TIDMULVR
RNS Number : 0535G
Unilever PLC
22 July 2021
2021 FIRST HALF YEAR RESULTS
Performance highlights (unaudited)
Underlying performance GAAP measures
vs 2020 vs 2020
First Half
Underlying sales growth
(USG) 5.4% Turnover EUR25.8bn 0.3%
Underlying operating
margin 18.8% (100)bps Operating margin 17.2% (100)bps
Underlying earnings Diluted earnings per
per share EUR1.33 (2.0)% share EUR1.19 (5.0)%
Second Quarter
USG 5.0% Turnover EUR13.5bn 1.2%
========== ========= ===================== ========== =========
Quarterly dividend payable in September EUR0.4268 per share
2021
=========================================== =======================================================
First half highlights
-- Underlying sales growth of 5.4%, with 4.0% volume and 1.3%
price. Price growth stepped up in Q2
-- Turnover increased 0.3% including a positive impact of 1.4%
from acquisitions net of disposals and negative impact of 6.1% from
currency related items
-- Underlying operating margin of 18.8%, a decrease of 100bps
driven by investment behind our brands and input cost inflation
-- Underlying earnings per share down 2.0%, including a negative impact of 6.3% from currency
-- Free cash flow of EUR2.4 billion, compared to EUR2.9 billion in the first half of 2020
-- Quarterly shareholder dividend of EUR0.4268 per share and
share buyback programme of up to EUR3 billion underway
Alan Jope: Chief Executive Officer statement
"Unilever has delivered a strong first half, with underlying
sales growth of 5.4% driven by our continued focus on operational
excellence.
We are making good progress against the strategic choices
outlined earlier this year, including the development of our
portfolio into high growth spaces. Prestige Beauty and Functional
Nutrition grew strongly and we recently announced the acquisition
of digitally-native skin care brand Paula's Choice. The operational
separation of our Tea business is substantially complete. Our
ecommerce business grew 50% and the channel now represents 11% of
sales.
Competitive growth is our priority, and we are confident that we
will deliver underlying sales growth in 2021 well within our
multi-year framework of 3-5%, despite more challenging comparators
in the second half. We have seen further cost inflation emerge
through the second quarter. Cost volatility and the timing of
landing price actions create a higher than normal range of likely
year end margin outcomes. We are managing this dynamically and
expect to maintain underlying operating margin for 2021 around
flat."
22 July 2021
FIRST HALF OPERATIONAL REVIEW: DIVISIONS
Second Quarter 2021 First Half 2021
===========================
Turnover USG UVG UPG Turnover USG UVG UPG Change
in underlying
operating
(unaudited) margin
======================== ========= ==== ==== ==== ========= ==== ==== ======= ===============
EURbn % % % EURbn % % % bps
========= ==== ==== ==== ========= ==== ==== ======= ===============
Unilever 13.5 5.0 3.3 1.6 25.8 5.4 4.0 1.3 (100)
========= ==== ==== ==== ========= ==== ==== ======= ===============
Beauty & Personal Care 5.4 4.2 2.1 2.0 10.4 3.3 1.8 1.4 (220)
Home Care 2.6 3.2 3.1 0.1 5.2 4.5 4.8 (0.3) (130)
Foods & Refreshment 5.5 6.8 4.6 2.0 10.2 8.1 5.8 2.1 60
========= ==== ==== ==== ========= ==== ==== ======= ===============
Our markets: The operating environment across our markets has
seen some improvements but remains volatile. Restrictions on daily
life continue around the world, impacting channel dynamics, sales
mix and consumer behaviour. Although renewed restrictions in India
impacted the market in the second quarter, they were less severe
than in the same period last year. In China, normalisation has
continued, but market growth is still below pre-Covid-19 levels.
The North America and Europe markets declined in the second quarter
as we lapped the surge in demand for in-home food and hygiene
products in the same period of 2020. In difficult macroeconomic
conditions, markets are growing in Latin America but market
conditions in South East Asia remain challenging. In Indonesia,
large parts of the country have entered lock-down following a sharp
rise in Covid-19 cases.
Unilever overall performance: We continue to be guided by our
five strategic choices:
-- develop our portfolio into higher growth spaces;
-- win with our brands as a force for good, powered by purpose and innovation;
-- accelerate in the USA, India and China and leverage our emerging markets strength;
-- lead in the channels of the future; and
-- build a purpose-led, future-fit organisation and growth culture.
These strategic choices and our sharp focus on operational
excellence have delivered first half underlying sales growth of
5.4%, with volume growth of 4.0% and 1.3% from price. Underlying
sales growth in the second quarter was 5.0%, including price of
1.6%, which accelerated through the quarter as our pricing actions
landed in markets.
Emerging markets grew 8.3%, driven by continued recovery in
China and strong performance in South Asia, both growing double
digit. Performance in South East Asia was mixed, with Indonesia
declining high single digit. Latin America grew high single digit,
led by price growth. Developed markets grew 1.5%, as North America
and Europe each grew low single digit. In North America, food
solutions and Prestige Beauty contributed to growth as the out of
home eating and health and beauty channels reopened. We saw a
relative decline in food consumed at home and flat growth in
hygiene products, as we lapped the spike in demand in the prior
year. In Europe, volume growth was supported by a recovery in out
of home ice cream. Price declined in Europe as we lapped a period
of lower promotional intensity in some markets. Ecommerce grew 50%
and is now 11% of sales.
Turnover increased 0.3% including a positive impact of 1.4% from
acquisitions net of disposals and negative impact of 6.1% from
currency related items.
We continue to develop our portfolio into higher growth spaces.
In Prestige Beauty we signed an agreement in June to acquire the
leading digital-led skin care brand Paula's Choice, which has
pioneered jargon-free science, high performing ingredients and
cruelty-free products. Underlying sales in functional nutrition
grew high single digit in the second quarter, which includes
vitamins, minerals & supplements brands OLLY and Equilibra and
our South Asian nutrition brands Horlicks and Boost.
The operational separation of our tea business is substantially
complete and is due to conclude in October 2021. We are now focused
on the next phase for this business, which we expect to be either
an IPO, sale or partnership. This business generated revenues of
around EUR2 billion in 2020 and excludes our hot tea businesses in
India and Indonesia and our partnership interests in ready-to-drink
tea.
As we announced in April, a number of smaller beauty and
personal care brands have been separated with a dedicated
management team under the name Elida Beauty. The brands include
Q-Tips, Caress, Tigi, Timotei, Impulse and Monsavon with combined
revenues of around EUR0.6 billion in 2020. We are exploring options
for these brands with a focus on maximising value creation.
Underlying operating margin declined by 100bps to 18.8%. After
conserving spend at the peak of the global pandemic in the prior
year we have stepped up investment in our brands and marketing
campaigns, increasing spend by 80bps. Gross margin was 60bps lower,
impacted by an increase in raw material, packaging and distribution
costs globally. There was a slightly negative incremental impact on
gross margin in the first half from adverse mix related to Covid-19
. Overheads improved by 40bps. Productivity programmes and ongoing
Covid-19 related savings in areas like travel and facilities
continued.
Beauty & Personal Care
Beauty and Personal Care underlying sales grew 3.3% with 1.8%
from volume and 1.4% from price, with an acceleration to 4.2%
underlying sales growth in the second quarter, helped by increased
personal care consumption occasions as living restrictions were
eased in some of our markets.
Skin care grew double digit and deodorants returned to growth.
In skin care Vaseline and Ponds each grew double digit. We launched
Dove's refillable deodorant innovation in the USA, one of many Dove
projects exploring sustainable packaging solutions. Skin cleansing
declined as we lapped the sharp increase in demand in the prior
year related to Covid-19. Hair grew mid-single digit. Wash and care
and styling both grew and we saw good growth in China, India and
Brazil. Premium brand Shea Moisture grew double digit in the USA.
Oral care grew mid-single digit, led by volume from South Asia and
Africa. Closeup's freshness innovation is driving growth in Brazil.
Our Prestige Beauty brands grew double digit, with higher in-store
footfall. We increased pricing in response to commodity inflation
across categories, particularly in Latin America and South
Asia.
Underlying operating margin declined 220bps as we stepped up
brand and marketing investment compared to the prior year and as
gross margin declined as a result of high cost inflation.
Home Care
Home Care underlying sales grew 4.5% with 4.8% from volume and
negative price of 0.3%.
Fabric cleaning grew mid-single digit driven by recovery in
India and price-led growth in Brazil. In Latin America growth was
helped by our Omo dilutable laundry liquid innovation, which
launched in 2020. Fabric enhancers grew mid-single digit led by
China, where our Comfort fragrance boosters innovation with
dual-colour beads and luxury-inspired fragrances performed well.
Home & hygiene declined low single digit. There was good growth
in dishwash in emerging markets, whilst household cleaners declined
as we lapped a prior year spike in growth. We expanded our Lifebuoy
brand into home hygiene products in the UK and Germany, launching
the new Botanitech range of cleaning products with
naturally-derived ingredients.
Price declined overall as we lapped a period of lower
promotional intensity in some markets and as the impact of rising
input costs was more muted in fabric cleaning through the first
half. Pricing was slightly positive in the second quarter as we
started to take pricing action in markets including Brazil and
Turkey to respond to rising input costs.
Underlying operating margin declined 130bps as we increased
brand and marketing investment compared to the prior year. Gross
margin declined as a result of high cost inflation, whilst
overheads decreased.
Foods & Refreshment
Foods and Refreshment underlying sales grew 8.1% with 5.8% from
volume and 2.1% from price.
Ice cream sales grew across both in home and out of home
products, with double digit performances in Turkey, China and
India. Out of home ice cream in Europe grew double digit as living
restrictions began to ease, although sales have not returned to
pre-Covid-19 levels. Magnum and Ben and Jerry's both grew double
digit. Magnum launched the Miley in Layers campaign with Miley
Cyrus. Ben and Jerry's has seen innovation success with its
'Topped' product range, with larger chunks and unique patterns and
layers.
Food solutions grew double digit. Sales in China were above
pre-Covid-19 levels, however in most other markets turnover has not
yet recovered to 2019 levels as out of home channel restrictions
remained in place. In-home foods grew low single digit even as we
lapped a spike in demand in the prior year. Knorr and Hellmanns's
grew double digit led by volume with campaigns such as Make Taste
Not Waste in Hellmann's and the rollout of innovations such as
Knorr's flavour rich, low salt bouillon. We took pricing action
across food and ice cream to counter rising input costs.
Tea grew high single digit through both price and volume, with
growth in North America, Turkey, Europe and India. Price was driven
by India, following significant raw material inflation.
Underlying operating margin increased 60bps. There was an
increase in brand marketing investment and a decrease in overheads
as we benefitted from turnover leverage .
Second Quarter 2021 First Half 2021
Turnover USG UVG UPG Turnover USG UVG UPG Change
in underlying
operating
(unaudited) margin
========================== ========= ==== ==== ====== ========= ==== ==== ======= ===============
EURbn % % % EURbn % % % bps
========================== ========= ==== ==== ====== ========= ==== ==== ======= ===============
Unilever 13.5 5.0 3.3 1.6 25.8 5.4 4.0 1.3 (100)
========================== ========= ==== ==== ====== ========= ==== ==== ======= ===============
( 30
Asia/AMET/RUB 6.1 5.7 4.5 1.2 12.1 7.7 6.4 1.2 )
The Americas 4.2 4.8 0.7 4.1 8.0 5.1 1.7 3.3 (190)
Europe 3.2 4.0 4.7 (0.6) 5.7 1.1 2.2 (1.1) (130)
========================== ========= ==== ==== ====== ========= ==== ==== ======= ===============
Second Quarter 2021 First Half 2021
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
======================== ======== ==== ====== ==== ======== === === =====
EURbn % % % EURbn % % %
======================== ======== ==== ====== ==== ======== === === =====
Developed markets 5.8 2.2 1.6 0.6 10.8 1.5 1.4 0.2
Emerging markets 7.7 7.2 4.7 2.4 15.0 8.3 5.9 2.2
======================== ======== ==== ====== ==== ======== === === =====
North America 2.7 1.1 (1.1) 2.2 5.1 2.6 1.0 1.6
Latin America 1.5 11.9 4.2 7.4 2.9 9.5 3.1 6.3
======================== ======== ==== ====== ==== ======== === === =====
Asia/AMET/RUB
Underlying sales grew 7.7% with 6.4% from volume and 1.2% from
price. South Asia grew double digit as we lapped a period of strict
lock-down measures in India in the prior year, although growth
slowed from the first to the second quarter as regional
restrictions were put in place. We increased prices across
categories in response to commodity inflation. China grew double
digit, with broad based growth across divisions and a recovery to
pre-Covid-19 turnover levels in our food solutions business. In
Turkey double digit growth was balanced between price and volume,
helped by strong ice cream performance. Indonesia declined high
single digit in difficult market conditions, whilst Thailand grew
mid-single digit as we lapped a period of heavy decline in the
second quarter of 2020.
Underlying operating margin declined 30bps as a result of
increased brand and marketing investment compared to the prior
year, and a lower gross margin due to higher input costs. This was
mostly offset by lower overheads
due to turnover leverage. .
The Americas
Underlying sales growth in North America was 2.6%, with 1.6%
from price and 1.0% from volume. Our food solutions and Prestige
Beauty businesses grew double digit as channels reopened. In-home
foods declined low single digit as we lapped a period of surge
demand and beauty and personal care saw low single digit growth.
Underlying price growth was delivered across all divisions.
Latin America delivered underlying sales growth of 9.5%, with
6.3% from price and 3.1% from volume. Growth was balanced across
all divisions. We took strong pricing action in response to high
commodity inflation and currency devaluation. Brazil grew double
digit and Mexico grew mid-single digit, both led by price.
Argentina delivered mid-single digit volume growth.
Underlying operating margin decreased by 190bps with greater
brand and marketing investment compared to the prior year and a
lower gross margin due to higher input costs. The input costs were
partially offset through pricing particularly in Latin America.
There was a benefit in overheads.
Europe
Underlying sales grew 1.1% with volume of 2.2% and negative
pricing of 1.1%. Volume growth was led by a recovery in out of home
ice cream in the second quarter, particularly in Italy and Spain,
as the channel started to re-open. Food solutions returned to
growth, as out of home eating outlets reopened. The UK and Germany
sales declined as we lapped a spike in growth in the second quarter
of 2020. Price declined and we lapped a period of lower promotional
intensity in the second quarter in some markets.
Underlying operating margin declined 130bps driven by lower
gross margin as high levels of input cost inflation outweighed
pricing in a challenging retail environment. We increased brand and
marketing investment compared to the prior year.
ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FIRST HALF 2021
Finance costs and tax
Net finance costs decreased by EUR96 million to EUR153 million
in the first half of 2021. The decrease was largely driven by a
lower cost of debt and a one-off foreign exchange gain. This was
partially offset by lower interest income driven by interest on tax
credits in Brazil in the prior year. The interest rate on average
net debt decreased to 1.4% from 2.0% in 2020.
The underlying effective tax rate for H1 2021 decreased to 21.9%
from 22.6% in H1 2020 due to favourable tax audit settlements and
provision releases, as well as the restatement of deferred tax
balances for changes in tax rates. The effective tax rate for H1
2021 was 22.7% compared with 22.3% in H1 2020.
Joint ventures, associates and other income from non-current
investments
Net profit from joint ventures and associates was EUR91 million,
consistent with the prior year. Other income from non-current
investments was EUR34 million.
Earnings per share
Underlying earnings per share decreased by 2.0%, including a
negative impact of 6.3% from currency. Constant underlying earnings
per share increased by 4.3%. The increase was mainly driven by
underlying sales growth, lower tax and finance costs, partially
offset by an increase in profit attributable to minority interests
following the Horlicks acquisition in India. Diluted earnings per
share decreased 5.0% at EUR1.19.
Free cash flow
Free cash flow in the first half of 2021 was EUR2.4 billion,
down from the EUR2.9 billion delivered in the first half of 2020.
This was primarily a result of lower operating profit. We have
maintained the enhanced working capital discipline that improved
our free cash flow in 2020 at the start of the pandemic.
Net debt
Closing net debt increased to EUR22.4 billion compared with
EUR20.9 billion at 31 December 2020. The increase was driven by
dividends paid and our share buyback programme, partially offset by
free cash flow delivery.
Pensions
Pension assets net of liabilities were in surplus of EUR1.9
billion at the end of June 2021 versus EUR0.3 billion as at 31
December 2020. The increase was driven by positive investment
returns on pension assets, and lower liabilities as interest rates
increased.
Finance and liquidity
In February 2021 $1,000 million 4.25% fixed rate notes matured
and were repaid. In March 2021 $400 million 2.75% fixed rate notes
matured and were repaid.
On 30 June 2021 Unilever had undrawn revolving 364-day bilateral
credit facilities of $7,965 million in aggregate with a 364-day
term out.
Share buyback programme
On 29 April 2021 we announced our intention to start a share
buyback programme of up to EUR3 billion. On 6 May 2021 we announced
we would commence the first tranche of this buyback programme for
an aggregate market value equivalent to EUR1.5 billion. As at 30
June 2021 the Group had repurchased 17,973,091 ordinary shares.
Total consideration for the repurchase of shares was EUR0.9 billion
which is recorded within other reserves. The first tranche for an
aggregate market value of EUR1.5 billion will end on or before 27
August 2021.
Capital Reduction
On 15 June 2021 the UK court approved a capital reduction of
GBP18.4 billion (EUR20.6 billion). The impact of this was to
transfer EUR20.6 billion from share premium to retained
earnings.
COMPETITION INVESTIGATIONS
As previously disclosed, Unilever is involved in a number of
ongoing investigations and cases by national competition
authorities, including those within Italy, Greece, South Africa and
Turkey. 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 rate average rate
in 2021 in 2020
================================ =============
Brazilian Real (EUR1 = BRL) 6.492 5.323
Chinese Yuan (EUR1 = CNY) 7.800 7.743
Indian Rupee (EUR1 = INR) 88.365 81.535
Indonesia Rupiah (EUR1 = IDR) 17231 16055
Philippine Peso (EUR1 = PHP) 58.153 55.823
UK Pound Sterling (EUR1 = GBP) 0.868 0.873
US Dollar (EUR1 = US $) 1.206 1.102
============= =============
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) 2021 2020
=================================================== ======
Operating profit 4,426 4,672
Non-underlying items within operating profit (see
note 2) 421 412
====== ======
Underlying operating profit 4,847 5,084
====== ======
Turnover 25,791 25,714
Operating margin (%) 17.2 18.2
Underlying operating margin (%) 18.8 19.8
====== ======
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) 2021 2020
============================================================= ====== =======
Taxation 972 991
Tax impact:
Non-underlying items within operating profit(a) 97 109
Non-underlying items not in operating profit but within
net profit(a) (34) (7)
====== =======
Taxation before tax impact of non-underlying items 1,035 1,093
====== =======
Profit before taxation 4,369 4,533
Non-underlying items within operating profit before
tax(a) 421 412
Non-underlying items not in operating profit but within
net profit before tax(a) 29 (21)
Share of net (profit)/loss of joint ventures and associates (91) (89)
====== =======
Profit before tax excluding non-underlying items before
tax and share of net profit/(loss) of joint ventures
and associates 4, 728 4,835
====== =======
Underlying effective tax rate 21.9% 22.6%
====== =======
(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) 2021 2020
=========================================================== =======
Underlying profit attributable to shareholders' equity
(see note 6) 3,488 3,559
Impact of translation from current to constant exchange
rates and translational hedges 133 (103)
Impact of price growth in excess of 26% per year in
hyperinflationary economies (16) -
======= =======
Constant underlying earnings attributable to shareholders'
equity 3,605 3,456
======= =======
Diluted average number of share units (millions of
units) 2,627.2 2,627.2
======= =======
Constant underlying EPS (EUR) 1.37 1.32
======= =======
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 As at
30 June 31 December 30 June
2021 2020 2020
======== =============
(unaudited)
============================================= ======== =============
Total financial liabilities (27,542) (27,305) (28,805)
Current financial liabilities (6,720) (4,461) (4,792)
Non-current financial liabilities (20,822) (22,844) (24,013)
Cash and cash equivalents as per balance
sheet 4,182 5,548 4,855
Cash and cash equivalents as per cash flow
statement 4,072 5,475 4,722
Add bank overdrafts deducted therein 110 73 133
Other current financial assets 885 808 1,100
Non-current financial assets derivatives
that relate to financial liabilities 33 21 96
======== ============= ========
Net debt (22,442) (20,928) (22,754)
======== ============= ========
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) 2021 2020
================================================== ======= =======
Cash flow from operating activities 3,961 4,427
Income tax paid (917) (899)
Net capital expenditure (386) (422)
Net interest paid (227) (256)
======= =======
Free cash flow 2,431 2,850
======= =======
Net cash flow (used in)/from investing activities (570) (581)
Net cash flow (used in)/from financing activities (4,097) (2,088)
======= =======
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 22; (ii) pages 2 to 10
comprise the interim management report; and (iii) the Directors'
responsibility statement can be found on page 23. No material
related party transactions have taken place in the first six months
of the year.
PRINCIPAL RISK FACTORS
On pages 46 to 50 of our 2020 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 2021.
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. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and
other factors affecting the Unilever Group (the 'Group'). They are
not historical facts, nor are they guarantees of future
performance.
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. A number of these risks have increased as a result of the
current Covid-19 pandemic. 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
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
2020 and the Unilever Annual Report and Accounts 2020 available on
our corporate website.
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations Team
UK +44 78 2527 3767 lucila.zambrano@unilever.com +44 20 7822 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
===================================
2021 2020 Increase/
(Decrease)
======
Current Constant
rates rates
=============================================== ====== ======== =========
Turnover 25,791 25,714 0.3% 7.1%
Operating profit 4,426 4,672 (5.3)% 2.6%
Which includes non-underlying items
credits/(charges) of (421) (412)
Net finance costs (153) (249)
Finance income 68 139
Finance costs (216) (378)
Pensions and similar obligations (5) (10)
Non-underlying item net monetary gain/(loss)
arising from hyperinflationary economies (29) 21
Share of net profit/(loss) of joint
ventures and associates 91 89
Other income/(loss) from non-current
investments and associates 34 -
Profit before taxation 4,369 4,533 (3.6)% 5.2%
Taxation (972) (991)
Which includes tax impact of non-underlying
items of 63 102
Net profit 3,397 3,542 (4.1)% 5.3%
Attributable to:
====== ====== ======== =========
Non-controlling interests 276 258
Shareholders' equity 3,121 3,284 (5.0)% 4.4%
====== ====== ======== =========
Combined earnings per share
Basic earnings per share (euros) 1.19 1.25 (5.0)% 4.4%
Diluted earnings per share (euros) 1.19 1.25 (5.0)% 4.4%
==== ==== ======= =====
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
EUR million First Half
==============
2021 2020
======================================================== ===== =======
Net profit 3,397 3,542
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 55 20
Remeasurements of defined benefit pension plans(a) 968 (201)
Items that may be reclassified subsequently to profit
or loss, net of tax:
Gains/(losses) on cash flow hedges 137 43
Currency retranslation gains/(losses)(b) 617 (1,481)
Total comprehensive income 5,174 1,923
Attributable to:
Non-controlling interests 299 177
Shareholders' equity 4,875 1,746
===== =======
(a) Remeasurement of defined benefit pension plans in 2021 is
driven by positive investment returns and increase in interest
rates.
(b) 2021 gain is primarily due to strengthening of the US
Dollar, British Pound, Brazilian Real and Indian Rupee against the
Euro. 2020 loss is due to weakening of the Brazilian Real, Mexican
Peso, Indian Rupee, South Korean Won and Russian Ruble 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 - 2021
========== ========= ============ ========== ========= ======= ============= ========
1 January 2021 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 (20,
reduction(a) 626) - - 20,626 - - -
Repurchase of shares(b) - - - (897) - (897) - (897)
Other movements in
treasury
shares(c) - - - 78 (101) (23) - (23)
Share-based payment
credit(d) - - - - 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(e) - - - (83) 140 57 14 71
========== ========= ============ ========== ========= ======= ============= ========
30 June 2021 92 52,843 (73,364) (7,694) 45,139 17,016 2,443 19,459
======================== ========== ========= ============ ========== ========= ======= ============= ========
First half - 2020
=== === ======= ======= ======= =====
1 January 2020 as previously
reported 420 134 -(5,574) 18,212 13,192 694 13,886
=== === ======= ======= ======= ===== =======
Profit or loss for the
period - - - - 3,284 3,284 258 3,542
Other comprehensive income,
net of tax:
Gains/(losses) on:
Equity instruments - - - 16 - 16 4 20
Cash flow hedges - - - 46 - 46 (3) 43
Remeasurements of defined
benefit pension plans - - - - (200) (200) (1) (201)
Currency retranslation
gains/(losses) - - -(1,387) (13) (1,400) (81) (1,481)
=== === ======= ======= ======= ===== =======
Total comprehensive income - - -(1,325) 3,071 1,746 177 1,923
Dividends on ordinary capital - - - - (2,149) (2,149) - (2,149)
Other movements in treasury
shares(c) - - - 190 (126) 64 - 64
Share-based payment credit(d) - - - - 74 74 - 74
Dividends paid to non-controlling ( 210
interests - - - - - - ) (210)
Currency retranslation
gains/(losses) net of tax - (7) - - - (7) - (7)
Hedging gain/(loss) transferred
to non-financial assets - - - - - - 1 1
Net gain arising from Horlicks
acquisition(f) - - - - 2,930 2,930 1,918 4,848
Other movements in equity(e) - - - - (211) (211) 5 (206)
=== === ======= ======= ======= ===== =======
30 June 2020 420 127 -(6,709) 21,801 15,639 2,585 18,224
=== === ======= ======= ======= ===== =======
(a) 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.
(b) Repurchase of shares reflects the cost of acquiring ordinary
shares as part of the share buyback programmes announced on 29
April 2021.
(c) 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.
(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) 2021 includes a hyperinflation adjustment of EUR137 million
and EUR83 million related to the Welly acquisition. 2020 includes
EUR163 million paid for purchase of the non-controlling interest in
Unilever Malaysia.
(f) Consideration for the Main Horlicks Acquisition included the
issuance of shares in a group subsidiary, Hindustan Unilever
Limited, which resulted in a net gain being recognised within
equity.
CONSOLIDATED BALANCE SHEET
(unaudited)
EUR million As at As at As at
30 June 31 December 30 June
2021 2020 2020
========= =============
Non-current assets
Goodwill 19,239 18,942 19,675
Intangible assets 16,064 15,999 16,049
Property, plant and equipment 10,521 10,558 11,374
Pension asset for funded schemes in surplus 4,017 2,722 2,296
Deferred tax assets 1,320 1,474 1,325
Financial assets 960 876 815
Other non-current assets 1,032 931 896
53,153 51,502 52,430
Current assets
Inventories 4,766 4,462 4,646
Trade and other current receivables 6,478 4,939 6,955
Current tax assets 272 372 336
Cash and cash equivalents 4,182 5,548 4,855
Other financial assets 885 808 1,100
Assets held for sale 828 28 56
========= ============= =========
17,411 16,157 17,948
========= ============= =========
Total assets 70,564 67,659 70,378
========= ============= =========
Current liabilities
Financial liabilities 6,720 4,461 4,792
Trade payables and other current liabilities 14,799 14,132 14,602
Current tax liabilities 1,597 1,451 1,051
Provisions 514 547 530
Liabilities held for sale 158 1 1
========= ============= =========
23,788 20,592 20,976
========= ============= =========
Non-current liabilities
Financial liabilities 20,822 22,844 24,013
Non-current tax liabilities 143 149 289
Pensions and post-retirement healthcare
liabilities:
Funded schemes in deficit 832 1,109 1,275
Unfunded schemes 1,298 1,326 1,426
Provisions 592 583 642
Deferred tax liabilities 3,361 3,166 3,276
Other non-current liabilities 269 235 257
27,317 29,412 31,178
Total liabilities 51,105 50,004 52,154
========= ============= =========
Equity
Shareholders' equity 17,016 15,266 15,639
Non-controlling interests 2,443 2,389 2,585
========= ============= =========
Total equity 19,459 17,655 18,224
========= ============= =========
Total liabilities and equity 70,564 67,659 70,378
========= ============= =========
CONSOLIDATED CASH FLOW STATEMENT
(unaudited)
EUR million First Half
================
2021 2020
========================================================= ======= =======
Net profit 3,397 3,542
Taxation 972 991
Share of net (profit)/loss of joint ventures/associates
and other (income)/loss
from non-current investments and associates (125) (89)
Net monetary (gain)/loss arising from hyperinflationary
economies 29 (21)
Net finance costs 153 249
======= =======
Operating profit 4,426 4,672
======= =======
Depreciation, amortisation and impairment 860 987
Changes in working capital (1,233) (1,215)
Pensions and similar obligations less payments (126) (79)
Provisions less payments (29) (66)
Elimination of (profits)/losses on disposals - 45
Non-cash charge for share-based compensation 82 74
Other adjustments (19) 9
======= =======
Cash flow from operating activities 3,961 4,427
======= =======
Income tax paid (917) (899)
Net cash flow from operating activities 3,044 3,528
======= =======
Interest received 61 80
Net capital expenditure (386) (422)
Other acquisitions and disposals (275) (623)
Other investing activities 30 384
Net cash flow (used in)/from investing activities (570) (581)
======= =======
Dividends paid on ordinary share capital (2,277) (2,120)
Interest paid (288) (336)
Change in financial liabilities (430) 602
Repurchase of shares (845) -
Other financing activities (257) (234)
Net cash flow (used in)/from financing activities (4,097) (2,088)
Net increase/(decrease) in cash and cash equivalents (1,623) 859
======= =======
Cash and cash equivalents at the beginning of the
period 5,475 4,116
Effect of foreign exchange rate changes 220 (253)
Cash and cash equivalents at the end of the period 4,072 4,722
======= =======
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 by
the EU (Regulation (EC) No 1606/2002) and as adopted for use in the
UK and except as set out below are consistent with the year ended
31 December 2020.
The Interest Rate Benchmark Reform Amendments Phase 2
(Amendments to IFRS 9, IAS 39 and IFRS 7) apply for the first time
in 2021. We do not have significant derivatives that refer to an
interest rate benchmark so these amendments do not have a
significant impact on the interim condensed consolidated financial
statements of the Group. The Group has not early adopted any
standard, interpretation or amendment that has been issued but is
not yet effective.
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
2021 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 2020 are not Unilever
PLC's statutory accounts for that financial year. Those accounts of
Unilever for the year ended 31 December 2020 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.
During Q4 2020 the Group reorganised under Unilever PLC ("PLC")
as its single parent company, a process which we referred to as
'Unification'. Prior to Unification the Group operated with two
parent companies, Unilever N.V. ("NV") and Unilever PLC ("PLC"),
who together with the group companies operated as a single economic
entity. Under the terms of Unification, all the NV ordinary shares
were cancelled and NV shareholders received one new PLC ordinary
share in exchange for each NV share owned. Unification resulted in
the issue of 1,460,713,122 new PLC ordinary shares. As at 30 June
2021 2,629,243,772 (December 2020: 2,629,243,772) PLC ordinary
shares were in issue and no NV ordinary shares were in issue
(December 2020: nil).
Prior to Unification NV and PLC formed a single reporting entity
for the purposes of presenting consolidated financial statements.
Accordingly, group companies included in the comparative
information provided in the condensed interim financial statements
are PLC and NV and those companies controlled by NV or PLC.
Refer to note 1 to our 2020 consolidated financial statements
for more details on Unification.
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 with 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
===============
2021 2020
================================================================= ====== =======
Acquisition and disposal-related credit/(costs) (122) (27)
Gain/(loss) on disposal of group companies 7 6
Restructuring costs (306) (391)
====== =======
Non-underlying items within operating profit before
tax (421) (412)
Tax on non-underlying items within operating profit 97 109
====== =======
Non-underlying items within operating profit after
tax (324) ( 303 )
================================================================= ====== =======
Net monetary gain/(loss) arising from hyperinflationary
economies (29) 21
====== =======
Non-underlying items not in operating profit but within
net profit before tax (29) 21
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) -
Hyperinflation adjustment for Argentina deferred tax (28) (7)
====== =======
Non-underlying items not in operating profit but within
net profit after tax (63) 14
================================================================= ====== =======
Non-underlying items after tax(a) (387) (289)
================================================================= ====== =======
Attributable to:
================================================================= ====== =======
Non-controlling interests (20) ( 14 )
Shareholders' equity (367) (275)
================================================================= ====== =======
(a) 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)
2020 5,320 2,617 5,355 13,292
2021 5,367 2,575 5,509 13,451
Change (%) 0.9 (1.6) 2.9 1.2
Impact of:
Acquisitions (%) 2.6 - 0.2 1.1
Disposals (%) - (0.2) (0.2) (0.1)
Currency-related items (%), of
which: (5.7) (4.5) (3.6) (4.6)
Exchange rates changes (%) (5.9) (4.8) (3.8) (4.8)
Extreme price growth in hyperinflationary
markets* (%) 0.2 0.3 0.2 0.2
Underlying sales growth (%) 4.2 3.2 6.8 5.0
============================================== ====== ============= ======
Price* (%) 2.0 0.1 2.0 1.6
Volume (%) 2.1 3.1 4.6 3.3
============================================== ========== ====== ============= ======
First Half Beauty & Home Foods & Total
Personal Care Refreshment
Care
========== ====== =============
Turnover (EUR million)
2020 10,610 5,328 9,776 25,714
2021 10,407 5,182 10,202 25,791
Change (%) (1.9) (2.7) 4.4 0.3
Impact of:
Acquisitions (%) 2.2 - 1.6 1.5
Disposals (%) - (0.2) (0.2) (0.1)
Currency-related items (%), of
which: (7.1) (6.8) (4.8) (6.1)
Exchange rates changes (%) (7.3) (6.9) (5.0) (6.3)
Extreme price growth in hyperinflationary
markets* (%) 0.2 0.2 0.2 0.2
Underlying sales growth (%) 3.3 4.5 8.1 5.4
============================================== ====== ============= ======
Price* (%) 1.4 (0.3) 2.1 1.3
Volume (%) 1.8 4.8 5.8 4.0
=============
Operating profit (EUR million)
2020 2,403 744 1,525 4,672
2021 2,089 655 1,682 4,426
Underlying operating profit (EUR
million)
2020 2,495 817 1,772 5,084
2021 2,215 727 1,905 4,847
Operating margin (%)
2020 22.6 14.0 15.6 18.2
2021 20.1 12.6 16.5 17.2
Underlying operating margin (%)
2020 23.5 15.3 18.1 19.8
2021 21.3 14.0 18.7 18.8
============================================== ====== ============= ======
* 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)
2020 6,063 4,210 3,019 13,292
2021 6,081 4,216 3,154 13,451
Change (%) 0.3 0.1 4.5 1.2
Impact of:
Acquisitions (%) 0.2 3.3 - 1.1
Disposals (%) - (0.1) (0.2) (0.1)
Currency-related items (%), of
which: (5.3) (7.4) 0.7 (4.6)
Exchange rates changes (%) (5.4) (7.9) 0.7 (4.8)
Extreme price growth in hyperinflationary
markets* (%) 0.1 0.6 - 0.2
Underlying sales growth (%) 5.7 4.8 4.0 5.0
============================================== ========== ======= ======
Price* (%) 1.2 4.1 (0.6) 1.6
Volume (%) 4.5 0.7 4.7 3.3
============================================== ======== ========== ======= ======
First Half Asia / The Europe Total
AMET / Americas
RUB
======== ========== =======
Turnover (EUR million)
2020 11,807 8,227 5,680 25,714
2021 12,040 8,022 5,729 25,791
Change (%) 2.0 (2.5) 0.9 0.3
Impact of:
Acquisitions (%) 1.4 2.8 - 1.5
Disposals (%) - (0.2) (0.3) (0.1)
Currency-related items (%), of
which: (6.6) (9.6) 0.1 (6.1)
Exchange rates changes (%) (6.7) (9.9) 0.1 (6.3)
Extreme price growth in hyperinflationary
markets* (%) 0.1 0.4 - 0.2
Underlying sales growth (%) 7.7 5.1 1.1 5.4
============================================== ========== ======= ======
Price* (%) 1.2 3.3 (1.1) 1.3
Volume (%) 6.4 1.7 2.2 4.0
=======
Operating profit (EUR million)
2020 2,265 1,532 875 4,672
2021 2,289 1,303 834 4,426
Underlying operating profit (EUR
million)
2020 2,394 1,622 1,068 5,084
2021 2,413 1,429 1,005 4,847
Operating margin (%)
2020 19.2 18.6 15.4 18.2
2021 19.0 16.2 14.6 17.2
Underlying operating margin (%)
2020 20.3 19.7 18.8 19.8
2021 20.0 17.8 17.5 18.8
======== ========== ======= ======
* 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 22.7% compared to
22.3% in 2020. 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 2021 First Half 2020
============================ =============================
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 56 (1) 55 19 1 20
Cash flow hedges 143 (6) 137 71 (28) 43
Remeasurements of defined
benefit pension plans(a) 1,404 (436) 968 (242) 41 (201)
Currency retranslation gains/(losses) 653 (36) 617 (1,516) 35 (1,481)
======= =========== ====== ======= =========== =======
Other comprehensive income 2,256 (479) 1,777 (1,668) 49 (1,619)
======= =========== ====== ======= =========== =======
(a) Remeasurement of defined benefit pension plans in 2021 is
driven by positive investment returns and increase in interest
rates.
6 COMBINED EARNINGS PER SHARE
The combined earnings per share calculations are based on the
average number of share units representing the combined ordinary
shares of NV and 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:
2021 2020
======================================================== ========
Combined EPS - Basic
======================================================== ======== ========
Net profit attributable to shareholders' equity (EUR
million) 3,121 3,284
Average number of share units (millions of units) 2,618.7 2,619.0
Combined EPS - basic (EUR) 1.19 1.25
======== ========
Combined EPS - Diluted
======================================================== ======== ========
Net profit attributable to shareholders' equity (EUR
million) 3,121 3,284
Adjusted average number of share units (millions
of units) 2,627.2 2,627.2
Combined EPS - diluted (EUR) 1.19 1.25
======== ========
Underlying EPS
======================================================== ======== ========
Net profit attributable to shareholder's equity (EUR
million) 3,121 3,284
Post tax impact of non-underlying items attributable
to shareholders' equity (see note 2) 367 275
======== ========
Underlying profit attributable to shareholders' equity
(EUR million) 3,488 3,559
Adjusted average number of share units (millions
of units) 2,627.2 2,627.2
Underlying EPS - diluted (EUR) 1.33 1.35
======== ========
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 2020 (net of treasury
shares) 2,622.0
Shares repurchased under the share buyback programme (18.0)
-------------------------------------------------------- --------
Net movement in shares under incentive schemes 1.7
======================================================== ========
Number of shares at 30 June 2021 2,605.7
======================================================== ========
7 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 2021 and
2020. The Group's cash resources and other financial assets are
shown below.
EUR million 30 June 2021 31 December 2020 30 June 2020
============================== ============================ ============================
Current Non-current Total Current Non-current Total Current Non-current Total
========================== ======== ============ ====== ======= ============ ===== ======= ============ =====
Cash and cash equivalents
Cash at bank and in
hand 2,625 - 2,625 2,764 - 2,764 2,672 - 2,672
Short-term deposits(a) 1,411 - 1,411 2,764 - 2,764 2,176 - 2,176
Other cash equivalents 146 - 146 20 - 20 7 - 7
======== ============ ====== ======= ============ ===== ======= ============ =====
4,182 - 4,182 5,548 - 5,548 4,855 - 4,855
======== ============ ====== ======= ============ ===== ======= ============ =====
Other financial assets
Financial assets at
amortised cost(b) 514 148 662 468 138 606 774 129 903
Financial assets at
fair value through
other comprehensive
income(c) 9 413 422 9 361 370 - 304 304
Financial assets at
fair value
through profit or loss:
Derivatives that
relate
to
financial liabilities 40 32 72 59 21 80 69 96 165
Other(d) 322 367 689 272 356 628 257 286 543
======== ============ ====== ======= ============ ===== ======= ============ =====
885 960 1,845 808 876 1,684 1,100 815 1,915
======== ============ ====== ======= ============ ===== ======= ============ =====
Total financial assets(e) 5,067 960 6,027 6,356 876 7,232 5,955 815 6,770
======== ============ ====== ======= ============ ===== ======= ============ =====
(a) Short-term deposits typically have 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 EUR 107
million (31 December 2020: EUR 101 million, 30 June 2020: EUR94
million ).
(c) Included within non-current financial assets at fair value
through other comprehensive income are equity investments of EUR408
million (31 December 2020: EUR356 million, 30 June 2020: EUR284
million).
(d) Current other financial assets at fair value through profit
or loss include A- or higher rated money and capital market
instruments. Included within non-current financial assets at fair
value through profit or loss are assets in a trust to fund benefit
obligations in the US, an option over non-controlling interest in a
subsidiary in Hong Kong and investments in a number of 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
2021 2020 2020 2021 2020 2020
================================ ========= ============= ========= ========== ============= ===========
Financial assets
Cash and cash equivalents 4,182 5,548 4,855 4,182 5,548 4,855
Financial assets at amortised
cost 662 606 903 662 606 903
Financial assets at fair value
through other
comprehensive income 422 370 304 422 370 304
Financial assets at fair value
through profit and loss:
Derivatives 72 80 165 72 80 165
Other 689 628 543 689 628 543
========= ============= ========= ========== ============= ===========
6,027 7,232 6,770 6,027 7,232 6,770
Financial liabilities
Bank loans and overdrafts (593) (411) (851) (593) (411) (851)
Bonds and other loans (26,587) (26,936) (28,206) (24,683) (24,585) (25,837)
Lease liabilities (1,694) (1,771) (1,849) (1,694) (1,771) (1,849)
Derivatives (224) (315) (76) (224) (315) (76)
Other financial liabilities (348) (223) (192) (348) (223) (192)
========= ============= ========= ========== ============= ===========
(29,446) (29,656) (31,174) (27,542) (27,305) (28,805)
========= ============= ========= ========== ============= ===========
EUR million Level Level Level Level Level Level Level Level Level
1 2 3 1 2 3 1 2 3
======= ======= ====== ======= ======= ====== ======= ======= ======
As at 30 June As at 31 December As at 30 June
2021 2020 2020
======================== ======================== ========================
Assets at fair value
Financial assets at
fair value through other
comprehensive income 7 3 412 5 3 362 5 4 295
Financial assets at
fair value
through profit or loss:
Derivatives(a) - 187 - - 158 - - 268 -
Other 323 - 366 300 - 328 260 - 283
Liabilities at fair
value
Derivatives(b) - (311) - - (418) - - (187) -
Contingent Consideration - - (159) - - (140) - - (155)
======= ======= ====== ======= ======= ====== ======= ======= ======
(a) Includes EUR115 million (31 December 2020: EUR78 million, 30
June 2020: EUR103 million) derivatives, reported within trade
receivables, that hedge trading activities.
(b) Includes EUR(87) million (31 December 2020: EUR (103)
million, 30 June 2020: EUR(111) million) 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 2020. There were also no significant movements between the
fair value hierarchy classifications since 31 December 2020.
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 2020.
8 SHARE BUYBACK PROGRAMME
On 29 April 2021 Unilever announced a share buyback programme of
up to EUR3 billion, to be completed in 2021. The first tranche of
the share buyback programme commenced on 6 May 2021 and will end on
or before 27 August 2021 for an aggregate market value of EUR1.5
billion. At 30 June 2021 Unilever had repurchased 17,973,091 PLC
ordinary shares. Cash paid for the repurchase of PLC ordinary
shares was EUR845 million and EUR52 million is shown within current
financial liabilities. These shares have not been cancelled and are
recognised as treasury shares with the cost reported within other
reserves.
9 ACQUISITIONS AND DISPOSALS
Total consideration for acquisitions completed in the first half
of 2021 was EUR284 million, of which cash was EUR269 million
(acquisitions completed in the first half of 2020: EUR5,526
million). We have finalised the opening balance sheets of the
Horlicks acquisitions and Vwash with no changes to the provisional
numbers reported at 31 December 2020.
In the first half of 2021 the Group completed the following
business acquisitions:
Deal completion Acquired business
date
29 January Acquired 51% of Welly Health, which adds to our health
2021 and wellbeing portfolio.
=============== ============================================================
28 May 2021 Acquired Onnit Lab Inc, a holistic wellness and lifestyle
company based in the US. Onnit complements our growing
portfolio of innovative wellness and supplement brands.
=============== ============================================================
In addition to the completed transactions above, on 14 June 2021
the Group announced it had signed an agreement to acquire Paula's
Choice, a digital-led premium skin care business from TA
Associates. The transaction is expected to be completed in Q3
2021.
10 ASSETS AND LIABILITIES HELD FOR SALE
Included within assets and liabilities held for sale as at 30
June 2021 are those relating to a number of small Beauty &
Personal Care and Foods & Refreshment brands. Whilst no
disposal has been agreed, we have received non-binding offers for
these brands.
EUR million 30 June 31 December
2021 2020
Total Total(a)
=============================================== ========
Property, plant and equipment held for sale 2 17
======== ===========
Disposal groups held for sale
Non-current assets 710 5
Current assets 116 6
=============================================== ======== ===========
Assets held for sale 828 28
=============================================== ======== ===========
Current liabilities 50 1
Non-current liabilities 108 -
=============================================== ======== ===========
Liabilities held for sale 158 1
=============================================== ======== ===========
Non-current assets held for sale are mainly goodwill and brand
trademarks. Non-current liabilities are mainly deferred tax
associated with these brand trademarks.
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
EUR55 million gain.
11 DIVIDS
The Board has declared a quarterly interim dividend for Q2 2021
of GBP0.3693 per Unilever PLC ordinary share or EUR0.4268 per
Unilever PLC ordinary share at the applicable exchange rate issued
by WM/Reuters on 20 July 2021.
Per Unilever PLC ordinary share (traded on the GBP 0.3693
London Stock Exchange):
Per Unilever PLC ordinary share (traded on Euronext
in Amsterdam): EUR 0.4268
Per Unilever PLC American Depositary Receipt: US$ 0.5031
The euro and US dollar amounts above have been determined using
the applicable exchange rates issued by WM/Reuters on
20 July 2021.
US dollar cheques for the quarterly interim dividend will be
mailed on 8 September 2021 to holders of record at the close of
business on 6 August 2021.
The quarterly dividend calendar for the remainder of 2021 will
be as follows:
Announcement Ex-Dividend Record Date Payment Date
Date Date
================= ============= ============ ==============
Q2 2021 Dividend 22 July 2021 5 August 6 August 2021 8 September
2021 2021
Q3 2021 Dividend 21 October 4 November 5 November 1 December
2021 2021 2021 2021
============= ============ ============== =============
12 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 2020.
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
22 July 2021
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IR PPUMWMUPGGBG
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