Unilever : 2019 Q3 trading statement

UNILEVER TRADING STATEMENT THIRD QUARTER 2019

Performance highlights

Underlying performance			GAAP measures
	vs 2018				vs 2018
Third quarter
Underlying sales growth (USG)(a)	2.9%	Turnover		€13.3bn	5.8%
Nine months
USG(a)	3.4%	Turnover		€39.3bn	1.5%
Quarterly dividend payable in December 2019			€0.4104 per	share

(a) Price growth in excess of 26% per year in hyperinflationary economies is not included in these amounts. See page 7 for more details.

Third quarter highlights

• Underlying sales growth 2.9% with volume 1.4% and price 1.5%
• Emerging markets underlying sales growth 5.1% with volume 2.2% and price 2.8%
• Turnover increased 5.8% which included a positive impact of 2.3% from currency and 0.8% from acquisitions

Alan Jope: Chief Executive Officer statement

"We have maintained momentum in the quarter, with a good balance between volume and price. Emerging markets and Home Care have been the key growth drivers. We will step-up competitive top line performance through innovation and portfolio evolution to serve the faster growing geographies and channels.

We are committed to delivering superior long-term financial performance and balanced, compound growth of the top and bottom line through our sustainable business model. We are taking action to remain relevant to the consumer of the future, such as setting stretching goals on plastic use which we recently announced.

For the full year, we continue to expect underlying sales growth to be in the lower half of our multi-year3-5% range, an improvement in underlying operating margin that keeps us on track for the 2020 target and another year of strong free cash flow."

17 October 2019

Underlying sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

	THIRD QUARTER OPERATIONAL REVIEW: DIVISIONS
(unaudited)			Third Quarter 2019					Nine Months 2019
	Turnover	USG*		UVG	UPG*		Turnover		USG*		UVG		UPG*
		€bn	%		%	%		€bn		%		%		%
Unilever		13.3	2.9		1.4	1.5		39.3		3.4		1.3		2.1
Beauty & Personal Care		5.6	2.8		2.1	0.7		16.2		3.3		1.9		1.5
Home Care		2.7	5.4		3.2	2.1		8.1		7.0		2.9		4.0
Foods & Refreshment		5.0	1.7		(0.2)	1.9		15.0		1.5		(0.1)		1.7

• Wherever referenced in this announcement, USG and UPG do not include price growth in excess of 26% per year in hyperinflationary economies. See pages 5 - 7 for further details.

Our markets: In Europe and North America growth remained low. South East Asian markets continued to grow well, whilst growth in India softened further and China slowed a little. In Latin America the economic environment remains difficult.

Unilever overall performance: Underlying sales growth was 2.9% with 1.4% from volume and 1.5% from price. As previously announced, this included 30bps growth from price in hyperinflationary economies (see page 9). Emerging markets continued to grow well at 5.1% with strong growth across South East Asia. Growth in India remained stable and competitive in a slowing market. In Latin America, Brazil grew modestly against a strong comparator which included some recovery from the truckers' strike. We also lapped a strong ice cream season in Europe.

Turnover increased 5.8% driven by sales growth, a positive impact from acquisitions net of disposals and a positive impact from currency.

Beauty & Personal Care

Beauty & Personal Care underlying sales grew 2.8%, with 2.1% from volume and 0.7% from price.

Deodorants performed well, with continued success from the roll out of the Rexona Clinical range, based on our new patented anti-perspirant technology. In skin care, innovations including Pond's Glow Up cream, a hybrid product across skin care and makeup, saw good performance. Skin cleansing saw modest growth, with negative pricing as commodity prices remained weak. Growth in emerging markets was helped by activations such as the extension of Clear Men into skin cleansing in China. Competitive intensity remained high in hair care, in particular in the US and China where we continue to focus on innovating and increasing market activity. This includes developing on-trend new formats such as Love Beauty and Planet's shampoo and conditioner bars, which cater to consumer demand for reduced packaging. Our prestige brands, such as Dermalogica, Hourglass and Living Proof, continue to perform well.

Home Care

Home Care underlying sales grew 5.4%, with 3.2% from volume and 2.1% from price.

Home and hygiene saw strong growth momentum, with hand dishwash a key driver both under the Sunlight brand and in white spaces like Brazil under the Brilhante brand and China under Omo. Cif surface cleaners grew double digit, helped by natural variants and new concentrated eco-refills which launched in Europe. Good growth in fabric sensations was driven by our strategy to trade up consumers through offering products with more benefits. In India we launched Love and Care, created for premium fabrics such as silk and fine cottons, and in China we launched Love Home and Planet which is performing well. Growth in fabric solutions was somewhat muted, impacted by a strong comparator due to some recovery from the Brazil truckers' strike in 2018 and challenging conditions in Africa. We continue to focus on developing our markets, with liquid formats in emerging markets a key driver. Our clean and green brand Seventh Generation saw good performance across all channels.

Underlying sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

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Foods & Refreshment

Foods & Refreshment underlying sales grew 1.7%, with volumes down 0.2% and pricing of 1.9%.

The volume decline was driven by ice cream due to a strong comparator from particularly good weather in the prior year in Europe. Overall ice cream grew slightly, with an improved performance in the US. Tea saw modest growth driven by our ongoing focus on premium black tea, black tea in emerging markets and fruit and herbal variants. This growth was partially offset by subdued consumer demand for black tea in developed markets. Herbal brand Pukka grew well, while in India our efforts to develop the green tea market with new Lipton variants are driving share and penetration levels for the category.

We have returned dressings to competitive growth. Hellmann's performed well and premium brand Sir Kensington's grew strongly, with its mayonnaise offering supplemented by a new salad dressings range. In savoury, Knorr continues to modernise and develop offerings that cater to demand for more natural and convenient products, including the launch of wet soups in France.

	THIRD QUARTER OPERATIONAL REVIEW: GEOGRAPHICAL AREA
			Third Quarter 2019					Nine Months 2019
(unaudited)		Turnover	USG*		UVG	UPG*		Turnover		USG*			UVG			UPG*
		€bn	%		%	%		€bn		%		%		%
Unilever		13.3	2.9		1.4	1.5		39.3		3.4		1.3		2.1
Asia/AMET/RUB		6.1	5.6		3.1	2.5		18.3		6.0		2.9		3.0
The Americas		4.2	1.5		(0.2)	1.8		12.2		2.5		(0.1)		2.6
Europe		3.0	(0.3)		0.5	(0.9)		8.8		(0.5)		-		(0.5)
			Third Quarter 2019					Nine Months 2019
(unaudited)
	Turnover	USG*		UVG	UPG*		Turnover		USG*		UVG		UPG*
		€bn	%		%	%		€bn		%		%		%
Emerging markets		7.8	5.1		2.2	2.8		23.4		6.1		2.4		3.6
Developed markets		5.5	(0.1)		0.3	(0.4)		15.9		(0.5)		(0.3)		(0.2)
North America		2.4	0.3		(0.3)	0.6		7.0		0.2		(0.5)		0.6
Latin America		1.8	3.2		(0.1)	3.2		5.2		5.6		0.3		5.3

• Wherever referenced in this announcement, USG and UPG do not include price growth in excess of 26% per year in hyperinflationary economies. See pages 5 - 7 for further details.

Asia/AMET/RUB

Underlying sales grew 5.6% with a balance between volume of 3.1% and price of 2.5%. Good growth in South East Asia was volume driven, with Indonesia, Vietnam and the Philippines performing strongly across all divisions. Despite a market slowdown in India, growth in South Asia was strong and ahead of markets. Turkey and the Middle East grew double digit, while Africa saw a difficult quarter in volatile economic conditions.

The Americas

Underlying sales growth in North America was positive, helped by price growth. Momentum improved in Foods & Refreshment as dressings returned to competitive growth. In Beauty and Personal Care skin care grew well although performance was held back by a decline in hair care. Seventh Generation and the e-commerce channel continue to perform strongly.

In Latin America underlying sales growth was 3.2%. Argentina and Venezuela remained hyperinflationary and price growth was capped in line with the new definition. Volume decline in Argentina slowed as we continue to outperform in difficult conditions. Momentum in Brazil improved with marginal growth against a comparator that included some truckers' strike recovery.

Europe

Europe declined 0.3% with volumes up 0.5% and price down 0.9% in a retail environment that remains difficult. Eastern Europe grew well across all divisions and we saw good growth in Italy helped by purpose-led activations while the decline in Germany slowed. Ice cream volumes were down as we lapped very good weather in the previous year.

Underlying sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

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COMPETITION INVESTIGATIONS

As previously disclosed, along with other consumer products companies and retail customers, Unilever is involved in a number of ongoing investigations and cases by national competition authorities, including those within Italy, Greece and South Africa. These proceedings and investigations are at various stages and concern a variety of product markets. Where appropriate, provisions are made and contingent liabilities disclosed in relation to such matters.

Ongoing compliance with competition laws is of key importance to Unilever. It is Unilever's policy to co-operate fully with competition authorities whenever questions or issues arise. In addition the Group continues to reinforce and enhance its internal competition law training and compliance programme on an ongoing basis.

DIVIDENDS

The Boards have determined to pay a quarterly interim dividend for Q3 2019 at the following rates which are equivalent in value between the two companies at the rate of exchange applied under the terms of the Equalisation Agreement:

Per Unilever N.V. ordinary share:	€ 0.4104
Per Unilever PLC ordinary share:	£ 0.3576
Per Unilever N.V. New York share:	US$ 0.4516
Per Unilever PLC American Depositary Receipt:	US$ 0.4516

The quarterly interim dividends have been determined in euros and converted into equivalent sterling and US dollar amounts using exchange rates issued by WM/Reuters on 15 October 2019.

US dollar cheques for the quarterly interim dividend will be mailed on 4 December 2019 to holders of record at the close of business on 1 November 2019. In the case of the NV New York shares, Netherlands withholding tax will be deducted.

The quarterly dividend calendar for the remainder of 2019 will be as follows:

Announcement

Ex-Dividend Date

Record Date

Payment Date

Date

Q3 2019 Dividend

17 October 2019

31 October 2019

1 November 2019

4 December 2019

Underlying sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

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SEGMENT INFORMATION - DIVISIONS

(unaudited)

Third Quarter		Beauty &		Home	Foods &
	Personal			Total
		Care	Refreshment
		Care
Turnover (€ million)
2018		5,209		2,511	4,809		12,529
2019		5,574		2,704	4,976		13,254
Change (%)		7.0		7.7	3.5		5.8
Impact of:
Acquisitions (%)		1.1		0.1	0.8		0.8
Disposals (%)		-		-	(0.8)		(0.3)
Currency-related items, of which:		2.9		2.1	1.7		2.3
Exchange rates changes (%)		2.1		1.4	(3.4)		(0.2)
Extreme price growth in hyperinflationary markets (%)*		0.7		0.7	5.2		2.4
Underlying sales growth (%)		2.8		5.4	1.7		2.9
Price* (%)		0.7		2.1	1.9		1.5
Volume (%)		2.1		3.2	(0.2)		1.4
Nine Months		Beauty &		Home	Foods &
	Personal			Total
		Care	Refreshment
		Care
Turnover (€ million)
2018		15,230		7,507	15,990		38,727
2019		16,273		8,095	14,957		39,325
Change (%)		6.8		7.8	(6.5)		1.5
Impact of:
Acquisitions (%)		0.8		0.2	0.6		0.6
Disposals (%)		-		-	(9.3)		(3.8)
Currency-related items, of which:		2.6		0.6	0.9		1.5
Exchange rates changes (%)		2.0		(0.2)	(1.7)		0.1
Extreme price growth in hyperinflationary markets (%)*		0.6		0.8	2.6		1.4
Underlying sales growth (%)		3.3		7.0	1.5		3.4
Price* (%)		1.5		4.0	1.7		2.1
Volume (%)		1.9		2.9	(0.1)		1.3

• 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, hyperinflation adjustment, 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 sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

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