Hein Schumacher, CEO: “Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever’s full potential.
“In October, we set out a Growth Action Plan focused on three priorities: delivering higher-quality growth, stepping up productivity and simplicity, and adopting a strong performance focus.
“The new leadership team has embedded the action plan at pace. We have increased investment behind our 30 Power Brands, accelerated portfolio transformation, and are driving a sharper performance focus with clear and stretching targets across the whole organisation.
“We are at the early stages of this work and there is much to do but we are moving with speed and urgency to transform Unilever into a consistently higher performing business.”
Outlook
We expect underlying sales growth (USG) for 2024 to be within our multi-year range of 3% to 5%, with more balance between volume and price.
We anticipate a modest improvement in underlying operating margin for the full year. We will deliver this through gross margin expansion, driven by a step-up in productivity and net material inflation back to more normal levels.
Growth Action Plan update
In October 2023, we set out a Growth Action Plan to drive improved performance and competitiveness. During the fourth quarter, we moved at pace to embed it across the business.
The plan is divided into three elements but is underpinned by one simple premise: the need to do fewer things, better, with greater impact. The operational impacts will build throughout 2024.
Faster growth
- Focus on 30 Power Brands: These gross margin accretive brands represented around 75% of Group turnover with underlying sales growth of 8.6% in 2023 and 6.5% in the fourth quarter. This is where we have concentrated our incremental brand and marketing investment, which will continue in 2024.
- Drive unmissable brand superiority: We developed a new quantitative methodology to measure brands’ consumer appeal across multiple dimensions and have validated it in 29 strategic cells. During the first half of 2024, this will be rolled out across all 30 Power Brands in key geographies to identify performance gaps and improve competitiveness.
- Scale multi-year innovation: We have identified multi-year, scalable innovation programmes to drive market development and premiumisation. The programmes at least double the average 2022 project size, with launches from 2025.
- Increase brand investment and returns: In 2023, we reinvested more than half of our gross margin expansion into incremental brand and marketing investment, up 130bps to 14.3%. We will continue to step up investment in areas that drive impact and support improved competitiveness.
- Selectively optimise the portfolio: We continue to reshape the portfolio, with the announced acquisitions of Yasso and K18 and the disposals of Elida Beauty, Dollar Shave Club and Suave.
Productivity & simplicity
- Build back gross margin: We accelerated recovery in the second half of 2023 with a 330bps gross margin improvement, driving a 200bps improvement for the year to 42.2%. In 2024, a tight grip on costs, measured by improved net productivity, will fuel further gross margin expansion.
- Focus our sustainability commitments: We are honing our sustainability efforts around four critical platforms: Climate, Plastic, Nature and Livelihoods. We have set exacting, short-term targets, to drive progress against our longer-term commitments.
- Drive benefits of the organisation: The category-focused Business Groups are now fully implemented with end-to-end responsibility for strategy and performance. In 2024, this will enable sharper choices to accelerate growth and digitalisation.
Performance Culture
- Renewed team: Since October, over half of our executive leadership team has changed. Our new leaders are addressing the 2024 opportunities and challenges with urgency and decisiveness.
We are announcing today that our Chief People & Transformation Officer Nitin Paranjpe has decided to retire from Unilever later this year. Nitin has had a distinguished 37-year career with Unilever, including as CEO of Hindustan Unilever, President Home Care, President Foods & Refreshment and Chief Operating Officer of Unilever. We are pleased to announce the appointment of Mairéad Nayager as our new Chief People Officer, effective 1 June. Mairéad is currently Chief Human Resources Officer (CHRO) of Haleon PLC, having previously served as CHRO of Diageo PLC between 2015 and 2022.
- Drive and reward outperformance: We have implemented a new reward framework across the organisation with metrics more closely aligned to value creation. A new Directors’ remuneration policy proposal has been extensively consulted on with our largest shareholders and will be voted on at the 2024 AGM.
