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Strong start and continued progress against strategic priorities

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Average read time: 7 minutes

Today, we announced our results for the first quarter of 2023.

Multi product illustration

Statement from Alan Jope, CEO

“Unilever has had a good start to the year, delivering another quarter of strong topline growth. Underlying sales growth accelerated to 10.5%, driven by price growth in response to continued high input cost inflation and an improved volume performance.

“We are continuing to execute well on our strategic priorities. Growth was broad-based across the five Business Groups, underpinned by strong performances from our €1 billion brands. We have stepped up both the effectiveness of our innovation and the investment behind our brands. We continue to shift our portfolio into higher growth spaces, with the delivery of another quarter of double-digit sales growth in Prestige Beauty and Health & Wellbeing, and the announced sale of Suave in North America. Our new operating model is driving focused resource allocation, and is unlocking a culture of bolder, faster decision-making and disciplined execution.

“We remain focused on navigating through continued macroeconomic uncertainty and are confident in our ability to deliver another year of strong growth, which remains our first priority.”

Outlook

In a volatile and high-cost environment, we continue to carefully balance price growth, volume and competitiveness. We will deliver another year of strong underlying sales growth in 2023, with an improved volume performance compared to 2022. We will continue to price and drive our cost savings programmes in order to allow us to invest behind our brands.

Our expectation for net material inflation (NMI) for 2023 is unchanged. We anticipate around €1.5 billion in the first half and significantly lower NMI in the second half, with a wide range of possible outcomes, though we do not expect cost deflation.

We now expect underlying sales growth for the full year 2023 to be at least at the upper end of our multi-year range of 3 – 5%. Underlying price growth will remain high in the first half and soften through the year.

Underlying operating margin in the first half will be at least 16%. We continue to expect a modest improvement in underlying operating margin in the full year, with another year of increased investment.

Unilever overall performance

Underlying sales growth accelerated to 10.5% in the first quarter. As underlying price growth moderated to 10.7% from 13.3% in the fourth quarter of 2022, volumes were virtually flat at -0.2%, driven by a step-up in volume performance across all Business Groups.

Beauty & Wellbeing grew underlying sales by 9.3% driven by price. Volume growth of 2.6% was helped by another quarter of double-digit growth in Prestige Beauty and Health & Wellbeing, which now account for 5% of Group turnover. Personal Care underlying sales were up 12.7%, driven by price and 3.0% volume growth of which the majority came from strong pipeline refill in Deodorants. Home Care delivered 10.2% USG with a volume decline of 2.8% which was largely caused by lower volumes in Home & Hygiene and Air Wellness.

Nutrition grew 11.9% with slightly negative volume at -1.3% driven by Scratch Cooking Aids. Ice Cream improved underlying sales by 6.0% despite negative UVG of 4.1%. Volumes grew in out-of-home channels but this was more than offset by lower in-home volumes.

Emerging markets grew underlying sales by 11.7% with price of 11.8% and volume at -0.1%. Latin America stepped up growth to 18.7%, led by continued strong price growth and volumes at 0.2%. South Asia grew again double-digit through price and volume. China returned to positive USG of 1.8% following the lifting of pandemic-related restrictions. South East Asia grew mid-single digit, while Turkey delivered strong volume growth in a continued hyper-inflationary environment. Developed markets increased by 8.7%, with 8.9% from price and -0.2% from volume. Volumes held up better in North America than in Europe.

Turnover increased 7.0% to €14.8 billion, which included a currency impact of -0.4% and -2.8% from disposals net of acquisitions. This reflected the sale of the Tea business, which completed on 1 July 2022, and the acquisition of Nutrafol, which completed on 7 July 2022.

Operating model and capital allocation

Since 1 July 2022, our simpler, more category-focused operating model for Unilever has been in place, organised around five Business Groups and a technology-driven backbone, Unilever Business Operations. We continue to expect around €600 million of cost savings over the first two years, with the majority delivered in 2023.

After completing two €750 million tranches in 2022 of our ongoing share buyback programme of up to €3 billion, we announced a third €750 million tranche on 17 March 2023, which will complete on or before 23 July 2023. The quarterly interim dividend for the first quarter is maintained at €0.4268.

Beauty & Wellbeing (21% of Q1 turnover)

Beauty & Wellbeing underlying sales grew 9.3% with 6.5% from price and 2.6% from volume.

Hair Care grew across all regions, delivering high single-digit growth and also returned to positive volume growth, helped by the continued rollout of our Sunsilk relaunch. TRESemmé grew strongly and the new Clear Anti Hair Fall in China continued to perform well.

Core Skin Care delivered mid single-digit growth, driven by strong performances in South Asia and South East Asia which were partially offset by double-digit decline in North Asia where sales of AHC were down. Vaseline and Pond’s delivered double-digit growth, supported by innovations with additional consumer benefits, such as the premium Gluta-Hya serum which revitalises skin overnight and boosts skin elasticity.

Prestige Beauty and Health & Wellbeing delivered another quarter of double-digit growth with strong contributions from Paula’s Choice, Hourglass and Liquid IV.

Personal Care (23% of Q1 turnover)

Personal Care underlying sales grew 12.7% with 9.4% from price and 3.0% from volume. Growth was broad-based with strong growth in Latin America, South Asia, Europe and North America.

Deodorants grew high double-digit driven by Europe and the Americas, where volumes were boosted by a recovery in service levels and associated pipeline fill. Rexona accelerated its strong performance, helped by our premium and superior 72-hour protection technology. We launched our Axe Fine Fragrance range, which combines odour protection with fine fragrances and freshness, contributing to double-digit growth for the brand.

Skin Cleansing grew high single-digit driven by Latin America and South Asia. In the United States, we launched our first Dove 24-hour Renewing Micromoisture body wash which actively regenerates the skin’s moisture for healthy-looking skin​. Lux grew double-digit, still benefiting from the relaunch of its bars which provide a further improved skin care experience, delivering glow and flawless complexion.

Oral Care achieved mid single-digit growth which was led by strong pricing. Close Up grew double-digit with good performance in South Asia and Africa.

Home Care (22% of Q1 turnover)

Home Care underlying sales grew 10.2% driven by 13.4% price, partially offset by negative volume of -2.8%. Volumes were negative in most markets as pricing remained high.

Fabric Cleaning grew double-digit with capsules and liquids performing well as we continued to drive premiumisation. We launched plastic-free packaging for our capsules in France and the UK under OMO. Fabric Enhancers grew high single-digit driven by price. Comfort grew strongly in Latin America and Turkey.

Home & Hygiene grew mid single-digit, with double-digit price partially offset by negative volume. Domestos grew double-digit and we launched new Power Foams which expand once applied to eliminate germs, even in the hardest-to-reach places. The Air Wellness business declined in the quarter as the global market continued to slow.

Nutrition (23% of Q1 turnover)

Nutrition underlying sales grew 11.9% with 13.4% from price and -1.3% from volume.

Dressings delivered another quarter of strong price-driven growth and positive volume, led by Hellmann’s with communication centred around our “Make taste not waste” campaign.

Scratch Cooking Aids grew high single-digit. Growth in Europe and North America was price-led with negative volume. Africa, where we relaunched fortified Knorr stock cubes to address iodine and zinc deficiencies, grew double-digit with positive price and volume while North Asia declined.

Unilever Food Solutions grew double-digit as China recovered throughout the quarter and other markets continued to deliver strong growth.

Ice Cream (11% of Q1 turnover)

Ice Cream underlying sales grew 6% with 10.5% from price, partially offset by negative volume of -4.1%.

In-home Ice Cream grew low single-digit but volumes declined as consumption remained impacted across regions by the discretionary nature of the category in a heavily inflationary environment. Out-of-home Ice Cream grew double-digit with positive price and volume in anticipation of a good ice cream season.

Magnum grew strongly, supported by our new Starchaser and Sunlover limited edition innovation, while the Heart brand grew mid single-digit with negative volume. Cornetto grew double-digit, helped by the launch of limited edition variants.




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