Unilever : Q1 2021 trading statementPDF | 221KB

UNILEVER TRADING STATEMENT FIRST QUARTER 2021

Performance highlights

Underlying performance			GAAP measures
	vs 2020				vs 2020
Underlying sales growth (USG)	5.7%	Turnover		€12.3bn	(0.9)%
Quarterly dividend payablein June 2021			€0.4268 per share

• Underlying sales growth of 5.7%, with 4.7% volume and 1.0% price
• Turnover decreased by 0.9%, driven by a negative currency related impact of 8.0%
• Quarterly shareholder dividend of €0.4268 per share and share buyback programmeof up to €3 billion to commence in May

Alan Jope: Chief Executive Officer statement

"Unilever has madea goodstart to the year. Our focus on operational excellence, innovation, and purposefulbrands is continuing to strengthen competitiveness and has deliveredunderlying sales growth of 5.7%for the quarter.

We are drivingthe evolution of our portfolio, with stronggrowth in Prestige Beautyand Functional Nutrition. The operationalseparation of our Tea business is on track. We arealsomaking good progress in creatinga new unit, Elida Beauty, comprisinga number of our smaller beauty andpersonalcarebrands.

We are confidentthat we will deliver underlying sales growth in 2021within our multi-year framework of 3-5%, with the first half aroundthe top of this range. We expectto increaseunderlyingoperating margin slightlyfor the fullyear, though with a decline in the first half drivenby Covid-19impacts, higher cost inflation andincreasedmarketingspendover the prior year. Following another year of strongcash flow delivery, Unilever's Board has approved a sharebuybackprogramme of up to €3 billion.

We are committed to delivering superior long-term financial performancethrough our sustainable business model, which we believehas never been morerelevant thanit is today."

29 April 2021

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

	FIRST QUARTER OPERATIONAL REVIEW
(unaudited)			First Quarter 2021
	Turnover	USG	UVG	UPG
		€bn	%	%		%
Unilever		12.3	5.7	4.7		1.0
Beauty & Personal Care		5.0	2.3	1.5		0.8
Home Care		2.6	5.9	6.5		(0.6)
Foods & Refreshment		4.7	9.8	7.3		2.3

Our markets: The operating environment remains volatile across our broad geographic footprint. Fluctuating Covid-19 case levels and markets entering and exiting lock-downs continue to impact consumer behaviour and channel dynamics. In North America and Europe strong demand for in home food has continued, while demand for most beauty and personal care categories has remained subdued. Conditions in China are normalising. Economic activity in India increased in the first quarter, although parts of the country have recently returnedto lock-down as a result of sharply rising Covid-19 cases. Markets grew in Latin America in the first quarter, despite macroeconomic conditions remaining volatile, and market conditions in South East Asia remain challenging.

Unilever overall performance and outlook: We continued to focus on operationalexcellence, which is delivering improved competitiveness. Underlying sales growth was 5.7% with 4.7% from volume and 1.0%from price. Emerging markets grew 9.4% driven by strong double-digit growth in China and India, following strict lock-downs in the prior year. Latin America grew high-single digit while South East Asia declined, driven by Indonesia. Developed markets grew 0.8%, with mid-single digit growth in North America offset by a decline in Europe, where volumes were impacted by lock-downs and we began to lap higher demand for food and hygiene products. E-commerce continued to perform strongly, with underlying sales growth of 66%, and represented 11%of turnover.

Turnover decreased 0.9%. There was a negative impact of 8.0% from currency related items. Acquisitions net of disposals, including acquired functional nutrition brands Horlicks, Liquid I.V. and SmartyPants Vitamins, had a positive impact of 1.9%.

In 2021 we expect to deliver underlying sales growth within our multi-year framework of 3-5%, with the first half at around the top of this range. We expect underlying operating margin to increase slightly in the full year, following a decline in the first half which is driven by a number of factors. Covid-19 continues to cause additional supply chain costs and a negative margin mix. Commodity and freight costs have increased further and we will be lapping lower marketing spend in the first half of last year.

We will commence a share buyback programmeof up to €3 billion in May, in one or more tranches, to becompleted bythe end of the year. This reflects our strong cashflowdelivery andbalance sheet position, andis in line with our capital allocation framework. A further announcement willbe provided before trading begins.

The operational separation of Unilever's Tea business, excluding India and Indonesia and the partnership interests in the ready-to-drink tea joint ventures, is progressing well and is expected to complete this year. We continue to evaluate the most value creating model, including an IPO, a demerger, a joint venture, or a disposal, and we have also appointed an external CEO to lead this business into its next phase. The business that will be separated generated revenues of around €2 billion in 2020.

The separation of a number of smaller beauty and personal care brands is also underway. These brands, which are predominantly sold in Europe and North America, will operate under the name Elida Beauty and will benefit from dedicated management focus. The brandsincludeQ-Tips,Caress,Tigi, Timotei, Impulse and MonSavon, and together generatedrevenues of around €0.6billion in 2020.

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

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Beauty & Personal Care

Beauty & Personal Care underlying sales grew 2.3%, with 1.5% from volume and 0.8% from pricing.

Skin cleansing grew mid-single digit, with growth in the first two months followed by a decline in March as we started lapping a sharp increase in demand for hygiene products. We rolled out Dove's Care & Protect innovation across the Americas, Europe and India, with new technology bringing together hygiene and long lasting moisturisation across formats. Skin care and hair care both grew mid-single digit. In hair, wash & care growth was driven by strong performance in China and India, which was partly offset by a decline in styling, as restricted living continued to weigh on usage occasions. Deodorants declined high-single digit as the deodorants market was also impacted by lower consumer usage. Our Prestige business grew strong double digit, helped by the gradual restocking and reopening of brick and mortar stores in the US. Our Hourglass brand launched a 100% vegan red lipstick formulated with a patent- pending pigment replacing the industry standard, which is produced from crushed beetles.

Home Care

Home Care underlying sales grew 5.9%, with 6.5% from volume and negative price of 0.6%.

Fabric cleaning and fabric enhancing grew mid-single digit, led by recovery in India as consumers returned to offices and schools. We continued the rollout of our new "tougher on stains, kinder to the planet" plant-based innovation under the Omo brand. Home & hygiene grew mid-single digit as demand for surface cleaners remained elevated, albeit declining in March as we started lapping high growth at the start of the pandemic in 2020. We expanded the rollout of our Domestos multi-surface germ kill innovation, launching new formats into India, Turkey and the UK. Price declined after we passed on the benefits of lower commodity costs in the second half of 2020, and due to promotional activity in Europe.

Foods & Refreshment

Foods & Refreshment underlying sales grew 9.8%, with 7.3% from volume and 2.3% from pricing.

Out of home ice cream returned to growth, with strong performance in emerging markets offsetting declines in Europe due to ongoing lock-down restrictions which have impacted the buy-in for the summer season. In-home ice cream grew double digit as demand for food consumed at home remained high. The Magnum brand launched its new Double Gold Caramel Billionaire innovation in stick and pint formats. Tea saw volume and price growth.

Despite in-home foods seeing a decline in March, as we lapped a spike in demand in the prior year, sales in the quarter were up mid-single digit as consumers continued to eat more at home due to restricted living conditions. The food solutions business grew low single digit, with growth in China offsetting declines in markets impacted by channel closures. Our Hellmann's brand grew double digit and communicated its purpose to fight food waste with the brand's first ever advert during the US Super Bowl.

Price growth of 2.3% was led by tea, as we increased prices in India in response to significant commodity inflation. In addition, we took strong pricing action in foods and ice cream in Latin America, following high inflation and currency devaluation.

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

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FIRST QUARTER OPERATIONAL REVIEW: GEOGRAPHICAL AREA
(unaudited)			First Quarter 2021
Turnover		USG		UVG	UPG
	€bn		%		%	%
Unilever	12.3		5.7		4.7	1.0
Asia/AMET/RUB	5.9		9.9		8.6	1.2
The Americas	3.8		5.3		2.8	2.5
Europe	2.6		(2.3)		(0.7)	(1.6)
			First Quarter 2021
(unaudited)
Turnover		USG		UVG	UPG
	€bn		%		%	%
Developed markets	5.0		0.8		1.1	(0.4)
Emerging markets	7.3		9.4		7.3	2.0
North America	2.4		4.3		3.3	0.9
Latin America	1.4		7.2		1.9	5.1

Asia/AMET/RUB

Underlying sales grew9.9%, with 8.6%from volume and1.2%from price. Indiaand Chinaeach grew strongdoubledigit, against a backdropof strict lock-downmeasures which impacted the prior year. Growth in China was broad based. Sales in our food solutions business returned to pre-Covid-19 levels for the quarter and therapid launchof new innovations, such as Cornetto's premium rose range, helpedice cream grow doubledigit. In South Asia, we saw good performance fromour winter skin careportfolio, while Horlicks, which is not yet includedin underlyingsales growth, grew well. In responseto commodity inflation we increased prices in severalcategories in SouthAsia, includingtea andskin cleansing. In South East Asia, Indonesia declinedhigh singledigit, driven byhome andpersonal carecategories, andThailand declined slightly as tourism remained restricted. The Philippines grew high singledigit, led by foods, as we lappeda periodof strictlock-down in the prior year. Turkey grewboth volume andprice.

The Americas

Underlying sales growth in North America was 4.3%, with 3.3% from volume and 0.9% from price. Growth was driven by continued demand for foods consumed at home. Functional nutrition brand Olly, acquired in 2019, grew strong double digit. Our Prestige brands grew double digit, helped by the gradual reopening of the health and beauty channel, whilst demand for beauty and personal care products remained weak overall and we began to lap a spike in demand for food and hygiene products.

Latin Americasaw a competitive performance, growing7.2%with 1.9%from volume and 5.1%fromprice. We took strong pricing actions as we respondedto commodityinflation andcurrencydevaluation. Price-ledgrowth was high-singledigit in Braziland low-singledigit in Mexico, both with marginallynegativevolumes. In Argentina, which remained hyperinflationary, high-single digit volumegrowth wasdrivenby food andhygieneproducts. Consumer value-orientated innovations, such as six-times concentrateddilutablelaundryliquids and Savital's anti-dandruff shampoo, performed well across the region.

Europe

Underlying sales declined 2.3% with volume declining 0.7% and price down 1.6%. Negative volumes were driven by a decline in our food solutions business and lower demand for personal care products due to ongoing lock-downs in markets such as the UK and Germany. Volumes were also impacted by lapping higher demand for in-home food and hygiene products in some markets. This was partially offset by double digit volume growth for ice cream, driven by in- home ice cream consumption. Price declined in a deflationary retail environment.

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, Unilever is involved in a number of ongoing investigations and cases by national competition authorities, including those within Italy, 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.

DIVIDENDSAND SHARE BUYBACKS

The Board has declared a quarterly interim dividend of Q1 2021 of £0.3710per Unilever PLC ordinaryshare or €0.4268 per Unilever PLC ordinary share at the applicable exchange rate issued by WM/Reuters on 27 April 2021.

The following amounts will be paid in respect of this quarterly interim dividend on the relevant payment date:

Per Unilever PLC ordinary share (traded on the London Stock Exchange):	£ 0.3710
Per Unilever PLC ordinary share (traded on Euronext in Amsterdam):	€ 0.4268
Per Unilever PLC American Depositary Receipt:	US$ 0.5159

The euro and US dollar amounts above have been determined using the applicable exchange rates issued by WM/Reuters on 27 April 2021.

US dollar cheques for the quarterly interim dividend will be mailed on 10 June 2021 to holders of record at the close of business on 21 May 2021.

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

Announcement

Ex-Dividend Date

Record Date

Payment Date

Date

Q1 2021 Dividend

29 April 2021

20 May 2021

21 May 2021

10 June 2021

Q2 2021 Dividend

22 July 2021

5 August 2021

6 August 2021

8 September 2021

Q3 2021 Dividend

21 October 2021

4 November 2021

5 November 2021

1 December 2021

1. share buyback programmeof up to €3 billion will commence in May 2021, in one or more tranches, to be completed by the end of the year. A further announcement will be provided before trading begins.

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