Unilever : Q3 2021 Trading statementPDF | 168KB

UNILEVER TRADING STATEMENT THIRD QUARTER 2021

Performance highlights

Underlying performance				GAAP measures
		vs 2020					vs 2020
Third quarter
Underlying sales growth (USG)		2.5%		Turnover		€13.5bn	4.0%
Nine months
USG		4.4%		Turnover		€39.3bn	1.7%
Quarterly dividend payablein December 2021				€0.4268 per share

Third quarter highlights

• Underlying sales growth of 2.5%, with 4.1% price and (1.5)% volume
• Turnover increased 4.0%, including 1.6% from acquisitions net of disposals and (0.1)% from currency
• Quarterly shareholder dividend of €0.4268 per share, ongoing share buyback programme of €3 billion to be completed by the end of the year

Alan Jope: Chief Executive Officer statement

"We have delivered a good quarter against strong comparators, with underlying sales growth of 2.5%. The combination of our strategic choices and focus on operational excellence continue to drive competitive growth. Underlying sales growth is now at 4.4% for the year to date and we are confident that we will be well within our multi- year framework of 3-5% for the full year.

Our strategic choices are having a positive impact on our growth and business momentum

• Priority markets: we have deliveredgood growth across our three priority markets of the US, China and India. South East Asia continues to be impacted by Covid-19, and was the main source of volume decline in the quarter
• Channel: ecommerce grew 38% and is now 12% of our sales
• Portfolio: our high-growth new businesses, Prestige Beauty and Functional Nutrition, each grew double digit and we completed the acquisition of digitally-native skin care brand Paula's Choice
• Brands and innovation: our focus on impactful innovation has led to a step up on measured product superiority and average innovation project size
• Organisation and culture: our organisational agility has allowed us to take rapid pricing actions in response to unprecedented cost inflation

Cost inflation remains at strongly elevated levels, and this will continue into next year. We have and will continue to respond across our categories and markets, taking appropriate pricing action and implementing a range of productivity measures to offset increased costs. We continue to expect that we will deliver in line with our margin guidance of around flat for the full year."

21 October 2021

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

	THIRD QUARTER OPERATIONAL REVIEW
(unaudited)		Third Quarter 2021			Nine Months 2021
	Turnover	USG	UVG	UPG	Turnover	USG	UVG	UPG
		€bn	%	%	%	€bn	%	%	%
Unilever		13.5	2.5	(1.5)	4.1	39.3	4.4	2.1	2.3
Beauty & Personal Care		5.7	2.6	(1.3)	3.9	16.1	3.0	0.7	2.3
Home Care		2.7	1.4	(3.2)	4.8	7.9	3.5	2.1	1.4
Foods & Refreshment		5.1	3.0	(0.8)	3.8	15.3	6.3	3.5	2.7

Our markets: The operating environment across our markets remains volatile, and restrictions on daily life continue around the world to varying degrees, impacting channel dynamics, sales mix and consumer behaviour.

In India as Covid-19 cases reduced and restrictions eased the operating environment improved. In China normalisation has continued, however overall the market remains below pre-Covid-19 levels. Markets are growing in Latin America, driven by price.

North America and Europe markets declined against a high base in the prior year driven by demand for in-home food and hygiene products. Conditions across South East Asia continue to be challenging, with the quarter impacted by lockdown restrictions in the region.

Unilever overall performance: Underlying sales growth was 2.5% with price of 4.1%, which is a step up from the first half of the year as we take pricing action to offset rising commodity and other input costs.

Our three priority markets of the US, India and China each grew strongly. In the US our food solutions, functional nutrition and Prestige Beauty businesses all contributed to growth, whilst in-home food and ice cream declined. We are continuing to see a trend of increased eating away from home and greater offline shopping. China grew high single digit led by volume with broad based growth across divisions. India grew double digit as the country continued to recover from Covid-19 relatedimpacts.

Latin America grew high single digit with strong price and a small decline on volume. Price increases have been taken in response to rising input costs. South East Asian markets were significantly impacted by rising Covid-19 cases and related restrictions, and were the main source of overall volume decline. Europe grew, with price of 2.1%, although volume declined partly due to a strong prior year comparator in Home Care. Ecommerce grew 38% and is now 12% of our sales.

Prestige Beauty and functional nutrition are delivering good growth. Underlying sales in functional nutrition grew double digit in the third quarter with vitamins, minerals and supplements brand OLLY, growing strongly. Prestige Beauty had a strong quarter growing double digit with the return to stores continuing.

Turnover increased 4.0%. There was a positive impact of 1.6% from acquisitions net of disposals and a negative impact of 0.1% from currency-related items.

We completed the operational separation of our tea business on 1 October 2021. We are focused on the next stage for this business which is expected to be either an IPO, sale or partnership.

Beauty & Personal Care

Beauty & Personal Care underlying sales grew 2.6%, with negative 1.3% from volume and 3.9% from price.

Skin care grew high single digit, with double digit growth from our Vaseline brand, and deodorants grew mid-single digit. While skin cleansing saw a step up in pricing, underlying sales declined overallas we lapped significantly increased demand in the prior year related to Covid-19. Hair caregrew low single digit, with mid-single digit price growth and negative volumes. Our Dove hair therapy innovation in North America, which applies state-of-the-art skin care ingredients to hair, continued to perform well. Oral care declined amidst challenging market conditions in South East Asia. Our Prestige Beauty brands grew double digit and vegan brand Hourglass launched its new customisable, refillable Curator eyeshadow palettes. We increased pricing in response to commodity inflation across categories and regions.

Home Care

Home Care underlying sales grew 1.4%, with negative 3.2% from volume and 4.8%from price.

Within fabric care, fabric cleaning grew low-single digit, with mid-single digit underlying price growth and negative volumes. Growth was driven by South Asia and strong price action in Latin America. Volume declined in Europe due to

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

2

1. strong prior year comparator, and in South East Asia as Covid-19 restrictions were imposed. In Brazil growth was supported by the rollout of our "tougher on stains, kinder to the planet" plant-based innovation under the Omo brand. Low single digit growth in fabric enhancers was driven by ongoing market development in South Asia and our Comfort fragrance boosters continued to perform well in China. We lapped high demand for household cleaners during the prior year resulting in high single digit decline in home and hygiene, although we continue to trade ahead of pre- pandemic levels. We took pricing action across the portfolio in response to commodity inflation, particularly in Latin America, South Asia and Turkey.

Foods & Refreshment

Foods & Refreshment underlying sales grew 3.0%, with negative 0.8% from volume and 3.8%from price.

Out of home ice cream grew with Asia and Europe both growing well as countries re-opened, although ongoing travel restrictions and poor weather in Europe means turnover has not yet recovered to 2019 levels. In-home ice cream declined as we lapped very strong growth in the prior period. Cornetto grew double digit supported by the launch of Cornetto Rose, the first ever rose shaped creamy ice cream.

Food solutions grew double digit with China and markets across Europe and Latin America delivering sales above 2019 levels. Consumer demand for in-home food remained strong, although sales in the third quarter were slightly down as we lapped a strong prior period of growth. Knorr and Hellmann's both grew mid-single digit supported by superior product performance and investments in sustainable packaging.

We have continued to take pricing action across foods and ice cream in response to commodity inflation.

Tea grew slightly led by pricing in India and Turkey.

	THIRD QUARTER OPERATIONAL REVIEW: GEOGRAPHICAL AREA
		Third Quarter 2021			Nine Months 2021
(unaudited)		Turnover	USG	UVG	UPG	Turnover	USG	UVG	UPG
		€bn	%	%	%	€bn	%	%	%
Unilever		13.5	2.5	(1.5)	4.1	39.3	4.4	2.1	2.3
Asia/AMET/RUB		6.1	2.3	(1.9)	4.2	18.1	5.8	3.5	2.2
The Americas		4.4	4.4	(0.7)	5.2	12.4	4.9	0.9	3.9
Europe		3.0	0.3	(1.8)	2.1	8.8	0.8	0.8	-
		Third Quarter 2021			Nine Months 2021
(unaudited)
	Turnover	USG	UVG	UPG	Turnover	USG	UVG	UPG
		€bn	%	%	%	€bn	%	%	%
Emerging markets		7.7	3.9	(1.4)	5.4	22.7	6.7	3.4	3.3
Developed markets		5.8	0.6	(1.6)	2.3	16.6	1.2	0.4	0.9
North America		2.8	2.0	(0.9)	2.9	7.9	2.4	0.3	2.0
Latin America		1.6	8.7	(0.4)	9.1	4.5	9.2	1.9	7.2

Asia/AMET/RUB

Underlying sales grew2.3%with 4.2%from priceand volume declineof 1.9% heavilyimpacted by South East Asian markets. India grew doubledigit, balanced between volume andprice. We havecontinued to pricein India in the third quarter to counter rising input costs. In Chinahigh single digit volume-led growth was broad basedacross divisions, with food service continuingto tradeabove2019levels. In Turkeydoubledigit growth continued with priceand volume both positive. South EastAsian markets declined in the quarter as many Covid-19restrictions werereimposed following high case rates. Indonesiacontinues to be a challenging market with strong competition.

The Americas

Underlying sales growth in NorthAmericawas 2.0% with negative0.9%from volumeand 2.9%fromprice. As we lapped a period of very highdemand for in-homefoodand hygiene products in the prior year, volumes declinedslightly. Our Prestige Beauty andfoodsolutionsbusinesses each grew double digit. We tookpricingactionin responseto commodityinflation.

Latin Americagrew 8.7% with positivepricingof 9.1%, and a slight volumedeclineof 0.4%. In responseto high commodity inflation combinedwith currencydevaluation, we delivered doubledigit underlying price growth in Brazil and volume declined. Mexicoand Argentinagrew bothpriceand volume.

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

3

Europe

Underlying sales grew 0.3% with price of 2.1% and volume declined 1.8%. Pricing actions are being taken in countries across Europe. Volume decline was led by Home Care which was lapping high single digit growth in the third quarter of 2020. Italy grew with a good performance in ice cream after a decline in the prior year and the Netherlands also grew, with foods and Home Care delivering mid-single digit growth. The UK declined low single digit as we lapped strong growth in the third quarter of 2020, particularly in Foods & Refreshment. Germany declined mid-singledigit, with a slow ice cream quarter due to poor weather and a declining Beauty & Personal Care market.

COMPETITION INVESTIGATIONS

As previously disclosed, Unilever is involved in a number of ongoing investigations and cases by national competition authorities, including those within Italy, France, Greece, South Africa and Turkey. 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 Board has declared a quarterly interim dividend for Q3 2021 of £0.3598 per Unilever PLC ordinary shareor €0.4268 per Unilever PLC ordinary shareat the applicable exchange rate issued by WM/Reuters on 19 October 2021.

Per Unilever PLC ordinary share (traded on the London Stock Exchange):	£ 0.3598
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam):	€ 0.4268
Per Unilever PLC American Depositary Receipt:	US$ 0.4975

The euro and US dollar amounts above have been determined using the applicable exchange rates issued by WM/Reuters on 19 October 2021.

US dollar cheques for the quarterly interim dividend will be mailed on 1 December 2021 to holders of record at the close of business on 5 November 2021.

The quarterly dividend calendar for the remainder of 2021 will be as follows:

Announcement

Ex-Dividend Date

Record Date

Payment Date

Date

Q3 2021 Dividend

21 October 2021

4 November 2021

5 November 2021

1 December 2021

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

4

SEGMENT INFORMATION - DIVISIONS

(unaudited)

			Beauty &
					Home			Foods &
	Third Quarter		Personal					Total
				Care			Refreshment
			Care
	Turnover (€ million)
	2020	5,348		2,591		4,991	12,930
	2021	5,691		2,635		5,127	13,453
	Change (%)	6.4		1.7		2.7	4.0
	Impact of:
	Acquisitions (%)	3.9		-		-	1.6
	Disposals (%)	-		-		(0.2)	(0.1)
	Currency-related items (%), of which:	(0.2)		0.3		(0.1)	(0.1)
	Exchange rateschanges (%)	(0.4)		(0.2)		(0.4)	(0.4)
	Extreme price growthin hyperinflationary markets* (%)	0.2		0.5		0.4	0.3
	Underlying sales growth (%)	2.6		1.4		3.0	2.5
	Price* (%)	3.9		4.8		3.8	4.1
	Volume (%)	(1.3)		(3.2)		(0.8)	(1.5)
			Beauty &			Home			Foods &
	Nine Months		Personal					Total
				Care			Refreshment
			Care
	Turnover (€ million)
	2020		15,948		7,912		14,762	38,622
	2021		16,108		7,826		15,336	39,270
	Change (%)		1.0		(1.1)		3.9	1.7
	Impact of:
	Acquisitions (%)		2.8		-		1.1	1.6
	Disposals (%)		-		(0.1)		(0.2)	(0.1)
	Currency-related items (%), of which:		(4.6)		(4.3)		(3.1)	(4.0)
	Exchange rateschanges (%)		(4.8)		(4.6)		(3.4)	(4.2)
	Extreme price growthin hyperinflationary markets* (%)		0.2		0.3		0.2	0.2
	Underlying sales growth (%)		3.0		3.5		6.3	4.4
	Price* (%)		2.3		1.4		2.7	2.3
	Volume (%)		0.7		2.1		3.5	2.1

• Underlying price growth in excess of 26% per year in hyperinflationary economies hasbeen excluded when calculating the price growth in the tables above, and an equal and opposite amount isshown 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 sales growth (USG), underlying volume growth (UVG) and underlying price growth (UPG) are non-GAAP measures (see page 7)

5