TIDMULVR
RNS Number : 6838T
Unilever PLC
26 July 2022
2022 FIRST HALF YEAR RESULTS
DELIVERING CONSISTENCY IN CHALLENGING CONDITIONS
Performance highlights (unaudited)
Underlying performance GAAP measures
vs 2021 vs 2021
============== ==================== =================== ============== ====================
First Half
Underlying
sales growth
(USG) 8.1% Turnover EUR29.6bn 14.9%
Underlying
operating Operating
profit EUR5.0bn 4.1% profit EUR4.5bn 1.7%
Underlying
operating Operating
margin 17.0% (180)bps margin 15.2% (200)bps
Underlying Diluted
earnings earnings per
per share EUR1.34 1.0% share EUR1.13 (4.7%)
============== ==================== =================== ============== ====================
Second Quarter
USG 8.8% Turnover EUR15.8bn 17.5%
============== ==================== =================== ============== ====================
EUR0.4268 per
Quarterly dividend payable in September 2022 share
========================================================================= ===========================================
First half highlights
-- Underlying sales growth of 8.1%, with 9.8% price and (1.6)% volume
-- Turnover increased 14.9%, including a currency impact of 5.6%
-- Underlying operating margin of 17.0%, a decrease of 180bps driven by input cost inflation
-- Underlying earnings per share up 1.0%, including a currency impact of 4.9%
-- The billion+ Euro brands, accounting for more than 50% of Group turnover, grew 9.4%
-- EUR750 million share buyback tranche completed on 22 July,
intention to launch second tranche in third quarter
Alan Jope: Chief Executive Officer statement
"Unilever has delivered a first half performance which builds on
our momentum of 2021, despite the challenges of high inflation and
slower global growth. Underlying sales growth of 8.1% was driven by
strong pricing to mitigate input cost inflation, which, as
expected, had some impact on volume. We are now raising our sales
guidance for the year. Underlying operating margin was on track at
17% for the first half.
We have made further progress against our strategic priorities.
We are maintaining strong investment in our brands, supporting 9.4%
underlying sales growth in our billion+ Euro brands. eCommerce
sales now represent 14% of turnover, up from 6% in 2019. Of our
three priority markets, the USA and India again grew strongly,
while sales in China were affected by the lockdowns in the second
quarter. We continue to reshape our portfolio, completing the sale
of the global tea business ekaterra, and the acquisition of
Nutrafol, a leading provider of hair wellness products. Prestige
Beauty and Health & Wellbeing, now 4% of Group turnover, again
grew double-digit.
Our simpler, more category-focused organisation came into effect
as planned on 1 July. This major change to Unilever's operating
model is an important further step that will underpin the delivery
of consistent growth, which remains our first priority. The
challenges of inflation persist and the global macroeconomic
outlook is uncertain, but we remain intensely focused on
operational excellence and delivery in 2022 and beyond."
26 July 2022
OUTLOOK
Our guidance for underlying sales growth in 2022 was previously
at the top end of a range of 4.5% to 6.5%. We now expect underlying
sales growth to be above that range, driven by price with some
further pressure on volume.
We expect net material inflation for the year to remain high at
around EUR4.6 billion with our forecast for the second half largely
unchanged at around EUR2.6 billion. We will continue to invest in
the health of our brands. In the first half, we increased absolute
brand and marketing investment, and we will again invest
competitively in marketing, R&D and capital expenditure in the
second half. Our full year underlying operating margin expectation
remains at 16%, which is within our guided range of 16% to 17%.
The medium-term macroeconomic and cost inflation outlooks are
uncertain and volatile, but delivering growth remains our first
priority. Against this backdrop, we continue to expect to improve
margin in 2023 and 2024, through pricing, mix and savings.
FIRST HALF OPERATIONAL REVIEW
Our market context : High input cost inflation has been
widespread across our markets, and it is expected to remain
elevated in the second half. While Covid-19 restrictions have been
eased in most markets, the lockdown in China affected consumers
particularly in the second quarter.
In the majority of markets in which we operate, market growth
was driven by price which had an impact on market volumes. Food
service and out-of-home ice cream channels benefitted in markets
which reopened after lockdowns in the prior year, although tourism
has not yet returned to pre-Covid levels.
Unilever overall performance : Underlying sales growth in the
first half was 8.1% with 9.8% from price and (1.6)% from volume.
Growth was broad-based across all Divisions. Price has sequentially
stepped up over the past two quarters, reaching 11.2% in the second
quarter, which had, as expected, some negative impact on volume.
This was more pronounced in Home Care, which was particularly
exposed to rising input costs and took the highest pricing action,
leading to underlying sales growth of 10.7%. Beauty & Personal
Care grew 7.5%, driven by price and continued strong growth in
Prestige Beauty and Health & Wellbeing, which is Unilever's
vitamins, minerals and supplements business. Foods &
Refreshment grew 7.3% with slightly negative volume at (0.9)%,
although volumes were flat excluding ekaterra. Ice cream
out-of-home and Unilever Food Solutions showed strong double-digit
growth in the first half, compensating for lower growth of in-home
ice cream.
Emerging markets grew by 10.0% with a 12.1% contribution from
price and volume at (1.8)%, including an estimated adverse impact
of around 70bps from the lockdowns in China. Pricing in Latin
America was strong at 19.1% with volumes contracting by (4.8)%.
South Asia grew strongly through both price and volume. Turkey
delivered double-digit volume growth by managing dynamically
through a high inflation environment. Developed markets increased
by 5.5%, with 6.7% from price and (1.2)% from volume. North America
grew 8.7%, helped by strong performances of dressings and our
businesses in high growth areas such as Health & Wellbeing.
Turnover increased 14.9% to EUR29.6 billion, which included a
currency impact of 5.6% and 0.6% from acquisitions net of
disposals. Underlying operating profit was EUR5.0 billion, up 4.1%
versus the prior year. Underlying operating margin declined by
180bps to 17.0%. Gross margin decreased by 210bps which reflected
the very high inflation in input costs that was only partially
mitigated by the strong pricing action and savings delivery. Brand
and marketing investment was stepped up by EUR0.2 billion in
constant exchange rates, which equated to a 40bps contribution to
margin. Overheads increased by 10bps largely due to increased
investment in business models with a higher overheads
structure.
We completed the announced sale of our global tea business,
ekaterra, on 1 July 2022. On 7 July, we completed the acquisition
of a majority stake in Nutrafol, a leading provider of hair
wellness products, which had been announced on 30 May 2022.
On 23 March, we commenced the first tranche of EUR750 million of
the share buyback programme of up to EUR3 billion. As at 30 June,
total consideration for the repurchase of shares was EUR648
million. This tranche completed on 22 July. It is our intention to
launch a second EUR750 million tranche of our planned share buyback
during the third quarter of 2022. This will be confirmed with a
launch announcement in due course.
In January 2022, we announced a new, simpler, more
category-focused operating model for Unilever organised around five
Business Groups and a technology-driven backbone, Unilever Business
Operations. The reorganisation is on schedule with the new
structure in place on 1 July. We expect it to be achieved within
existing restructuring plans, and to generate around EUR600 million
of cost savings over two years, with the majority in 2023.
FIRST HALF OPERATIONAL REVIEW: DIVISIONS
Second Quarter 2022 First Half 2022
Turnover USG UVG UPG Turnover USG UVG UPG Change
in underlying
operating
(unaudited) margin
======================= ======== ======== ==== ===== ==== ==============
EURbn % % % EURbn % % % bps
======================= ======== ==== ===== ==== ======== ==== ===== ==== ==============
Unilever 15.8 8.8 (2.1) 11.2 29.6 8.1 (1.6) 9.8 (180)
======================= ======== ==== ===== ==== ======== ==== ===== ==== ==============
Beauty & Personal
Care 6.4 8.0 (2.3) 10.5 12.2 7.5 (1.3) 9.0 (180)
Home Care 3.1 12.2 (3.8) 16.6 6.0 10.7 (3.4) 14.5 (200)
Foods & Refreshment 6.3 8.1 (1.2) 9.4 11.4 7.3 (0.9) 8.3 (170)
======================= ======== ==== ===== ==== ======== ==== ===== ==== ==============
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 7.5% with 9.0%
from price and (1.3)% from volume. Strong price increases landed
across most categories, and were particularly pronounced in Latin
America, South Asia and Turkey.
Deodorants delivered double-digit growth, helped by continued
premiumisation and strong innovations, such as the 72-hour
protection technology launched with Rexona. Skin care grew low
single-digit on the back of a strong prior year base, with strong
growth of Pond's in India partially offset by a decline in China.
Skin cleansing returned to growth, with Dove landing strong pricing
and flat volume supported by the launch of premium innovations in
North America. Overall skin cleansing volumes declined mid
single-digit, particularly affected by the pricing in Europe and
South Asia. Hair care grew mid single-digit, driven by India and
North America, partially offset by declines in North Asia and
Europe. Mid single-digit growth in oral care was driven by a strong
performance in Indonesia with modest growth elsewhere. Prestige
Beauty continued its double-digit growth momentum with Tatcha
successfully launching in the United Kingdom and expanding in
premium channels in China.
Underlying operating margin decreased 180bps as gross margin
declined as a result of high input cost inflation.
Home Care
Home Care underlying sales grew 10.7% with 14.5% from price and
(3.4)% from volume. Double-digit pricing landed across most
geographies in response to very high increases in raw material
costs.
Fabric cleaning continued its momentum, posting strong
double-digit growth with marginal volume decline. The growth was
broad-based across all formats, with strong contributions from OMO
and Radiant. South Asia and Turkey achieved double-digit pricing
and positive volumes, supported by the continuous development of
the liquids market. Fabric enhancers grew mid single-digit with
accelerated performance in the second quarter. Comfort continued
its growth momentum in Brazil and China but faced declining markets
in South-East Asia and Europe. Home & hygiene grew low
single-digit with double-digit pricing offset by volume declines
across most geographies. Household cleaner volumes declined as a
result of a slowdown in consumers' disinfecting habits, while
dishwash sales grew driven by India and South-East Asia.
Underlying operating margin declined 200bps driven by a
substantial gross margin reduction partially offset by lower brand
and marketing investment.
Foods & Refreshment
Foods & Refreshment underlying sales grew 7.3% with 8.3%
from price and (0.9)% from volume. Pricing was broad-based and
particularly high in dressings given the input cost increases.
Ice cream underlying sales grew high single-digit driven by
strong growth in the out-of-home business which landed double-digit
price and volume growth. Magnum and Cornetto continued their growth
momentum supported by new variant innovations, while ice cream
suffered from supply issues in the United States. In-home sales
were slightly up, although volumes declined in Europe and North
America where markets contracted as a result of some post-Covid
channel switching by consumers.
Foods also grew high single-digit with slightly negative
volumes. Unilever Food Solutions, our food service business, landed
strong double-digit growth and achieved sales above pre-Covid
levels despite the severe China lockdown impact in the second
quarter. In-home foods grew high single-digit driven by high
pricing and marginally negative volumes, on the back of a strong
comparator. Hellmann's delivered double-digit, price-driven growth,
which was supported by its global purpose campaign "Turn nothing
into something".
Underlying operating margin decreased 170bps predominantly
driven by lower gross margin.
FIRST HALF OPERATIONAL REVIEW: GEOGRAPHICAL AREA
Second Quarter 2022 First Half 2022
Turnover USG UVG UPG Turnover USG UVG UPG Change
in underlying
operating
(unaudited) margin
================= ======== ======== ==== ===== ==== ==============
EURbn % % % EURbn % % % bps
================= ======== ==== ===== ==== ======== ==== ===== ====
Unilever 15.8 8.8 (2.1) 11.2 29.6 8.1 (1.6) 9.8 (180)
================= ======== ==== ===== ==== ======== ==== ===== ====
Asia/AMET/RUB 7.1 9.0 (2.6) 11.9 13.7 9.0 (1.1) 10.2 (90)
The Americas 5.4 11.7 (1.7) 13.6 9.9 10.4 (1.4) 11.9 (200)
Europe 3.3 4.6 (1.8) 6.5 6.0 2.9 (2.9) 6.0 (320)
================= ======== ==== ===== ==== ======== ==== ===== ====
Second Quarter 2022 First Half 2022
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
================== ======== ==== ===== ====
EURbn % % % EURbn % % %
================== ======== ==== ===== ==== ======== ==== =====
Emerging markets 9.1 10.5 (3.1) 14.0 17.4 10.0 (1.8) 12.1
Developed markets 6.7 6.6 (0.9) 7.6 12.2 5.5 (1.2) 6.7
================== ======== ==== ===== ==== ======== ==== =====
North America 3.4 8.9 (0.5) 9.4 6.2 8.7 0.6 8.1
Latin America 2.0 16.8 (4.0) 21.7 3.7 13.4 (4.8) 19.1
================== ======== ==== ===== ==== ======== ==== =====
Asia/AMET/RUB
Underlying sales grew 9.0% with 10.2% from price and (1.1)% from
volume. China declined low single-digit with the strong start of
the year being reversed in the second quarter due to the Covid
lockdowns that particularly impacted Unilever Food Solutions and
Beauty & Personal Care. South Asia continued its growth
momentum with strong pricing and positive volumes. Growth
accelerated in the second quarter, driven by the performance of
Home Care and hair care. Indonesia grew high single-digit, after
another quarter of price-driven growth, supported by strong
performance of oral care, deodorants and scratch cooking aids, but
overall volumes were still down, most notably in Home Care. Vietnam
landed high pricing and positive volumes across all categories. We
have announced that we will no longer invest in Russia, but we will
continue providing the local population with basic products. Our
Russian business represented around 1% of turnover and had a minor
negative impact on the growth of the Group. Turkey posted very
strong, broad-based growth across all categories, driven by both
price and volume. In line with our treatment of other
hyperinflationary countries, the underlying price growth in Turkey
was capped from the second quarter.
Underlying operating margin declined 90bps as a result of lower
gross margin due to higher input costs. This was partially offset
by the turnover leverage benefit on brand and marketing investment
as well as overheads.
The Americas
Underlying sales growth in North America was 8.7%, with 8.1%
from price and 0.6% from volume. Double-digit growth in Beauty
& Personal Care was driven by strong performance in deodorants
and Health & Wellbeing, including high growth from Liquid IV.
Prestige Beauty also continued its growth momentum, helped by
consumers returning to the offline channels. Foods &
Refreshment grew high single-digit, boosted by strong sales in
dressings and out-of-home ice cream. Customer service challenges
persisted in the second quarter, largely due to labour
availability.
Latin America delivered underlying sales growth of 13.4%, with
19.1% from price and (4.8)% from volume. All Divisions delivered
double-digit growth. In the context of high double-digit pricing,
volumes declined in Brazil, Mexico and Chile, while volumes held up
in Argentina.
Underlying operating margin decreased by 200bps primarily driven
by lower gross margin and higher overheads.
Europe
Underlying sales grew 2.9% with price of 6.0% and (2.9)% from
volume. Growth sequentially improved in the second quarter, helped
by out-of-home ice cream sales as the channel re-opened. Unilever
Food Solutions also posted strong double-digit growth with sales
exceeding pre-Covid levels, driven by extended distribution and
price growth. The United Kingdom, France and Germany posted low
single-digit growth with pricing largely offset by volume
declines.
Underlying operating margin declined 320bps driven largely by
lower gross margin as higher input costs outweighed pricing.
ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FIRST HALF 2022
Finance costs and tax
Net finance costs increased by EUR74 million to EUR227 million
in the first half of 2022. The increase was largely driven by a
higher cost of debt on bonds and commercial papers as well as
higher other interest costs. This was partially offset by an
increase in finance income from higher cash balances and positive
rate variances. The interest rate on average net debt increased to
1.9% from 1.4% in the prior year.
The underlying effective tax rate for H1 2022 increased to 24.4%
from 21.9% in H1 2021 due to changes in profit mix and the lapping
of favourable one-offs in the prior year. The effective tax rate
for H1 2022 was 26.8% compared with 22.7% in H1 2021. The 2022
figure included tax costs related to the separation of the ekaterra
business.
Joint ventures, associates and other income from non-current
investments
Net profit from joint ventures and associates was EUR97 million,
compared with EUR91 million in 2021. Other income from non-current
investments was EUR27 million, slightly down versus prior year.
Earnings per share
Underlying earnings per share increased by 1.0%, including a
positive impact of 4.9% from currency. Constant underlying earnings
per share decreased by 3.9%. The decline was mainly driven by lower
margin, higher tax and finance costs, partially offset by turnover
growth and a reduction in the number of shares. Diluted earnings
per share decreased 4.7% to EUR1.13.
Restructuring costs
Restructuring costs in the first half increased to EUR359
million, compared to EUR306 million in the prior year. For the full
year, we expect restructuring costs of around EUR1 billion,
including those linked to the implementation of the new operating
model. From 2023, restructuring costs are anticipated to be around
1% of Group turnover.
Free cash flow
Free cash flow in the first half of 2022 was EUR2.2 billion,
down from the EUR2.4 billion delivered in the first half of 2021.
This decrease was due to higher cash tax and increased capital
expenditure, partially offset by improved operating profit and
working capital.
Net debt
Closing net debt increased to EUR27.1 billion compared with
EUR25.5 billion at 31 December 2021. The increase was driven by
dividends paid, the share buyback programme and an adverse currency
impact, partially offset by free cash flow delivery.
Pensions
Pension assets net of liabilities were in surplus of EUR5.0
billion at the end of June 2022 versus EUR3.0 billion as at 31
December 2021. The increase was primarily driven by lower
liabilities as a result of increased interest rates in the European
Union, the United Kingdom and the United States. This was partially
offset by investment losses on pension assets reflecting the
declines in equity and bond markets in the first half.
Finance and liquidity
During the first half, the following notes matured and were
repaid:
-- February: EUR750 million 0.50% fixed rate notes, GBP350 million 1.125% fixed rate notes
-- March: $500 million 3.00% fixed rate notes
-- May: $850 million 2.20% fixed rate notes
The following notes were issued:
-- February: EUR500 million 0.75% fixed rate notes due February
2026, EUR650 million 1.25% fixed rate notes due February 2031,
GBP300 million 2.125% fixed rate notes due February 2028
-- May: EUR650 million 1.75% fixed rate notes due November 2028;
EUR850 million 2.25% fixed rate notes due May 2034
On 30 June 2022, Unilever had undrawn revolving 364-day
bilateral credit facilities in aggregate of $7,215 million and
EUR750 million with a 364-day term out.
Share buyback programme
On 10 February 2022, we announced a share buyback programme of
up to EUR3 billion to be completed over 2022 and 2023. On 23 March
2022, we announced we would commence the first tranche of this
buyback programme for an aggregate market value equivalent to
EUR750 million. As at 30 June 2022, Unilever had repurchased
15,508,723 ordinary shares. Total consideration for the repurchase
of shares was EUR648 million which is recorded within other
reserves. The first tranche for an aggregate market value of EUR750
million completed on 22 July 2022. Between 23 March 2022 and 22
July 2022, a total of 17,802,472 Unilever PLC ordinary shares were
purchased.
COMPETITION INVESTIGATIONS
As previously disclosed, Unilever is involved in a number of
ongoing investigations by national competition authorities,
including those of France, Portugal 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.
NON-GAAP MEASURES
Certain discussions and analyses set out in this announcement
include measures which are not defined by generally accepted
accounting principles (GAAP) such as IFRS. We believe this
information, along with comparable GAAP measurements, is useful to
investors because it provides a basis for measuring our operating
performance, ability to retire debt and invest in new business
opportunities. Our management uses these financial measures, along
with the most directly comparable GAAP financial measures, in
evaluating our operating performance and value creation. Non-GAAP
financial measures should not be considered in isolation from, or
as a substitute for, financial information presented in compliance
with GAAP. Wherever appropriate and practical, we provide
reconciliations to relevant GAAP measures.
Unilever uses 'constant rate', and 'underlying' measures
primarily for internal performance analysis and targeting purposes.
We present certain items, percentages and movements, using constant
exchange rates, which exclude the impact of fluctuations in foreign
currency exchange rates. We calculate constant currency values by
translating both the current and the prior period local currency
amounts using the prior year average exchange rates into euro,
except for the local currency of entities that operate in
hyperinflationary economies. These currencies are translated into
euros using the prior year closing exchange rate before the
application of IAS 29. The table below shows exchange rate
movements in our key markets.
First half First half
average average
rate in rate in
2022 2021
===============================
Brazilian Real (EUR1 = BRL) 5.538 6.492
Chinese Yuan (EUR1 = CNY) 7.083 7.800
Indian Rupee (EUR1 = INR) 83.337 88.365
Indonesia Rupiah (EUR1 = IDR) 15798 17231
Philippine Peso (EUR1 = PHP) 56.969 58.153
UK Pound Sterling (EUR1 = GBP) 0.842 0.868
US Dollar (EUR1 = US $) 1.094 1.206
=============================== ====================
Underlying sales growth (USG)
Underlying sales growth (USG) refers to the increase in turnover
for the period, excluding any change in turnover resulting from
acquisitions, disposals, changes in currency and price growth in
excess of 26% in hyperinflationary economies. Inflation of 26% per
year compounded over three years is one of the key indicators
within IAS 29 to assess whether an economy is deemed to be
hyperinflationary. We believe this measure provides valuable
additional information on the underlying sales performance of the
business and is a key measure used internally. The impact of
acquisitions and disposals is excluded from USG for a period of 12
calendar months from the applicable closing date. Turnover from
acquired brands that are launched in countries where they were not
previously sold is included in USG as such turnover is more
attributable to our existing sales and distribution network than
the acquisition itself. The reconciliation of changes in the GAAP
measure turnover to USG is provided in notes 3 and 4.
Underlying price growth (UPG)
Underlying price growth (UPG) is part of USG and means, for the
applicable period, the increase in turnover attributable to changes
in prices during the period. UPG therefore excludes the impact to
USG due to (i) the volume of products sold; and (ii) the
composition of products sold during the period. In determining
changes in price we exclude the impact of price growth in excess of
26% per year in hyperinflationary economies as explained in USG
above. The measures and the related turnover GAAP measure are set
out in notes 3 and 4.
Underlying volume growth (UVG)
Underlying volume growth (UVG) is part of USG and means, for the
applicable period, the increase in turnover in such period
calculated as the sum of (i) the increase in turnover attributable
to the volume of products sold; and (ii) the increase in turnover
attributable to the composition of products sold during such
period. UVG therefore excludes any impact on USG due to changes in
prices. The measures and the related turnover GAAP measure are set
out in notes 3 and 4.
Non-underlying items
Several non-GAAP measures are adjusted to exclude items defined
as non-underlying due to their nature and/or frequency of
occurrence.
-- Non-underlying items within operating profit are: gains or
losses on business disposals, acquisition and disposal related
costs, restructuring costs, impairments and other items within
operating profit classified here due to their nature and
frequency.
-- Non-underlying items not in operating profit but within net
profit are: net monetary gain/(loss) arising from hyperinflationary
economies and significant and unusual items in net finance cost,
share of profit/(loss) of joint ventures and associates and
taxation.
-- Non-underlying items are: both non-underlying items within
operating profit and those non-underlying items not in operating
profit but within net profit.
Underlying operating profit (UOP) and underlying operating
margin (UOM)
Underlying operating profit and underlying operating margin mean
operating profit and operating margin before the impact of
non-underlying items within operating profit. Underlying operating
profit represents our measure of segment profit or loss as it is
the primary measure used for making decisions about allocating
resources and assessing performance of the segments. The
reconciliation of operating profit to underlying operating profit
is as follows:
EUR million First Half
(unaudited) 2022 2021
=======================================================
Operating profit 4,500 4,426
Non-underlying items within operating profit (see note
2) 544 421
======================================================= ====================
Underlying operating profit 5,044 4,847
======================================================= ====================
Turnover 29,623 25,791
Operating margin (%) 15.2 17.2
Underlying operating margin (%) 17.0 18.8
======================================================= ====================
Underlying effective tax rate
The underlying effective tax rate is calculated by dividing
taxation excluding the tax impact of non-underlying items by profit
before tax excluding the impact of non-underlying items and share
of net (profit)/loss of joint ventures and associates. This measure
reflects the underlying tax rate in relation to profit before tax
excluding non-underlying items before tax and share of net
profit/(loss) of joint ventures and associates. Tax impact on
non-underlying items within operating profit is the sum of the tax
on each non-underlying item, based on the applicable country tax
rates and tax treatment. This is shown in the following table:
EUR million First Half
(unaudited) 2022 2021
============================================================
Taxation 1,143 972
Tax impact of:
Non-underlying items within operating profit(a) 102 97
Non-underlying items not in operating profit but within
net profit(a) (63) (34)
============================================================ ==================
Taxation before tax impact of non-underlying items 1,182 1,035
============================================================ ==================
Profit before taxation 4,359 4,369
Non-underlying items within operating profit before
tax(a) 544 421
Non-underlying items not in operating profit but within
net profit before tax(a) 38 29
Share of net (profit)/loss of joint ventures and associates (97) (91)
============================================================ ==================
Profit before tax excluding non-underlying items before
tax and share of net profit/(loss) of joint ventures
and associates 4,844 4,728
============================================================ ==================
Underlying effective tax rate 24.4% 21.9%
============================================================ ==================
(a) Refer to note 2 for further details on these items.
Underlying earnings per share
Underlying earnings per share (underlying EPS) is calculated as
underlying profit attributable to shareholders' equity divided by
the diluted average number of ordinary shares. In calculating
underlying profit attributable to shareholders' equity, net profit
attributable to shareholders' equity is adjusted to eliminate the
post-tax impact of non-underlying items. This measure reflects the
underlying earnings for each share unit of the Group. Refer to note
6 for reconciliation of net profit attributable to shareholders'
equity to underlying profit attributable to shareholders
equity.
Constant underlying EPS
Constant underlying earnings per share (constant underlying EPS)
is calculated as underlying profit attributable to shareholders'
equity at constant exchange rates and excluding the impact of both
translational hedges and price growth in excess of 26% per year in
hyperinflationary economies divided by the diluted average number
of ordinary shares. This measure reflects the underlying earnings
for each share unit of the Group in constant exchange rates.
The reconciliation of underlying profit attributable to
shareholders' equity to constant underlying earnings attributable
to shareholders' equity and the calculation of constant underlying
EPS is as follows:
EUR million First Half
(unaudited) 2022 2021
====================================
Underlying profit attributable to
shareholders' equity
(see note 6) 3,440 3,488
Impact of translation from current
to constant exchange
rates and translational hedges (92) 8
Impact of price growth in excess of (66) -
26% per year in
hyperinflationary economies
==================================== ========
Constant underlying earnings
attributable to shareholders'
equity 3,282 3,496
==================================== ========
Diluted average number of share
units (millions) 2,566.2 2,627.2
==================================== ========
Constant underlying EPS (EUR) 1.28 1.33
==================================== ========
Net debt
Net debt is a measure that provides valuable additional
information on the summary presentation of the Group's net
financial liabilities and is a measure in common use elsewhere. Net
debt is defined as the excess of total financial liabilities,
excluding trade payables and other current liabilities, over cash,
cash equivalents and other current financial assets, excluding
trade and other current receivables, and non-current financial
asset derivatives that relate to financial liabilities.
The reconciliation of total financial liabilities to net debt is
as follows:
EUR million As at As at 31 As at
30 June December 30 June
2022 2021 2021
(unaudited)
===============
Total financial
liabilities (33,961) (30,133) (27,542)
Current
financial
liabilities (9,032) (7,252) (6,720)
Non-current
financial
liabilities (24,929) (22,881) (20,822)
Cash and cash
equivalents as
per balance
sheet 5,411 3,415 4,182
Cash and
cash
equivalents
as per cash
flow
statement 5,274 3,387 4,072
Add: bank
overdrafts
deducted
therein 157 106 110
Less: cash (20) (78) -
and cash
equivalents
held for
sale(a)
Other current
financial
assets 1,435 1,156 885
Non-current
financial
asset
derivatives
that
relate to
financial
liabilities 60 52 33
=============== ====================== ======================
Net debt (27,055) (25,510) (22,442)
=============== ====================== ======================
(a) Cash and cash equivalents held for sale of EUR20 million are
net of bank overdrafts of EUR6 million.
Free cash flow (FCF)
Within the Unilever Group, free cash flow (FCF) is defined as
cash flow from operating activities, less income taxes paid, net
capital expenditure and net interest payments. It does not
represent residual cash flows entirely available for discretionary
purposes; for example, the repayment of principal amounts borrowed
is not deducted from FCF. FCF reflects an additional way of viewing
our liquidity that we believe is useful to investors because it
represents cash flows that could be used for distribution of
dividends, repayment of debt or to fund our strategic initiatives,
including acquisitions, if any.
The reconciliation of cash flow from operating activities to FCF
is as follows:
EUR million First Half
(unaudited) 2022 2021
==================================================
Cash flow from operating activities 4,344 3,961
Income tax paid (1,295) (917)
Net capital expenditure (593) (386)
Net interest paid (217) (227)
================================================== ====================
Free cash flow 2,239 2,431
================================================== ====================
Net cash flow (used in)/from investing activities (432) (570)
Net cash flow (used in)/from financing activities (924) (4,097)
================================================== ====================
OTHER INFORMATION
This document represents Unilever's half-yearly report for the
purposes of the Disclosure and Transparency Rules (DTR) issued by
the UK Financial Conduct Authority (DTR 4.2) and the Dutch Act on
Financial Supervision, section 5:25d (8)/(9) (Half-yearly financial
reports). In this context: (i) the condensed set of financial
statements can be found on pages 11 to 23; (ii) pages 2 to 10
comprise the interim management report; and (iii) the Directors'
responsibility statement can be found on page 23. This half-yearly
report has not been reviewed in accordance with ISRE 2410 by our
external auditors. No material related party transactions have
taken place in the first six months of the year.
EXTERNAL AUDIT TER
The Board of Unilever announces its intention to reappoint KPMG
as its external auditor for the financial year end 31 December
2024, subject to shareholder approval at its 2024 Annual General
Meeting.
This follows an extensive competitive tender process, which was
overseen by the Company's Audit Committee. The selection to
re-appoint KPMG was unanimously recommended by the Committee and
has been approved by the Unilever Board.
Adrian Hennah, Chair of the Audit Committee, commented "We
conducted a thorough and competitive tender process. Our decision
to re-appoint KPMG was based on their strong performance during the
tender process across a comprehensive set of criteria and our
satisfaction with their effectiveness as our current auditor. We
would also like to extend our thanks to all firms who participated
in the thorough tender process."
PRINCIPAL RISK FACTORS
On pages 46 to 50 of our 2021 Annual Report and Accounts we set
out our assessment of the principal risk issues that would face the
business under the headings: brand preference; portfolio
management; climate change; plastic packaging; customer; talent;
supply chain; safe and high quality products; systems and
information; business transformation; economic and political
instability; treasury and tax; ethical; and legal and regulatory.
In our view, the nature and potential impact of such risks remain
essentially unchanged as regards our performance over the second
half of 2022.
CAUTIONARY STATEMENT
This announcement 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', 'vision', or the negative of these terms and
other similar expressions of future performance or results, and
their negatives, are intended to identify such forward-looking
statements. Forward-looking statements also include, but are not
limited to, statements and information regarding the Unilever
Group's (the 'Group') emissions reduction targets and other climate
change related matters (including actions, potential impacts and
risks associated therewith). These forward-looking statements are
based upon current expectations and assumptions regarding
anticipated developments and other factors affecting the Group.
They are not historical facts, nor are they guarantees of future
performance or outcomes.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by
these forward-looking statements. Among other risks and
uncertainties, the material or principal factors which could cause
actual results to differ materially are: Unilever's global brands
not meeting consumer preferences; Unilever's ability to innovate
and remain competitive; Unilever's investment choices in its
portfolio management; the effect of climate change on Unilever's
business; Unilever's ability to find sustainable solutions to its
plastic packaging; significant changes or deterioration in customer
relationships; the recruitment and retention of talented employees;
disruptions in our supply chain and distribution; increases or
volatility in the cost of raw materials and commodities; the
production of safe and high quality products; secure and reliable
IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political
risks and natural disasters; financial risks; failure to meet high
and ethical standards; and managing regulatory, tax and legal
matters.
These forward-looking statements speak only as of the date of
this announcement. Except as required by any applicable law or
regulation, the Group expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in the Group's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
Further details of potential risks and uncertainties affecting
the Group are described in the Group's filings with the London
Stock Exchange, Euronext Amsterdam and the US Securities and
Exchange Commission, including in the Annual Report on Form 20-F
2021 and the Unilever Annual Report and Accounts 2021.
ENQUIRIES
Media : Media Relations Team Investors: Investor Relations
Team
+44 78 2527 +44 20 7822
UK 3767 lucila.zambrano@unilever.com 6830 investor.relations@unilever.com
or +44 77 7999
9683 JSibun@tulchangroup.com
NL +31 10 217 4844 els-de.bruin@unilever.com
or +31 62 375 8385 marlous-den.bieman@unilever.com
There will be a web cast of the results presentation available
at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
CONSOLIDATED INCOME STATEMENT
(unaudited)
EUR million First Half
2022 2021 Increase/
(Decrease)
========================= =====================
Current Constant
rates rates
========================= ===================== ===================== =====================
Turnover 29,623 25,791 14.9% 10.2%
Operating profit 4,500 4,426 1.7% (1.8%)
Which includes
non-underlying items
credits/(charges) of (544) (421)
Net finance costs (227) (153)
Finance income 105 68
Finance costs (354) (216)
Pensions and similar
obligations 22 (5)
Non-underlying item net
monetary gain/(loss)
arising from
hyperinflationary
economies (38) (29)
Share of net
profit/(loss) of joint
ventures and associates 97 91
Other income/(loss) from
non-current
investments and
associates 27 34
Profit before taxation 4,359 4,369 (0.2%) (3.4%)
Taxation (1,143) (972)
Which includes tax
impact of
non-underlying
items of 39 63
Net profit 3,216 3,397 (5.3%) (7.9%)
Attributable to:
========================= ===================== ====================== =====================
Non-controlling
interests 311 276
Shareholders' equity 2,905 3,121 (6.9%) (9.1%)
========================= ===================== ====================== =====================
Combined earnings per
share
===================== ====================== ===================== =====================
Basic earnings per share
(euros) 1.14 1.19 (4.7%) (6.9%)
Diluted earnings per
share (euros) 1.13 1.19 (4.7%) (7.0%)
========================= ===================== ====================== =====================
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
EUR million Half Year
2022 2021
========================================================== =====================
Net profit 3,216 3,397
Other comprehensive income
Items that will not be reclassified to profit or loss,
net of tax:
Gains/(losses) on equity instruments measured at fair
value through other comprehensive income 52 55
Remeasurement of defined benefit pension plans(a) 1,463 968
Items that may be reclassified subsequently to profit
or loss, net of tax:
Gains/(losses) on cash flow hedges 51 137
Currency retranslation gains/(losses)(b) 1,309 617
Total comprehensive income 6,091 5,174
========================================================== =====================
Attributable to:
Non-controlling interests 384 299
Shareholders' equity 5,707 4,875
========================================================== =====================
(a) Remeasurement of defined benefit pension plans in 2022 is
due to a significant decrease in liabilities as interest rates
continued to rise, more than offsetting the reduction in asset
values.
(b) 2022 gain is primarily due to strengthening of the US
Dollar, Brazilian Real and Indian Rupee against the Euro. In 2021
the gain was largely due to strengthening of the US Dollar, British
Pound, Brazilian Real and Indian Rupee against the Euro.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
EUR million Called Share Unification Other Retained Total Non- Total
up share premium reserve reserves profit controlling equity
capital account interest
=================
First half - 2022
=================
1 January 2022 92 52,844 (73,364) (9,210) 46,745 17,107 2,639 19,746
========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
Profit or loss
for the
period - - - - 2,905 2,905 311 3,216
Other
comprehensive
income,
net of tax:
Gains/(losses)
on:
Equity
instruments - - - 44 - 44 8 52
Cash flow
hedges - - - 48 - 48 3 51
Remeasurements
of defined
benefit
pension plans - - - - 1,462 1,462 1 1,463
Currency
retranslation
gains/(losses) - - - 1,240 8 1,248 61 1,309
========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
Total
comprehensive
income - - - 1,332 4,375 5,707 384 6,091
Dividends on
ordinary
capital - - - - (2,195) (2,195) - (2,195)
Repurchase of
shares(a) - - - (648) - (648) - (648)
Other movements
in treasury
shares(b) - - - 99 (107) (8) - (8)
Share-based
payment credit(c) - - - - 93 93 - 93
Dividends paid to
non-controlling
interests - - - - - - (309) (309)
Hedging
gain/(loss)
transferred
to non-financial
assets - - - (133) - (133) (3) (136)
Other movements
in equity(d) - - - 2 216 218 14 232
================= ========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
30 June 2022 92 52,844 (73,364) (8,558) 49,127 20,141 2,725 22,866
================= ========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
First half - 2021
=================
1 January 2021 as
previously
reported 92 73,472 (73,364) (7,482) 22,548 15,266 2,389 17,655
========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
Profit or loss
for the
period - - - - 3,121 3,121 276 3,397
Other
comprehensive
income,
net of tax:
Gains/(losses)
on:
Equity
instruments - - - 67 - 67 (12) 55
Cash flow
hedges - - - 136 - 136 1 137
Remeasurements
of defined
benefit pension
plans - - - - 968 968 - 968
Currency
retranslation
gains/(losses) - - - 576 7 583 34 617
========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
Total
comprehensive
income - - - 779 4,096 4,875 299 5,174
Dividends on
ordinary
capital - - - - (2,252) (2,252) - (2,252)
Share capital
reduction(e) (20,626) - - 20,626 - - -
Repurchase of
shares(a) - - - (897) - (897) - (897)
Other movements
in treasury
shares(b) - - - 78 (101) (23) - (23)
Share-based
payment credit(c) - - - - 82 82 - 82
Dividends paid to
non-controlling
interests - - - - - - (258) (258)
Currency
retranslation
gains/(losses)
net of
tax - (3) - - - (3) - (3)
Hedging
gain/(loss)
transferred
to non-financial
assets - - - (89) - (89) (1) (90)
Other movements
in equity(d) - - - (83) 140 57 14 71
================= ========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
30 June 2021 92 52,843 (73,364) (7,694) 45,139 17,016 2,443 19,459
================= ========================================== ============================================ ====================================================== ============================================ ============================================ ====================================== ========================================================
(a) Repurchase of shares reflects the cost of acquiring ordinary
shares as part of the share buyback programmes announced on 29
April 2021 and 10 February 2022.
(b) Includes purchases and sales of treasury stock, and transfer
from treasury stock to retained profit of share-settled schemes
arising from prior years and differences between exercise and grant
price of share options.
(c) The share-based payment credit relates to the non-cash
charge recorded against operating profit in respect of the fair
value of share options and awards granted to employees.
(d) The 2022 movement consists primarily of a hyperinflation
adjustment of EUR235 million. 2021 includes a hyperinflation
adjustment of EUR137 million and EUR83 million related to the Welly
acquisition.
(e) Share premium has been adjusted to reflect the legal share
capital of the PLC company, which reduced by GBP18,400 million
following court approval on 15 June 2021.
CONSOLIDATED BALANCE SHEET
(unaudited)
EUR million As at As at As at
30 June 31 December 30 June
2022 2021 2021
Non-current assets
Goodwill 21,571 20,330 19,239
Intangible assets 18,935 18,261 16,064
Property, plant and equipment 10,733 10,347 10,521
Pension asset for funded schemes in surplus 6,581 5,119 4,017
Deferred tax assets 1,559 1,465 1,320
Financial assets 1,286 1,198 960
Other non-current assets 1,023 974 1,032
===================== =====================
61,688 57,694 53,153
===================== =====================
Current assets
Inventories 5,893 4,683 4,766
Trade and other current receivables 7,309 5,422 6,478
Current tax assets 324 324 272
Cash and cash equivalents 5,411 3,415 4,182
Other financial assets 1,435 1,156 885
Assets held for sale 2,832 2,401 828
===================== =====================
23,204 17,401 17,411
===================== =====================
Total assets 84,892 75,095 70,564
================================================= ===================== =====================
Current liabilities
Financial liabilities 9,032 7,252 6,720
Trade payables and other current liabilities 17,151 14,861 14,799
Current tax liabilities 1,327 1,365 1,597
Provisions 640 480 514
Liabilities held for sale 788 820 158
===================== =====================
28,938 24,778 23,788
===================== =====================
Non-current liabilities
Financial liabilities 24,929 22,881 20,822
Non-current tax liabilities 163 148 143
Pensions and post-retirement healthcare
liabilities:
Funded schemes in deficit 362 831 832
Unfunded schemes 1,189 1,295 1,298
Provisions 621 611 592
Deferred tax liabilities 5,523 4,530 3,361
Other non-current liabilities 301 275 269
===================== =====================
33,088 30,571 27,317
===================== =====================
Total liabilities 62,026 55,349 51,105
===================== =====================
Equity
Shareholders' equity 20,141 17,107 17,016
Non-controlling interests 2,725 2,639 2,443
===================== =====================
Total equity 22,866 19,746 19,459
===================== =====================
Total liabilities and equity 84,892 75,095 70,564
================================================= ===================== =====================
CONSOLIDATED CASH FLOW STATEMENT
( unaudited)
EUR million First Half
2022 2021
====================
Net profit 3,216 3,397
Taxation 1,143 972
Share of net
(profit)/loss of
joint
ventures/associates
and other
(income)/loss from
non-current
investments
and associates (124) (125)
Net monetary
(gain)/loss arising
from
hyperinflationary
economies 38 29
Net finance costs 227 153
=======================
Operating profit 4,500 4,426
=======================
Depreciation,
amortisation and
impairment 842 860
Changes in working
capital (1,116) (1,233)
Pensions and similar
obligations less
payments (49) (126)
Provisions less
payments 135 (29)
Elimination of -
(profits)/losses on
disposals (28)
Non-cash charge for
share-based
compensation 93 82
Other adjustments (33) (19)
=======================
Cash flow from
operating
activities 4,344 3,961
=======================
Income tax paid (1,295) (917)
Net cash flow from
operating
activities 3,049 3,044
==================== =======================
Interest received 106 61
Net capital
expenditure (593) (386)
Other acquisitions
and disposals 2 (275)
Other investing
activities 53 30
Net cash flow (used
in)/from investing
activities (432) (570)
==================== =======================
Dividends paid on
ordinary share
capital (2,176) (2,277)
Interest paid (323) (288)
Change in financial
liabilities 2,500 (430)
Repurchase of shares (648) (845)
Other financing
activities (277) (257)
Net cash flow (used
in)/from financing
activities (924) (4,097)
==================== =======================
Net
increase/(decrease)
in cash and cash
equivalents 1,693 (1,623)
==================== =======================
Cash and cash
equivalents at the
beginning of the
period 3,387 5,475
Effect of foreign
exchange rate
changes 194 220
Cash and cash
equivalents at the
end of the period 5,274 4,072
==================== =======================
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(unaudited)
1 ACCOUNTING INFORMATION AND POLICIES
The condensed interim financial statements are prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the International Accounting Standard Board (IASB), as adopted for
use in the UK and are consistent with the year ended 31 December
2021.
Management have produced forecasts which have been modelled for
different plausible scenarios. These scenarios confirm the Group is
able to generate profits and cash in the year ended 31 December
2022 and beyond. As a result, the Directors have a reasonable
expectation that the Group has adequate resources to meet its
obligations as they fall due for a period of at least 12 months
from the date of signing these financial statements. Accordingly,
they continue to adopt the going concern basis in preparing the
half year financial statements.
The condensed interim financial statements are shown at current
exchange rates, while percentage year-on-year changes are shown at
both current and constant exchange rates to facilitate comparison.
The consolidated income statement on page 11, the consolidated
statement of comprehensive income on page 11, the consolidated
statement of changes in equity on page 12 and the consolidated cash
flow statement on page 14 are translated at exchange rates current
in each period. The consolidated balance sheet on page 13 is
translated at period-end rates of exchange.
The condensed interim financial statements attached do not
constitute the full financial statements within the meaning of
section 434 of the UK Companies Act 2006. The comparative figures
for the financial year ended 31 December 2021 are not Unilever
PLC's statutory accounts for that financial year. Those accounts of
Unilever for the year ended 31 December 2021 have been reported on
by the Group's auditor and delivered to the Registrar of Companies.
The report of the auditor on these accounts was (i) unqualified,
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report, and (iii) did not contain a statement under section 498 (2)
or (3) of the UK Companies Act 2006.
Change in reporting segments
In January 2022, the Group announced a new, simpler, more
category focused operating model which came into effect on 1 July
2022. This model is structured around five Business Groups: Beauty
& Wellbeing, Personal Care, Home Care, Nutrition, and Ice
Cream. Each Business Group will be fully responsible for their
strategy, growth, and profit delivery globally.
From 1 July 2022 our segmental information will be based on the
five Business Groups as this reflects how the Group's performance
will be monitored and managed going forward.
2 SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT
Non-underlying items
These include non-underlying items within operating profit and
non-underlying items not in operating profit but within net
profit:
-- Non-underlying items within operating profit are gains or
losses on business disposals, acquisition and disposal related
costs, restructuring costs, impairment and other items within
operating profit classified here due to their nature and
frequency.
-- Non-underlying items not in operating profit but within net
profit are net monetary gain/(loss) arising from hyperinflationary
economies and significant and unusual items in net finance cost,
share of profit/(loss) of joint ventures and associates and
taxation.
Restructuring costs are charges associated with activities
planned by management that significantly change either the scope of
the business or the manner in which it is conducted.
EUR million First Half
2022 2021
===================== =======================================================================
Acquisition and
disposal-related
credits/(costs) (87) (122)
Gain/(loss) on
disposal of group
companies 21 7
Restructuring
costs (359) (306)
Impairments (4) -
Other(a) (115) -
=======================================================================
Non-underlying items
within operating
profit before
tax (544) (421)
Tax on non-underlying
items within
operating profit 102 97
=======================================================================
Non-underlying items
within operating
profit after
tax (442) (324)
===================== =======================================================================
Net monetary
gain/(loss)
arising from
hyperinflationary
economies (38) (29)
=======================================================================
Non-underlying items
not in operating
profit but within
net profit before
tax (38) (29)
Tax impact of
non-underlying items
not in operating
profit but within net
profit:
Taxes related to
the UK tax audit
of intangible
income
and centralised
services - (6)
Taxes related to -
the separation of
ekaterra (39)
Hyperinflation
adjustment for
Argentina
deferred tax (24) (28)
=======================================================================
Non-underlying items
not in operating
profit but within
net profit after tax (101) (63)
===================== =======================================================================
Non-underlying items
after tax(b) (543) (387)
===================== =======================================================================
Attributable to:
===================== =======================================================================
Non-controlling
interests (8) (20)
Shareholders'
equity (535) (367)
===================== =======================================================================
(a) Comprised of EUR40 million of asset write-downs relating to
our businesses in Russia and Ukraine and EUR75 million relating to
legal provisions for ongoing competition investigations.
(b) Non-underlying items after tax is calculated as
non-underlying items within operating profit after tax plus
non-underlying items not in operating profit but within net profit
after tax.
3 SEGMENT INFORMATION - DIVISIONS
Second Quarter Beauty & Home Foods & Total
Personal Care Refreshment
Care
Turnover (EUR million)
2021 5,367 2,575 5,509 13,451
2022 6,419 3,092 6,299 15,810
Change (%) 19.6 20.1 14.3 17.5
Impact of:
Acquisitions (%) 1.6 - - 0.6
Disposals (%) (0.1) - (0.2) (0.1)
Currency-related
items (%), of which: 9.1 7.0 6.0 7.5
Exchange rates
changes (%) 8.2 4.9 4.6 6.1
Extreme price
growth in
hyperinflationary
markets* (%) 0.8 2.0 1.4 1.3
Underlying sales growth
(%) 8.0 12.2 8.1 8.8
======================== ==================== ================================================ ================================================
Price* (%) 10.5 16.6 9.4 11.2
Volume (%) (2.3) (3.8) (1.2) (2.1)
======================== ==================== ================================================ ================================================
First Half Beauty & Home Foods & Total
Personal Care Refreshment
Care
Turnover (EUR million)
2021 10,407 5,182 10,202 25,791
2022 12,176 6,024 11,423 29,623
Change (%) 17.0 16.2 12.0 14.9
Impact of:
Acquisitions (%) 1.6 - 0.2 0.7
Disposals (%) 0.0 - (0.2) (0.1)
Currency-related
items (%), of which: 7.1 5.0 4.4 5.6
Exchange rate
changes (%) 6.5 3.7 3.5 4.7
Extreme price
growth in
hyperinflationary
markets* (%) 0.6 1.3 0.9 0.8
Underlying sales growth
(%) 7.5 10.7 7.3 8.1
======================== ===================== ================================================ =====================
Price* (%) 9.0 14.5 8.3 9.8
Volume (%) (1.3) (3.4) (0.9) (1.6)
======================== ===================== ================================================ =====================
Operating profit (EUR
million)
2021 2,089 655 1,682 4,426
2022 2,169 609 1,722 4,500
Underlying operating
profit (EUR
million)
2021 2,215 727 1,905 4,847
2022 2,378 723 1,943 5,044
Operating margin (%)
2021 20.1 12.6 16.5 17.2
2022 17.8 10.1 15.1 15.2
Underlying operating
margin (%)
2021 21.3 14.0 18.7 18.8
2022 19.5 12.0 17.0 17.0
======================== ===================== ================================================ =====================
* 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, 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 operating profit represents our measure of segment
profit or loss as it is the primary measure used for the purpose of
making decisions about allocating resources and assessing
performance of segments. Underlying operating margin is calculated
as underlying operating profit divided by turnover.
4 SEGMENT INFORMATION - GEOGRAPHICAL AREA
Second Quarter Asia / The Europe Total
AMET / Americas
RUB
Turnover (EUR million)
2021 6,081 4,216 3,154 13,451
2022 7,061 5,414 3,335 15,810
Change (%) 16.1 28.4 5.8 17.5
Impact of:
Acquisitions (%) 0.2 1.3 0.6 0.6
Disposals (%) (0.2) - (0.1) (0.1)
Currency-related
items (%), of which: 6.6 13.5 0.5 7.5
Exchange rates
changes (%) 4.9 11.7 0.5 6.1
Extreme price 1.6 1.6 - 1.3
growth in
hyperinflationary
markets* (%)
Underlying sales growth
(%) 9.0 11.7 4.6 8.8
======================== ==================== ================================================ ================================================
Price* (%) 11.9 13.6 6.5 11.2
Volume (%) (2.6) (1.7) (1.8) (2.1)
======================== ==================== ================================================ ================================================
First Half Asia / The Europe Total
AMET / Americas
RUB
Turnover (EUR million)
2021 12,040 8,022 5,729 25,791
2022 13,700 9,941 5,982 29,623
Change (%) 13.8 23.9 4.4 14.9
Impact of:
Acquisitions (%) 0.3 1.4 0.7 0.7
Disposals (%) (0.2) - (0.1) (0.1)
Currency- related
items (%), of which: 4.2 10.8 0.9 5.6
Exchange rates
changes (%) 3.3 9.3 0.9 4.7
Extreme price 0.9 1.4 - 0.8
growth in
hyperinflationary
markets* (%)
Underlying sales growth
(%) 9.0 10.4 2.9 8.1
======================== ==================== ================================================ ================================================
Price* (%) 10.2 11.9 6.0 9.8
Volume (%) (1.1) (1.4) (2.9) (1.6)
======================== ==================== ================================================ ================================================
Operating profit (EUR
million)
2021 2,289 1,303 834 4,426
2022 2,442 1,443 615 4,500
Underlying operating
profit (EUR
million)
2021 2,413 1,429 1,005 4,847
2022 2,615 1,575 854 5,044
Operating margin (%)
2021 19.0 16.2 14.6 17.2
2022 17.8 14.5 10.3 15.2
Underlying operating
margin (%)
2021 20.0 17.8 17.5 18.8
2022 19.1 15.8 14.3 17.0
======================== ==================== ================================================ ================================================
* 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.
5 TAXATION
The effective tax rate for the first half was 26.8% compared to
22.7% in 2021. The tax rate is calculated by dividing the tax
charge by pre-tax profit excluding the contribution of joint
ventures and associates.
Tax effects of components of other comprehensive income were as
follows:
EUR million First Half 2022 First Half 2021
Before Tax After Before Tax After
tax (charge)/ tax tax (charge)/ tax
credit credit
================= ================ ================ ================= ================
Gains/(losses)
on:
Equity
instruments
at fair value
through other
comprehensive
income 49 3 52 56 (1) 55
Cash flow
hedges 26 25 51 143 (6) 137
Remeasurements of
defined benefit
pension plans(a) 2,037 (574) 1,463 1,404 (436) 968
Currency
retranslation
gains/(losses) 1,317 (8) 1,309 653 (36) 617
================= ================ ================= ================ ================ =================
Other
comprehensive
income 3,429 (554) 2,875 2,256 (479) 1,777
================= ================ ================= ================ ================ =================
(a) Remeasurement of defined benefit pension plans in 2022 is
due to a significant decrease in liabilities as interest rates
continued to rise, more than offsetting the reduction in asset
values.
6 EARNINGS PER SHARE
The earnings per share calculations are based on the average
number of share units representing the ordinary shares of PLC in
issue during the period, less the average number of shares held as
treasury shares.
In calculating diluted earnings per share and underlying
earnings per share, a number of adjustments are made to the number
of shares, principally the exercise of share plans by
employees.
Earnings per share for total operations for the six months were
calculated as follows:
2022 2021
=====================================================
EPS - Basic
===================================================== ====================== ======================
Net profit attributable to shareholders' equity (EUR
million) 2,905 3,121
Average number of shares (millions of share units) 2,557.3 2,618.7
EPS - basic (EUR) 1.14 1.19
===================================================== ======================
EPS - Diluted
======================
Net profit attributable to shareholders' equity (EUR
million) 2,905 3,121
Diluted average number of share units (millions) 2,566.2 2,627.2
EPS - diluted (EUR) 1.13 1.19
===================================================== ======================
Underlying EPS
======================
Net profit attributable to shareholders' equity (EUR
million) 2,905 3,121
Post tax impact of non-underlying items attributable
to shareholders' equity (see note 2) 535 367
======================
Underlying profit attributable to shareholders' equity 3,440 3,488
Diluted average number of share units (millions) 2,566.2 2,627.2
Underlying EPS - diluted (EUR) 1.34 1.33
======================================================= ======================
In calculating underlying earnings per share, net profit
attributable to shareholders' equity is adjusted to eliminate the
post-tax impact of non-underlying items.
During the period the following movements in shares have taken
place:
Millions
==============================================================
Number of shares at 31 December 2021 (net of treasury shares) 2,561.0
--------------------------------------------------------------
Shares repurchased under the share buyback programme (15.5)
Net movement in shares under incentive schemes 2.0
==============================================================
Number of shares at 30 June 2022 2,547.5
==============================================================
7 SHARE BUYBACK PROGRAMME
On 10 February 2022 we announced our intention to start a share
buyback programme of up to EUR3 billion to be completed over 2022
and 2023. On 23 March 2022 we announced we would commence the first
tranche of this buyback programme for an aggregate market value
equivalent to EUR750 million. As at 30 June 2022 the Group had
repurchased 15,508,723 ordinary shares. Total consideration for the
repurchase of shares was EUR648 million which is recorded within
other reserves. The first tranche for an aggregate market value of
EUR750 million completed on 22 July 2022. Between 23 March 2022 and
22 July 2022, a total of 17,802,472 Unilever PLC ordinary shares
were purchased.
8 FINANCIAL INSTRUMENTS
The Group's Treasury function aims to protect the Group's
financial investments, while maximising returns. The fair value of
financial assets is the same as the carrying amount for 2022 and
2021. The Group's cash resources and other financial assets are
shown below.
EUR million 30 June 2022 31 December 2021 30 June 2021
==================
Current Non-current Total Current Non-current Total Current Non-current Total
================== ========================================= ============= ========================================= ============ ============= ========================================= ============
Cash and cash
equivalents
Cash at bank
and in hand 2,730 - 2,730 2,505 - 2,505 2,625 - 2,625
Short-term - - -
deposits(a) 2,481 2,481 811 811 1,411 1,411
Other cash - - -
equivalents 200 200 99 99 146 146
========================================= ========================================= =========== ============= ========================================= ============ ============= =========================================
5,411 - 5,411 3,415 - 3,415 4,182 - 4,182
========================================= ========================================= =========== ============= ========================================= ============ ============= =========================================
Other financial
assets
Financial
assets at
amortised
cost(b) 756 220 976 750 208 958 514 148 662
Financial
assets at fair
value through
other
comprehensive
income(c) - 547 547 1 526 527 9 413 422
Financial
assets at fair
value through
profit
or loss:
Derivatives
that relate
to
financial
liabilities 264 60 324 76 52 128 40 32 72
Other(d) 415 459 874 329 412 741 322 367 689
========================================= ========================================= =========== ============= ========================================= ============ ============= =========================================
1,435 1,286 2,721 1,156 1,198 2,354 885 960 1,845
========================================= ========================================= =========== ============= ========================================= ============ ============= =========================================
Total financial
assets(e) 6,846 1,286 8,132 4,571 1,198 5,769 5,067 960 6,027
================== ========================================= ========================================= =========== ============= ========================================= ============ ============= =========================================
(a) Short-term deposits typically have a maturity of up to 3 months.
(b) Current financial assets at amortised cost include short
term deposits with banks with maturities longer than three months
excluding deposits which are part of a recognised cash management
process and loans to joint venture entities. Non-current financial
assets at amortised cost include judicial deposits of EUR195
million (31 December 2021: EUR157 million, 30 June 2021: EUR107
million).
(c) Included within non-current financial assets at fair value
through other comprehensive income are equity investments of EUR540
million (31 December 2021: EUR521 million, 30 June 2021: EUR408
million).
(d) Other Financial assets at fair value through profit or loss
include money market funds, marketable securities, other capital
market instruments and investments in companies and financial
institutions in North America, North Asia, South Asia and
Europe.
(e) Financial assets exclude trade and other current receivables.
The Group is exposed to the risks of changes in fair value of
its financial assets and liabilities. The following tables
summarise the fair values and carrying amounts of financial
instruments and the fair value calculations by category.
EUR million Fair value Carrying amount
======================
As at As at As at As at As at As at
30 June 31 December 30 June 30 June 31 December 30 June
2022 2021 2021 2022 2021 2021
====================== ============== ============== ==============
Financial assets
Cash and cash
equivalents 5,411 3,415 4,182 5,411 3,415 4,182
Financial assets at
amortised
cost 976 958 662 976 958 662
Financial assets at
fair value
through other
comprehensive income 547 527 422 547 527 422
Financial assets at
fair value
through profit and
loss:
Derivatives 324 128 72 324 128 72
Other 874 741 689 874 741 689
============== ============== ============== ============== ==============
8,132 5,769 6,027 8,132 5,769 6,027
Financial liabilities
Bank loans and
overdrafts (540) (402) (593) (540) (402) (593)
Bonds and other loans (30,089) (29,133) (26,587) (31,007) (27,621) (24,683)
Lease liabilities (1,585) (1,649) (1,694) (1,585) (1,649) (1,694)
Derivatives (548) (184) (224) (548) (184) (224)
Other financial
liabilities (281) (277) (348) (281) (277) (348)
============== ============== ============== ============== ==============
(33,043) (31,645) (29,446) (33,961) (30,133) (27,542)
====================== ============== ============== ============== ============== ==============
EUR million Level Level Level Level Level Level Level Level Level
1 2 3 1 2 3 1 2 3
As at 30 June 2022 As at 31 December As at 30 June 2021
2021
=============== =================================================================================================================== ============================================================================================================================
Assets at fair
value
Financial
assets at fair
value through
other
comprehensive
income 11 3 533 6 3 518 7 3 412
Financial
assets at
fair value
through profit
or loss:
Derivatives(a) - 505 - - 289 - - 187 -
Other 420 - 454 331 - 410 323 - 366
Liabilities at
fair
value
Derivatives(b) - (729) - - (235) - - (311) -
Contingent
consideration - - (175) - - (180) - - (159)
=============== ===================================== ===================================== ===================================== ======================================== ======================================== ======================================== ======================================== ========================================
(a) Includes EUR181 million (31 December 2021: EUR161 million,
30 June 2021: EUR115 million) of derivatives reported within trade
receivables that hedge trading activities.
(b) Includes EUR181 million (31 December 2021: EUR51 million, 30
June 2021: EUR87 million) of derivatives reported within trade
payables that hedge trading activities.
There were no significant changes in classification of fair
value of financial assets and financial liabilities since 31
December 2021. There were also no significant movements between the
fair value hierarchy classifications since 31 December 2021.
The fair value of trade receivables and payables is considered
to be equal to the carrying amount of these items due to their
short-term nature.
Calculation of fair values
The fair values of the financial assets and liabilities are
defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Methods and
assumptions used to estimate the fair values are consistent with
those used in the year ended 31 December 2021.
9 ASSETS AND LIABILITIES HELD FOR SALE
On 18 November 2021, Unilever announced that it had entered into
an agreement to sell its global tea business, ekaterra, to CVC
Capital Partners Fund VIII. This deal was completed on 1 July 2022
for consideration of EUR4.7 billion which is subject to final
working capital adjustments. As a result, the assets and
liabilities of ekaterra remain classified as held for sale as at 30
June 2022.
Following the classification of assets and liabilities as held
for sale, they are recognised as current on the balance sheet.
30 June 30 June 30 June 31 December
2022 2022 2022 2021
Total
ekaterra Others Total
Property, plant
and equipment
held
for sale - 2 2 2
Non-Current
assets
Goodwill and
intangible
assets 927 2 929 901
Property, plant
and equipment 471 22 493 447
Deferred tax 609 - 609 329
assets
Other 26 - 26 25
non-current
assets
======================================================================= ======================================================================= =======================
2,033 24 2,057 1,702
======================================================================= ======================================================================= =======================
Current assets
Inventories 337 - 337 258
Trade and other 392 - 392 336
receivables
Current tax 13 - 13 11
assets
Cash and cash 26 - 26 90
equivalents
Other current 5 - 5 2
assets
======================================================================= ======================================================================= =======================
773 - 773 697
======================================================================= ======================================================================= =======================
Assets held for
sale 2,806 26 2,832 2,401
======================================================================= ======================================================================= =======================
Current
liabilities
Trade payables 646 - 646 652
and other
current
liabilities
Current tax 9 - 9 9
liabilities
Financial 31 - 31 49
liabilities
Provisions 13 - 13 8
======================================================================= ======================================================================= =======================
699 - 699 718
======================================================================= ======================================================================= =======================
Non-Current
liabilities
Pensions and 12 - 12 12
post-retirement
healthcare
liabilities
Financial 29 - 29 31
Liabilities
Other 1 - 1 2
non-current
liabilities
Deferred tax 47 - 47 57
liabilities
======================================================================= ======================================================================= =======================
89 - 89 102
======================================================================= ======================================================================= ======================= =======================
Liabilities held 788 - 788 820
for sale
---------------- ======================================================================= ======================================================================= =======================
On disposal of an asset or disposal group, the associated
currency translation difference, including amounts previously
reported within equity, is reclassified to the income statement as
part of the gain or loss on disposal. This is estimated to be a
EUR63 million loss.
10 DIVIDENDS
The Board has declared a quarterly interim dividend for Q2 2022
of GBP0.3633 per Unilever PLC ordinary share or EUR0.4268 per
Unilever PLC ordinary share at the applicable exchange rate issued
by WM/Reuters on 22 July 2022.
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 GBP 0.3633
London Stock Exchange):
Per Unilever PLC ordinary share (traded on Euronext
in Amsterdam): EUR 0.4268
Per Unilever PLC American Depositary Receipt: US$ 0.4343
The euro and US dollar amounts above have been determined using
the applicable exchange rates issued by WM/Reuters on
22 July 2022.
US dollar cheques for the quarterly interim dividend will be
mailed on 1 September 2022 to holders of record at the close of
business on 5 August 2022.
The quarterly dividend calendar for the remainder of 2022 will
be as follows:
Announcement Ex-Dividend Record Date Payment Date
Date Date
1 September
Q2 2022 Dividend 26 July 2022 4 August 2022 5 August 2022 2022
27 October 17 November 18 November 9 December
Q3 2022 Dividend 2022 2022 2022 2022
================ ============ ============= =============
11 EVENTS AFTER THE BALANCE SHEET DATE
There were no material post balance sheet events other than
those mentioned elsewhere in this report.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
-- this condensed set of interim financial statements, which
have been prepared in accordance with IAS 34 'Interim Financial
Reporting', as issued by the International Accounting Standard
Board and endorsed and adopted by the UK and the EU gives a true
and fair view of the assets, liabilities, financial position and
profit or loss of Unilever; and
-- the interim management report gives a fair review of the
information required pursuant to regulations 4.2.7 and 4.2.8 of the
Disclosure and Transparency Rules (DTR) issued by the UK Financial
Conduct Authority and section 5:25d (8)/(9) of the Dutch Act on
Financial Supervision (Wet op het financieel toezicht).
Unilever's Directors are listed in the Annual Report and
Accounts for 2021.
Details of all current Directors are available on our website at
www.unilever.com
By order of the Board
Alan Jope Graeme Pitkethly
Chief Executive Officer Chief Financial Officer
26 July 2022
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END
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