Unilever PLC · LSE:ULVR
Unilever — Investor Day (December 2022)
24 slides from Unilever's investor day presentation, Dec 8, 2022
Slide 1: Investing for growth
Investing for growth Graeme Pitkethly CFO 8 December 2022
Slide 2: Safe harbour statement
Safe harbour statement This presentation may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vi
Slide 3: Investing for growth: What we will cover
Investing for growth: What we will cover 1 Our priority is growth 2 Building blocks for higher growth 3 Disciplined capital allocation 4 Multi-year financial model 3
Slide 4: We are operating in a complex macro environment
We are operating in a complex macro environment Geopolitics Inflation Affordability We are no strangers to volatility with deep experience and capability across 190+ markets 4
Slide 5: 2022 Guidance
Our guidance is unchanged 2022 Guidance Expect FY 2022 USG above 8%, with more negative UVG than in the first nine months Increased investment in BMI, R&D and Capex FY 2022 UOM of 16% Estimated net material inflation of around €2bn in H1 2023 Expect to improve margin in 2023 and 2024 5
Slide 6: We see significant headroom for growth
We see significant headroom for growth Premiumisation Demographics Market development Premium Value Expert at growing >120 <80 markets 15% 30% More More More Mid users usage benefits 55% 80 to 120 % turnover by price index 60% of business 3.4 billion people in Emerging Markets use our products daily
Slide 7: Our priority is sustained, high-quality growth
Our priority is sustained, high-quality growth Sustainably higher Step-up in volume Competitive 5% 5% 2%+ 53% 50%+ 50% 43% 1.4% 3% 3% 2017-19 2020-21 22 MAT 2023+ 2017-21 2023+ 2017-21 2023+ USG CAGR USG CAGR UVG CAGR UVG CAGR 7
Slide 8: Investing for growth: Building blocks
Investing for growth Building blocks
Slide 9: We are now investment-ready, with the building blocks in place
We are now investment-ready, with the building blocks in place Execution Refreshed portfolio New operating model Operationally stronger Higher growth profile Focus of FIVE, power of ONE Brands Harvested Unilever Corporate Centre Innovation Wellbeing Nutrition Beauty & Personal Cream Home Care Care P
Slide 10: Our new operating model creates many advantages
Our new operating model creates many advantages Strategy and investment Incentives drive performance • Business Groups own end-to-end • Business Group focused reward strategy and performance – clear line of sight • Investment aligned to BG strategies • BG performance drives annual bonus – 75% for BG
Slide 11: We have sharper, more distinctive Business Group strategies
We have sharper, more distinctive Business Group strategies Beauty & Personal Home Nutrition Ice Cream Wellbeing Care Care €12bn €13bn €12bn €13bn €8bn Value creation High Growth Growth Growth and Growth Growth and margin ROA Margin Accretive Accretive Dilutive Slightly Dilutive vs UL accretive Posi
Slide 12: With resource allocation across Business Groups by CEO/CFO
With resource allocation across Business Groups by CEO/CFO Performance Capital allocation Target setting management Led by BG strategies BGs held accountable Rolling 3 year by CEO/CFO strategic plan • Portfolio change • Results delivery 1 year • Capital expenditure • Cross-BG resource financial plan
Slide 13: We will step up investment behind growth
We will step up investment behind growth Brand support R&D Overheads Increasing absolute BMI Increasing absolute R&D Targeted investments €6.9bn €0.8bn 2021 2022 2023-25 2021 2022 2023-25 • More working media • Science & technology • Channels • More digital • Digital tools • Business models Stronger
Slide 14: And fuel that through price, mix and increased savings
And fuel that through price, mix and increased savings Underlying price growth Mix & SKU reduction Savings Pricing quickly and Simplifying for growth Productivity experts responsibly 11.2 12.5 20% €2bn €2-2.5bn UPG% 8.3 p.a. p.a. 4.1 4.9 SKU reduction 2022 2023+ Q3'21 Q4 Q1'22 Q2 Q3 Price carry-over
Slide 15: Investing for growth: Capital allocation
Investing for growth Capital allocation
Slide 16: We have a clear and consistent strategy for capital allocation
We have a clear and consistent strategy for capital allocation Operational investment Portfolio reshaping Capital returns • Brand support, R&D, • Bolt-on acquisitions • Dividends new capabilities • Capital expenditure • Portfolio pruning • Share buybacks • Restructuring 16
Slide 17: Delivering strong cash performance
Delivering strong cash performance Stepping up free cash flow Negative working capital >100% >90% +€2bn (3.8) cash Cash <90% conversion 6.7 WC % of turnover (4.5) 5.4 Free cash flow in €bn 3.9 (average) (6.1) (6.1) (7.2) 2013-15 2016-18 2019-21 2013 2015 2017 2019 2021 Cash conversion: FCF as % of n
Slide 18: Our growth model underpinned by disciplined capital allocation
Our growth model underpinned by disciplined capital allocation Operational investment Portfolio reshaping Capital returns Capex % turnover Acquisitions since 2017 Cash dividends €bn Covid 3.9 4.1 4.2 4.3 4.5 3.0 2.8 impact 2.7 2.4 1.8 €17bn invested 2017 18 19 20 21 2017 18 19 20 21 Restructuring €b
Slide 19: Maintaining a solid balance sheet
Maintaining a solid balance sheet Leverage Credit rating Net finance costs Net debt / underlying EBITDA Interest rate % on avg. net debt 2.7 2.6 2.5 2.2 2.2 2x 2.0 1.9 1.9 A1 / A+ 1.5 1.8 2017 18 19 20 21 2017 18 19 20 21 Net finance costs are comprised of finance costs and finance income, including
Slide 20: Other financial metrics 2023+
Other financial metrics 2023+ Investment ROIC Tax Debt Sustaining in Capex mid teens % Net debt/EBITDA >3% of TO around 2x 18.5 18.1 19.2 18.0 17.2 25% Restructuring Net finance costs ca. 1% of TO 2.5 - 3% Underlying tax rate 2017 18 19 20 21 ROIC: UOP after tax / annual average (goodwill, intangibl
Slide 21: Investing for growth: Growth model
Investing for growth Growth model
Slide 22: Multi-year financial framework
Multi-year financial framework Growth Profit Cash Underlying sales growth Modest margin expansion Sustained strong 3 – 5% USG cash flow • Towards upper end • Gross margin-led • 100% cash conversion • Volume step-up • With increased BMI • Competitive Long-term value creation through EPS Attractive di
Slide 23: Key messages
Key messages Our priority is sustained, higher growth An organisation better positioned to deliver that We are investing more, behind sharper Business Group strategies Our value creation model is clear, with disciplined capital allocation Anchored in higher growth, modest margin expansion, high cash
Slide 24: Investing for growth
Investing for growth Graeme Pitkethly CFO 8 December 2022