Unilever Regulatory News (ULVR)

2023 Full Year Results

(a) See note 11 for more information on dividends

Financial and operational highlights

? Underlying sales growth of 7.0% with positive volumes, up 0.2% for the FY and 1.8% in Q4

? Turnover of ?59.6 billion with (5.7)% impact from currency and (1.7)% from net disposals

? Underlying operating margin up 60bps to 16.7%, with gross margin up 200bps for the year and up 330bps in the second half

? Underlying EPS increased 1.4% with (9.6)% of adverse currency, up 11% on a constant basis

? Diluted EPS down (14.2)% against prior year that included ?2.3 billion profit on disposal for the Tea business

? Strong cash conversion of 111% with free cash flow up ?1.9 billion to ?7.1 billion

? New ?1.5 billion share buyback to commence in Q2

? Progress against Growth Action plan, including:

? New leadership team has embedded the plan across the organisation

? 30 Power Brands (~75% of turnover) accretive to growth and margin, with underlying sales up 8.6%

? Brand and marketing investment up 130bps to 14.3%, focused on 30 Power Brands

? Active portfolio optimisation into premium segments, announced acquisitions of K18 and Yasso and disposals of Elida Beauty, Dollar Shave Club, Suave in North America

Chief Executive Officer statement

"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."

Hein Schumacher

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.

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

1. 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.

2. 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.

3. 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.

4. 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.

5. 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

6. 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.

7. 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.

8. 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

9. 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.

10. 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.

Performance

Underlying sales growth in the full year was 7.0%, with positive volumes of 0.2% and 6.8% from price. Growth from the 30 Power Brands was accretive at 8.6%. Beauty & Wellbeing and Personal Care delivered strong volume growth throughout the year and Home Care returned to positive volume growth in the second half. Volume growth for the Group accelerated to 1.8% in the fourth quarter, with 3.9% volume growth from the 30 Power Brands.

Underlying price growth decelerated from 10.7% in the first quarter to 2.8% in the fourth quarter, reflecting lower net material inflation in the second half. Nutrition and Ice Cream faced the highest input cost inflation in 2023 which translated into higher pricing.

The percentage of our business winning market share* on a rolling 12 month-basis was disappointing at 37%. This poor performance reflects share losses to private label in Europe, consumer shifts to super-premium segments in North America where we currently under index and a significant reduction of unprofitable SKUs globally. Our competitiveness is not good enough and we are moving quickly to address it.

Beauty & Wellbeing grew underlying sales by 8.3%, with strong volume growth of 4.4%. Prestige Beauty and Health & Wellbeing continued to grow double-digit and now account for a quarter of Beauty & Wellbeing's turnover. Personal Care grew underlying sales 8.9%, with 3.2% from volume and 5.5% from price, led by strong sales growth of Deodorants. Home Care grew underlying sales 5.9%, driven by 6.8% from price and (0.9)% from volume, with positive volumes in emerging markets offset by a double-digit decline in Europe. Nutrition grew underlying sales 7.7%, with 10.1% from price and volumes down (2.2)% as we responded to higher input costs and a challenging European market. Ice Cream's underlying sales growth was disappointing at 2.3%, with price growth of 8.8% and a volume decline of (6.0)%, reflecting the impact of downtrading in the in-home channels.

Emerging markets (58% of Group turnover) grew underlying sales 8.5%, with 1.6% from volume and 6.9% from price. Latin America, Turkey and Africa delivered double-digit growth. India grew mid-single digit led by volume, with lower input costs that led to negative pricing in the fourth quarter. Sales in China grew low-single digit led by volume while the market recovery continued to be uneven and slower than expected. Growth in South East Asia was impacted by a sales decline in Indonesia in the fourth quarter as consumers avoided the brands of multinational companies in response to the geopolitical situation in the Middle East.

Underlying sales in developed markets (42% of Group turnover) grew 4.8% in the full year with 6.7% from price and (1.8)% from volume. North America delivered strong growth of 5.8% with 2.5% from volume and 3.3% from price, with continued double-digit underlying sales growth in Prestige Beauty and Health & Wellbeing. Volume growth in North America accelerated throughout the year leading to volume growth of 6.3% in the fourth quarter. In Europe, underlying sales growth was 4.1%, driven by 12.8% from price given its higher exposure to categories with significant cost inflation, and a volume decline of (7.7)%.

Turnover was ?59.6 billion, down (0.8)% versus the prior year, including (5.7)% adverse foreign exchange translation and (1.7)% from disposals net of acquisitions. Underlying operating profit was ?9.9 billion, up 2.6% versus the prior year. Underlying operating margin increased 60bps to 16.7%. We improved gross margin by 200bps to 42.2% with an improvement of 330bps in the second half. We more than mitigated net material inflation of around ?1.8 billion through improved productivity, price and mix while stepping up brand and marketing investment by ?0.7 billion, a 130bps increase as a percentage of turnover. Overheads increased by 10bps, as we continued to invest in the expansion of our Prestige Beauty and Health & Wellbeing businesses.

Capital allocation

We continue to reshape the portfolio, allocating capital to premium segments through selective bolt-on acquisitions and divesting lower-growth businesses while balancing investment in the business and shareholder returns.

Adding to our portfolio of premium brands, we announced the acquisitions of Yasso Holdings, Inc., a premium frozen Greek yogurt brand in the United States, which completed on 1 August, and K18, a premium biotech haircare brand, which completed on 1 February 2024.

We announced three disposals during the year: the Suave beauty and personal care brand in North America, which completed on 1 May; Dollar Shave Club, which completed on 1 November; and Elida Beauty, which comprises more than 20 personal care brands. It is expected to complete by mid-2024.

In 2023, we returned ?5.9 billion to shareholders through dividends and share buybacks. We completed the final two ?750 million tranches of our ?3 billion share buyback programme. The quarterly interim dividend for the Fourth Quarter is maintained at ?0.4268.

Reflecting the Group's continued strong cash generation, the Board has approved a share buyback programme of up to ?1.5 billion to be conducted during 2024, which we expect to commence in the second quarter.

*Competitiveness % Business Winning measures the aggregate turnover of the portfolio components (country/category cells) gaining value market share as a % of the total turnover measured by market data. As such, it assesses what percentage of our revenue is being generated in areas where we are gaining market share

Following the release of this trading statement on 8 February 2024 at 7:00 AM (UK time), there will be a webcast at 8:00 AM available on the website www.unilever.com/investor-relations/results-and-presentations/latest-results.

A replay of the webcast and the slides of the presentation will be made available after the live meeting.

Beauty & Wellbeing (21% of Group turnover)

In Beauty & Wellbeing, we are focused on three key priorities that will drive the unmissable superiority of our brands: elevating our core Hair Care and Skin Care brands to increase premiumisation; fuelling the growth of Prestige Beauty and Health & Wellbeing with selective international expansion; and continuing to strengthen our beauty and wellbeing capabilities.

Beauty & Wellbeing delivered a strong full year performance, with underlying sales up 8.3%, balanced between volume at 4.4% and price at 3.8%. Volume growth accelerated through the year to 6.3% in the fourth quarter, with good volumes in Hair Care and very strong volumes in Health & Wellbeing.

The full year performance reflects continued strong growth in Prestige Beauty and Health & Wellbeing, which now account for a quarter of Beauty & Wellbeing's turnover, as well as successful relaunches of some of our core Hair Care and Skin Care brands. The relaunches were powered by our science and technology capabilities and were supported by increased investment across our key markets to elevate their superiority credentials.

Hair Care grew mid-single digit through a combination of price and volume growth, with strong growth in Latin America and Turkey. Sunsilk delivered double-digit growth for the year following a successful relaunch of the brand. Clear delivered mid-single digit growth driven by breakthrough innovation - our first clinically proven anti-dandruff formula powered by niacinamide concentrate to repair and strengthen the scalp's skin barrier. Following the successful relaunch in China last year, the mix has now been expanded to Thailand, Turkey and Brazil.

Core Skin Care grew low-single digit driven by price. Vaseline delivered double-digit growth, reaching ?1 billion of turnover in 2023. Following the launch of our successful Gluta-Hya range in South East Asia two years ago, we further expanded the platform with the launch of serums and a Pro-Age range, tapping into a larger consumer pool by extending the patented technology to more products and new markets such as India. In North Asia, AHC declined double-digit as we reset the cross-border trade channel.

Our US-centric Prestige Beauty and Health & Wellbeing portfolios, built over several years through carefully selected bolt-on acquisitions, continued to grow ahead of the market delivering double-digit growth for the year. This was supported by strong performances from Hourglass, Dermalogica and Paula's Choice which launched a Vitamin C range, using our core science and technology capabilities. In Health & Wellbeing, Liquid I.V. and Nutrafol performed strongly. Liquid I.V. added sugar-free and kids variants to the range, without compromising flavour or function. The brand extended its presence outside of the United States for the first time with a successful launch in Canada, and further international roll outs planned.

Underlying operating margin was flat with gross margin improvement reinvested in marketing and overheads.

Personal Care (23% of Group turnover)

In Personal Care, we are focused on winning with science-led brands that deliver unmissable superiority to our consumers across Deodorants, Skin Cleansing, and Oral Care. Our priorities include developing superior technology and multi-year innovation platforms, leveraging partnerships with our customers, and expanding into premium areas and digital channels.

Personal Care grew underlying sales 8.9% for the year, with growth balanced between price and volume, underpinned by continued strength in Deodorants. In the fourth quarter all three categories drove positive volumes.

Personal Care's full year growth was led by its Power Brands and science-backed innovations. These innovations offer functional benefits but also deliver enhanced health, hygiene, and superior skin cleansing. Personal Care supported these innovations with a step-up in marketing investment, including strategic sponsorships such as our first sponsorship deal with FIFA.

Deodorants grew double-digit led by strong volume growth, particularly in Europe and Latin America. Rexona grew double-digit and its range of products with 72-hour sweat and odour protection technology is now in over 100 markets. Dove delivered double-digit growth with the successful launch of Dove Advanced Care for women and the launch of a new range of Dove Men+Care antiperspirant. Axe grew high-single digit following the launch of its new, long-lasting fine fragrance collection.

Skin Cleansing delivered mid-single digit growth with positive volumes. Lux grew double-digit driven by elevated skin care benefits in soap bars from its ProGlow technology. In the United States, Dove grew mid-single digit supported by its Body Wash relaunch with new packaging and 24-hour renewing MicroMoisture technology.

Oral Care grew mid-single digit led by price. Close Up grew double-digit and Pepsodent grew mid-single digit, having expanded its premium offerings in therapeutics and whitening.

The Dove Personal Care portfolio achieved double-digit growth with balanced price and volume growth.

Underlying operating margin increased by 60bps, driven by a strong gross margin improvement that was partly re-invested in increased brand and marketing investment.

Home Care (21% of Group turnover)

In Home Care, we focus on delivering for consumers who want superior products that are sustainable and great value. We drive growth through unmissable superiority in our biggest brands, in our key markets and across channels. We have a resilient business that spans price points and grows the market by premiumising and trading consumers up to additional benefits.

Home Care grew underlying sales 5.9% for the full year, with 6.8% from price and (0.9)% from volume. Volumes were positive in the second half, with a sharp price growth deceleration in emerging markets reflecting commodity cost deflation.

In Home Care we stepped up investments in brand and marketing and R&D to drive unmissable superiority of our biggest brands and deliver innovations that enhance the efficacy and sustainability of our products.

Fabric Cleaning grew mid-single digit for the year. This was led by high-single digit growth in Latin America where we launched OMO Branco Absoluto that restores the whiteness of clothes. South Asia delivered balanced high-single digit growth as we continued to develop the market by offering a full range of products to consumers, from entry-level products such as our Wheel laundry soap bar to mid-tier Rin, to premium Surf Excel liquid detergent. Growth in Europe was flat with double-digit price growth offset by volume declines. We expanded plastic-free packaging for OMO capsules to more countries across Europe and drove premiumisation through next generation innovation such as laundry sheets, a convenient and sustainable alternative to liquids and capsules.

We leveraged our cross-category science and technology platforms by using fragrance innovation from Beauty & Wellbeing in Fabric Enhancers where we launched Comfort Beauty Perfume in Vietnam. Fabric enhancers delivered mid-single digit growth driven by price with low-single digit volume decline. Turkey continued to lead growth with double-digit price and volume growth.

Home & Hygiene grew mid-single digit led by strong growth in Latin America and South Asia which was partially offset by a decline in South East Asia. In the United Kingdom, we launched Domestos Power Foam - an unmissably superior innovation that is designed to spray upside down for improved cleaning performance as well as convenience. High store penetration and availability coupled with product superiority make this a blueprint for future rollouts.

Underlying operating margin increased by 150bps driven by the strong gross margin improvement and a step-up in brand and marketing investment.

Nutrition (22% of Group turnover)

In Nutrition, our strategy is to deliver consistent, competitive growth by offering unmissably superior products through our biggest brands. We do this by reaching more consumers and focusing on top dishes and high consumption seasons to satisfy consumer's preferences on taste, health and sustainability; while delivering productivity and resilience in our supply chain. 

Nutrition grew underlying sales 7.7% for the year, with 10.1% from price and (2.2)% from volume. Growth continued to be price-led as we responded to higher input costs of food ingredients. In the fourth quarter, we saw an improvement in volumes, with our two largest brands, Hellmann's and Knorr, returning to positive volume growth.

Growth in Nutrition was driven primarily by Knorr and Hellmann's, which together accounted for 60% of Nutrition's turnover in 2023. We sharpened our focus on offering holistically superior products and unmissable marketing campaigns in key seasons, supported by increased marketing and R&D investment. Our business in Europe remained challenging as a result of continued cost inflation, the targeted exit of unprofitable SKUs, and private label share gains, impacting both volumes and profitability.

Scratch Cooking Aids grew high-single digit, led by Knorr, which achieved ?5 billion in turnover in 2023. North America grew mid-single digit, supported by the 'Knorr Taste Combos' campaign and the launch of Knorr ready-to-eat snack pots which provide consumers with a nutritious meal while saving time. Latin America grew double-digit and Europe grew mid-single digit as we developed targeted campaigns to inspire healthier diets. Africa grew double-digit, supported by fortified products that help address malnutrition in the region.

Dressings grew double-digit driven by price. With strong foundations in taste, sustainable ingredients and recyclable bottles, Hellmann's grew double-digit with positive volume driven by Latin America. The performance was helped by further roll outs of our vegan and flavoured mayonnaise range. We stepped up brand marketing investment to target high consumption occasions such as Thanksgiving, Christmas or the summer BBQ season. 2023 was our third consecutive US Super Bowl 'Make Taste, Not Waste' campaign with nearly 10 billion earned media impressions and we partnered with the NBA in Brazil.

Unilever Food Solutions, now 20% of Nutrition's sales, grew double-digit with positive volume and price growth driven by our strong presence in Europe, North America and North Asia. Our focus on customer service and digital selling has enabled us to serve more operators and improve productivity. As the food service market in China fully reopened, we grew double-digit, helped by market making innovation such as extending Knorr bouillon to more flavours, tapping into evolving consumer preferences.

Functional Nutrition returned to growth while growing penetration and market share through its core proposition for kids as well as premium innovation tailored for women and people with diabetes.

Underlying operating margin increased by 100bps, driven by gross margin improvement which funded an increase in brand and marketing investment.

Ice Cream (13% of Group turnover)

In Ice Cream, our immediate strategic priority is to expand operating profit and global market share. We will do this by building the unmissable superiority of our brands, accelerating market development in emerging markets, continuing to lead the industry on innovation and premiumisation, and by stepping up our performance and productivity.

Ice Cream grew underlying sales by 2.3%, with 8.8% from price and (6.0)% from volume. Volumes were impacted throughout the year by high price elasticities with consumers downtrading to value formats and less favourable summer weather versus last year, mainly in Europe. In the fourth quarter, price growth slowed significantly after double-digit price growth in the first half of the year.

Ice Cream had a disappointing year with declining market share and profitability. We continued to invest behind our Power Brands, including Magnum and Cornetto, which generated almost 85% of the Business Group's turnover. These brands remain well positioned to meet consumer's desire for superior and indulgent ice cream. Emerging markets delivered mid-single digit growth, driven by a strong performance in Turkey. In the fourth quarter, we made additional investments in promotions, particularly in North America, to address competitiveness and volume decline.

In the full year, there was a marginal decline in In-home Ice Cream (around 60% of the business), with volumes down high-single digit broadly offset by pricing. Inflation remained high and private label gained share as consumers looked for value propositions in this discretionary category. In the United States, our Talenti brand expanded from pints into new formats with mini gelato and sorbetto bars.

Out-of-home Ice Cream (around 40% of the business) grew high-single digit, driven by strong pricing partially offset by some volume decline. Our limited-edition Magnum innovation, Starchaser and Sunlover, performed well and became Magnum's biggest ever innovation.

Underlying operating margin declined 90bps, driven by lower gross margin as a result of continued cost inflation and volume deleverage outstripping pricing, while brand and marketing investment increased.

Asia Pacific Africa (44% of Group turnover)

Underlying sales growth was 6.5% with price growth of 5.3% and volume growth of 1.1%.

India grew mid-single digit through balanced price and volume growth. Sales were flat in the fourth quarter as pricing turned negative, mainly driven by price reductions in Fabric Cleaning and Skin Cleansing bars as a result of commodity movements. We are focused on driving competitive volume growth while pricing is expected to remain marginally negative if current commodity prices persist.

China grew low single-digit in a deflationary market with low consumer confidence. Growth was driven by a strong performance in Unilever Food Solutions and growth in Beauty & Wellbeing, while Home Care, Personal Care and Ice Cream declined.

In Indonesia, sales declined double-digit in the fourth quarter as consumers avoided the brands of multinational companies in response to the geopolitical situation in the Middle East. We have since seen some improvement to customer and consumer uptake in January. Growth in the Philippines was broad-based with a mix of price and volume growth while Thailand and Vietnam saw mid-single and low-single digit growth respectively, led by price.

Turkey delivered double-digit volume growth in a hyperinflationary environment with all Business Groups growing volumes.

Africa grew double-digit driven by price as volume growth turned positive in the second half.

The Americas (36% of Group turnover)

Underlying sales growth in North America was strong at 5.8% with 2.5% from volume growth, which accelerated to 6.3% in the fourth quarter, and 3.3% from price. Beauty & Wellbeing grew double-digit led by Prestige and Health & Wellbeing. Personal Care grew mid-single digit and Nutrition grew high-single digit, with strong performances from Dove and Hellmann's respectively. Positive volume growth in Beauty and Wellbeing, Nutrition, and Personal Care was partially offset by a volume decline in Ice Cream.

Latin America grew 14.9% with 4.8% from volume growth and 9.6% from price. Growth was broad-based with double-digit growth in Brazil, Mexico, and Argentina. Personal Care led growth through double-digit volume growth driven by Rexona. Brazil growth was led by Personal Care and Nutrition where Hellmann's Supreme became the market leader in the premium Squeeze segment. Argentina grew volumes double-digit despite challenging macro-economic and market conditions, particularly in the fourth quarter.

Europe (20% of Group turnover)

Underlying sales growth was 4.1% with price at 12.8% and volume at (7.7)%.

Price growth remained elevated in all Business Groups to at least partially recover the impact from high input cost inflation. Personal Care and Beauty & Wellbeing delivered strong growth with slightly positive volume. Nutrition grew mid-single digit, while growth in Ice Cream and Home Care was muted due to double-digit volume declines. Private label gained share across most categories as consumer looked for value propositions in a high inflation environment.

Price-led growth was broad-based across most of the region. Eastern Europe and the United Kingdom grew underlying sales strongly, while France declined.

Finance costs and tax

Net finance costs reduced by ?7 million to ?486 million in 2023. This was driven by higher interest income across several markets and a higher interest credit from pensions, which more than offset the higher cost of debt on bonds and commercial paper. Net finance costs were 2.1% on average net debt. For 2024, we expect net finance costs to be between 2.5% to 3% on average net debt. This reflects the impact of refinancing maturing debt at higher rates, and lower finance income and pension credits versus 2023.

The underlying effective tax rate for 2023 increased to 25.6% (2022: 24.1%), due to a number of factors including an increase in non-deductible interest and irrecoverable withholding tax, as well as lower benefits from tax settlements and other one-off items. Our guidance for the underlying effective tax rate remains around 25%. The effective rate was 24.1% and included a benefit related to the disposal of the Dollar Shave Club. This compares with 20.4% in the prior year, which included a significant favourable impact related to the disposal of the global tea business which benefited from the participation exemption in the Netherlands.

Joint ventures, associates and other income from non-current investments

Net profit from joint ventures and associates increased ?23 million to ?231 million, largely driven by the Pepsi-Lipton JVs. Other income from non-current investments was ?(22) million, versus ?24 million in the prior year.

Earnings per share

Underlying earnings per share increased 1.4% to ?2.60, including (9.6)% of adverse currency. Constant underlying earnings per share increased by 11.0%, reflecting a strong operational performance. The reduction in the average number of shares as a result of the share buyback programme contributed 1.1%. Diluted earnings per share of ?2.56 decreased by 14.2% versus the prior year that included the ?2.3 billion profit on disposal for the Tea business.

Free cash flow

We delivered strong cash conversion of 111%. Free cash flow increased ?1.9 billion to ?7.1 billion (2022: ?5.2 billion). This increase was largely driven by higher underlying operating profit, significantly improved working capital, and included ?0.4 billion linked to a tax refund in India.

Underlying return on invested capital

Underlying return on invested capital improved to 16.2% (2022: 16.0%). This reflected the working capital improvement that reduced total invested capital.

Net debt

Closing net debt was ?23.7 billion in line with 31 December 2022. Capital returns of ?4.4 billion in dividends and ?1.5 billion in share buyback to PLC shareholders, as well as net spend on acquisition and disposal activity, were fully funded by the free cash flow delivery of ?7.1 billion. Net debt to underlying EBITDA was 2.1x as at 31 December 2023, in line with the prior year and our guidance of around 2x.

Pensions

Pension assets net of liabilities were in surplus of ?2.4 billion at 31 December 2023 versus a surplus of ?2.6 billion at the end of 2022. The decrease was primarily driven by reductions in interest rates increasing liabilities more than assets.

Financial implications and impairment risk in Russia

Our Russia business employs approximately 3,000 people in Russia and in 2023 the business represented around 1% of the Group's turnover and net profit. As at 31 December 2023, our Russia business had net assets of around ?600 million, including four factories. During 2023 we reviewed our position and concluded that the containment actions we put in place at the beginning of the war minimise our economic contribution to the Russian state.

We will continue to review and disclose the financial implications from the conflict. While the potential impacts remain uncertain, there remains a risk that our operations in Russia are unable to continue, leading to loss of turnover, profit and a write-down of assets.

Share buyback programme

On 18 October 2023, we completed the fourth and final ?750 million tranche of our share buyback programme of up to ?3 billion, initiated on 10 February 2022. The total consideration paid for the repurchase of 16,181,572 shares is recorded within other reserves and the shares are held by Unilever as treasury shares. Under the first three tranches of the programme, a total of 49,770,289 ordinary Unilever PLC shares were purchased, and subsequently cancelled on 2 August 2023.

Reflecting the Group's continued strong cash generation and anticipated proceeds from the sale of Elida Beauty, the Board has approved a share buyback programme of up to ?1.5 billion to be conducted during 2024, which we expect to commence in the second quarter.

Finance and liquidity

In 2023, the following notes matured and were repaid:

? February: ?600 million 0.375% fixed rate notes

? March: $550 million 3.125% fixed rate notes

? June: ?500 million 1.00% fixed rate notes

? August: ?500 million 0.50% fixed rate notes

? September: $500 million 0.375% fixed rate notes

The following notes were issued:

? February: ?500 million 3.25% fixed rate notes maturing in February 2031 and ?500 million 3.50% fixed rate notes due February 2035

? June: ?550 million 3.30% fixed rate notes due June 2029 and ?700 million 3.40% fixed rate notes due June 2033

? September: $700 million 4.875% fixed rate notes due September 2028 and $800 million 5.00% fixed rate notes due December 2033

On 31 December 2023, Unilever had undrawn revolving 364-day bilateral credit facilities in aggregate of $5,200 million and ?2,600 million with a 364-day term out.

As previously disclosed, Unilever is involved in a number of ongoing investigations by national competition authorities. These proceedings and investigations are at different stages and concern different 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. At the same time, we are vigorously defending Unilever when we feel that allegations are unwarranted. The Group continues to reinforce and enhance its internal competition law compliance programme on an ongoing basis.

Effective from 1 January 2024, the functional currency of Unilever PLC ("PLC"), the Group's ultimate parent company, has changed from Sterling to Euro. This follows a review and subsequent change of the internal debt of PLC, from Sterling to Euro, which triggered a formal evaluation of PLCs functional currency in line with relevant accounting standards. The change is applied prospectively. There is no change to the stock listing currency of the Group and future dividends will continue to be paid in Sterling, Euro, and US dollar depending on the location of the exchange where shares are traded. There is no impact on the presentation of the Group results nor will there be any restatement to the Group financial statements as a result of this change.

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.

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 (A&D) 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:

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:

(a) See note 2.

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:

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:

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:

Cash conversion

Unilever defines cash conversion as free cash flow excluding tax on disposal as a proportion of net profit, excluding P&L on disposal and income from JV, associates and non-current investments. This reflects our ability to convert profit to cash.

Underlying return on invested capital (ROIC)

Underlying return on invested capital (ROIC) is a measure of the return generated on capital invested by the Group. The measure provides a guard rail for long-term value creation and encourages compounding reinvestment within the business and discipline around acquisitions with low returns and long payback. Underlying ROIC is calculated as underlying operating profit after tax divided by the annual average of: goodwill, intangible assets, property, plant and equipment, net assets held for sale, inventories, trade and other current receivables, and trade payables and other current liabilities.

(a) Tax on underlying operating profit is calculated as underlying operating profit before tax multiplied by the underlying effective tax rate of 25.6% (2022: 24.1%) which is shown on page 14.

This announcement may contain forward-looking statements within the meaning of the securities laws of certain jurisdictions, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words and terminology such as 'will', 'aim', 'expects', 'anticipates', 'intends', 'looks', 'believes', 'vision', 'will continue', 'should', 'would be', 'seeks', 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 appear in a number of places throughout this document and are based upon the intentions, beliefs, current expectations and assumptions regarding anticipated developments and other factors affecting the Group. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. 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. In addition, even if the results are consistent with the forward-looking statements contained in this announcement, those results may not be indicative of results in subsequent periods. 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. A number of these risks have increased as a result of the Russia/Ukraine war. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any intention or 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. All subsequent written and oral forward-looking statements attributable to either the Group or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above. 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 2022 and the Unilever Annual Report and Accounts 2022.

After the conference call on 8 February 2024 at 8:00 AM (UK time), the webcast of the presentation will be available at www.unilever.com/investor-relations/results-and-presentations/latest-results.

This Results Presentation has been submitted to the FCA National Storage Mechanism and is available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

(a) Includes a hyperinflation adjustment of ?514 million in relation to Argentina and Turkey.

(b) Repurchase of shares reflects the cost of acquiring ordinary shares as part of the share buyback program announced on 10 February 2022.

(c) Includes purchases and sales of treasury shares, other than the share buyback programme and the transfer from treasury shares to retained profit of share-settled schemes arising from prior years and differences between purchase and grant price of share awards.

(d)  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.

(e)  Includes the following items related to the acquisition of Nutrafol: ?(269) million non-controlling interest purchase option in other reserves and ?99 million non-controlling interest recognised on acquisition.

(f) Includes a hyperinflation adjustment of ?308 million in relation to Argentina and Turkey.

(g) During 2023, 112,746,434 PLC ordinary shares held as treasury shares were cancelled. The amount paid to repurchase these shares was initially recognised in other reserves and is transferred to retained profit on cancellation.

(unaudited)

Except as set out below the accounting policies and methods of computation are consistent with the year ended 31 December 2022. In conformity with the requirements of the Companies Act 2006, the condensed consolidated preliminary financial statements have been prepared based on the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB) and UK-adopted international accounting standards.

The condensed consolidated financial statements are shown at current exchange rates, and percentage year-on-year changes are shown to facilitate comparison. The consolidated income statement on page 18, the consolidated statement of comprehensive income on page 18, the consolidated statement of changes in equity on page 19 and the consolidated cash flow statement on page 21 are translated at exchange rates current in each period. The balance sheet on page 20 is translated at period-end rates of exchange.

The condensed consolidated financial statements attached do not constitute the full financial statements within the meaning of Section 434 of the UK Companies Act 2006, which will be finalised and delivered to the Registrar of Companies in due course. Full accounts for Unilever for the year ended 31 December 2022 have been delivered to the Registrar of Companies; the auditors' reports on these accounts were unqualified, did not include a reference to any matters by way of emphasis and did not contain a statement under Section 498 (2) or Section 498 (3) of the UK Companies Act 2006.

New accounting standards

On 1 January 2023, the Group adopted IFRS 17 'Insurance Contracts'. The standard introduces a new model for accounting for insurance contracts. We have reviewed existing arrangements and concluded that IFRS 17 does not impact the condensed consolidated financial statements.

On 23 May 2023, amendments to IAS 12 'Income Taxes' came into effect relating to International Tax Reform (Pillar Two). These amendments clarify when an entity shall disclose qualitative and quantitative information about its exposure to Pillar Two income taxes. Effective immediately, the amendments also provide a temporary mandatory exemption from deferred tax accounting. There is no impact on the condensed consolidated financial statements.

All other new standards or amendments issued by the IASB and UK Endorsement Board that are effective or not yet effective, are either not applicable or not material to the Group.

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, 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.

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.

(a)  2023 includes a charge of ?104 million for the revaluation of the minority interest liability of Nutrafol, ?43 million relating to the disposal of Elida Beauty and ?10 million (2022: ?42 million) relating to the disposal of the global tea business.

(b)  2023 includes a gain of ?497 million related to the disposal of Suave business in North America. 2022 includes a gain of ?2,303 million related to the disposal of the global tea business.

(c) Restructuring costs are comprised of strategic organisational change programmes (including Compass), and transformational technology and supply chain projects.

(d)  2022 includes an impairment charge of ?192 million relating to Dollar Shave Club.

(e)  2023 includes ?28 million net release after utilisation to the provision (2022: ?89 million charge) relating to a product recall and market withdrawal by The Laundress, ?107 million release (2022: ?82 million charge) relating to legal provisions for ongoing competition investigations and ?54 million charge (2022: ?42 million charge) relating to our businesses in Russia and Ukraine.

(f) 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.

*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.

*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.

The effective tax rate for 2023 is 24.1% compared with 20.4% in 2022. The increase is primarily driven by the favourable impact of the ekaterra Tea disposal which benefited from the participation exemption in the Netherlands in 2022. The increase was partially offset by a benefit related to the disposal of Dollar Shave Club in 2023.

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 twelve months were calculated as follows:

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:

In 2023, the Group completed the business acquisitions and disposals as listed below. The net consideration for acquisitions in 2023 is ?675 million (2022: ?811 million for acquisitions completed during that year).

On 1 May 2023, Unilever sold the North America Suave business to Yellow Wood Partners LLC for consideration of ?592 million. A gain on disposal of ?497 million has been recognised as a non-underlying item (see note 2).

On 18 December 2023, Unilever announced that it has received a binding offer from Yellow Wood Partners LLC to acquire Elida Beauty. Elida Beauty comprises more than 20 beauty and personal care brands including Q-Tips, Caress, Timotei and Tigi. Completion is expected by mid-2024.

On 22 December 2023, the Group announced it had signed an agreement to acquire K18, a premium biotech haircare brand in the US. The transaction completed on 1 February 2024 and the provisional accounting for this transaction, including the valuation of assets and liabilities acquired, is expected to be completed by H1 2024. This acquisition is another step towards the optimisation of Unilever's portfolio into premium segments.

Acquisitions

Effect on consolidated income statement

The acquisition deals completed in 2023 have contributed ?82 million to the Group turnover and ?18 million to the Group operating profit since the date of acquisition. If the acquisition deals completed in 2023 had all taken place at the beginning of the year, Group turnover would have been ?59,709 million, and Group operating profit would have been ?9,780 million.

Effect on consolidated balance sheet

The following table summarises the consideration and net assets acquired in 2023. The fair values currently used for opening balances are provisional. These balances remain provisional due to there being outstanding relevant information in regard to facts and circumstances that existed as of the acquisition date and/or where valuation work is still ongoing.

(a) Other current assets include inventories of ?18 million and cash and cash equivalents of ?30 million.

(b) Non-current liabilities include deferred tax of ?109 million.

Disposals

Total consideration for 2023 disposals is ?578 million (2022: ?4,606 million for disposals completed during that year). The following table sets out the effect of the disposals in 2023 and comparative year on the consolidated balance sheet. The results of disposed businesses are included in the consolidated financial statements up until their date of disposal.