Unilever(UK)(UL) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year, underlying sales growth was 3.5%, with volumes at 1.5% and price at 2% [5] - Turnover for the full year was EUR 50.5 billion, down 3.8% versus the prior year, primarily due to significant currency headwinds [25] - Underlying operating margin expanded by 60 basis points to 20% in 2025, reflecting a structurally strong margin profile [26] - Underlying EPS rose to EUR 3.08, up 0.7% versus the prior year, with sales growth and margin expansion contributing 6.5% to EPS growth [28] Business Line Data and Key Metrics Changes - Beauty and Wellbeing delivered underlying sales growth of 4.7% for the full year, with volumes up 2.8% [10] - Personal Care delivered underlying sales growth of 4.7% for the full year, driven by strong performance in the U.S. [11] - Home Care delivered underlying sales growth of 2.6% for the year, primarily volume-led at 2.2% [14] - Foods delivered underlying sales growth of 2.5% for the year, with 0.8% from volume and 1.7% from price [16] Market Data and Key Metrics Changes - Developed markets delivered underlying sales growth of 3.6% for the year, while emerging markets delivered underlying sales growth of 3.5% [19][21] - In North America, underlying sales grew 5.3% for the year, with volumes contributing 3.8% [20] - In Asia Pacific Africa, underlying sales growth was 4.6% for the year, with volumes contributing 3% [21] - Latin America saw underlying sales growth of 0.5% for the year, reflecting a broad-based market slowdown [23] Company Strategy and Development Direction - The company aims to focus on beauty, wellbeing, and personal care, with an emphasis on premium segments and digitally native brands [32][34] - The company completed the demerger of ice cream and 10 transactions to sharpen its portfolio and increase focus on growth [34] - The company is committed to a disciplined capital allocation strategy, focusing on growth and productivity while delivering attractive capital returns [31][44] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in emerging markets, expecting volume growth of at least 2% in 2026 [36] - The company anticipates underlying sales growth for 2026 to be at the bottom end of the multi-year range of 4%-6% [36] - Management acknowledged challenges in developed markets but emphasized the strength of their portfolio and execution [38] Other Important Information - Free cash flow for the year was EUR 5.9 billion, representing 100% cash conversion [29] - The company has delivered more than EUR 670 million of savings from its productivity program, ahead of schedule [27][59] - The company plans to continue investing in brand and marketing, with 16.1% of turnover allocated to these areas, the highest percentage in over a decade [27] Q&A Session Questions and Answers Question: Emerging market outlook for 2026 - Management expressed confidence in emerging markets, noting improvements in India and Indonesia, and a gradual recovery in China [51][52][53] Question: Pricing outlook for 2026 - Management expects pricing growth to be around 2% for 2026, with some increased promotional spending noted [64] Question: Key building blocks for margin improvement in 2026 - Management highlighted the importance of gross margin expansion, productivity savings, and disciplined pricing as key factors for margin improvement [66][68]