR5.8 billion through dividends and buybacks.
• Beauty and Wellbeing Sales Growth: 6.5%, with volume growth of 5.1% and price growth of 1.3%.
• Personal Care Sales Growth: 5.2%, with volume growth of 3.1% and price growth of 2.1%.
• Home Care Sales Growth: 2.9%, with volume growth of 4%.
• Foods Sales Growth: 2.6%, with price growth of 2.4% and volume growth of 0.2%.
• Ice Cream Sales Growth: 3.7%, with volume growth of 1.6% and price growth of 2.1%.

• Warning! GuruFocus has detected 7 Warning Signs with UL.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Unilever PLC (NYSE:UL) executed its Growth Action Plan (GAP) with speed and discipline, leading to improvements across the company, including brand superiority and innovation scale.
• The company achieved a significant increase in gross margin, up by 280 basis points to 45%, exceeding pre-COVID levels in all business groups except Ice Cream.
• Underlying operating profit grew by 12.6% to EUR11.2 billion, supported by a 2.9% underlying volume growth across all business groups.
• Unilever PLC (NYSE:UL) returned EUR5.8 billion in capital to shareholders in 2024 through dividends and buybacks.
• The company is on track to complete the separation of its Ice Cream business by the end of 2025, which is expected to enhance focus and performance.

Negative Points

• The company anticipates a slower start to 2025 with subdued market growth in the near term, particularly affecting Q1 performance.
• Unilever PLC (NYSE:UL) faces challenges in China and Indonesia, with market weakness and the need for significant portfolio and brand proposition adjustments.
• Commodity inflation, particularly in cocoa and dairy, is expected to impact costs, necessitating price increases throughout 2025.
• Despite improvements, the company acknowledges that consistency in performance is not yet fully achieved, with more work needed to navigate turbulent market conditions.
• The restructuring program, while ahead of schedule, involves significant job reductions, with 7,500 roles expected to be cut by the end of 2025.

Q & A Highlights

Q: Can you comment on category growth and market share trends for 2025, and explain the slower start in Q1? Are you comfortable with the 2025 organic growth consensus? A: Hein Schumacher, CEO, explained that market growth slowed in Q4 and is expected to continue in Q1. Beauty and Wellbeing and Personal Care are seeing decent growth, while Home Care and Nutrition are softer. Ice Cream faces pressure due to commodity costs. The growth is expected to be back-weighted, with pricing adjustments taking time. The company remains competitive and aims to stay ahead of the market.

Q: Can you comment on margin phasing and expectations for gross margin and operating profit margin in 2025? A: Schumacher stated that the goal was to achieve a gross margin above pre-COVID levels, which has been reached at 45%. The focus will be on net productivity and premiumizing the portfolio. Fernando Fernandez, CFO, added that material inflation is expected to be around EUR0.78 billion, with pricing adjustments anticipated from Q2 onwards.

Q: How do you plan to maintain volume growth despite potential pricing impacts on elasticity? A: Schumacher emphasized the focus on fewer, bigger, and better innovations, with 12 big bets identified for 2025. The company aims to maintain a healthy balance between volume and price, with continued investment in innovation and market share improvements, particularly in Europe.

Q: What is the outlook for the Ice Cream business and its separation? A: Schumacher confirmed that Ice Cream will be separated by the end of 2025, with listings in Amsterdam, London, and New York. The primary listing will be in Amsterdam. The separation is expected to have a technical effect on margins, but the guidance for 2025 includes Ice Cream as part of the group.

Q: Can you provide more details on cost inflation and its impact on different divisions? A: Fernandez explained that inflation is concentrated in palm oil, surfactants, and cocoa, affecting Beauty and Personal Care, Home Care, and Ice Cream. The impact is more significant in Ice Cream due to cocoa costs. The company is committed to protecting the P&L shape and investing behind brands to offset inflation.

Q: How is the US Personal Care segment performing, particularly deodorants? A: Schumacher noted positive developments in deodorants and skin cleansing, with innovations like whole body deodorants and premium Dove products. The company is seeing improved momentum in the US Personal Care business and expects it to continue.

Q: What are the competitive metrics for Unilever in 2024, and how is the China business performing? A: Schumacher stated that Unilever's market shares improved in the second half of 2024, with a neutral market share situation in the last quarter. The company is gaining share in Well-being, Prestige, and out-of-home Ice Cream. In China, the focus is on resetting the business and adapting to consumer shifts, with positive effects expected in the second half of 2025.

Q: How is the North American market performing, and what is the impact of the Sky program? A: Schumacher highlighted strong performance in North America, driven by Well-being and Personal Care. The Sky program, which uses AI for planning and forecasting, is being rolled out globally and is contributing to improved service and forecasting accuracy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.