TIDMULVR TIDM0NXJ
RNS Number : 6414G
Unilever PLC
25 July 2019
2019 FIRST HALF YEAR RESULTS
Performance highlights (unaudited)
Underlying performance GAAP measures
vs 2018 vs 2018
========== ======== ====================== ========== ========
First Half
Underlying sales growth
(USG) (a) 3.3% Turnover EUR26.1bn (0.9)%
Underlying operating
margin(b) 19.3% 50bps Operating margin(b) 17.6% 40bps
Underlying earnings
per share(b) EUR1.27 5.0% Earnings per share(b) EUR1.14 3.4%
Second Quarter
USG(a) 3.5% Turnover EUR13.7bn (0.1)%
========== ======== ====================== ========== ========
Quarterly dividend payable in September EUR0.4104 per share
2019
=========================================== ======================================================
(a) USG does not include price growth in Venezuela and
Argentina. See page 6 for further details.
(b) 2018 numbers have been restated following adoption of IFRS
16. See note 1 and note 9 for more details.
First half highlights
-- Underlying sales grew 3.3% with volume 1.2% and price 2.1%
-- Emerging markets underlying sales growth 6.2% with volume 2.5% and price 3.6%
-- Turnover decreased 0.9% driven by the sale of our spreads
business, partially offset by a 1.1% currency benefit
-- Underlying operating margin increased 50bps with 30bps from gross margin
-- Operating margin increased by 40bps
-- Underlying earnings per share increased 5.0%, with constant EPS up 3.0%
Alan Jope: Chief Executive Officer statement
"We have delivered consistent growth within our guided range for
2019, led by our emerging markets. Accelerating growth remains our
top priority and we continue to evolve our portfolio and seek out
fast growth channel and geographical opportunities, as well as
address those performance hotspots where growth is falling short of
our aspirations.
For the full year, we continue to expect underlying sales growth
to be in the lower half of our multi-year 3-5% range, an
improvement in underlying operating margin that keeps us on track
for the 2020 target and another year of strong free cash flow. Our
sustainable business model and portfolio of purpose-led brands are
key to delivering superior long-term financial performance."
25 July 2019
FIRST HALF OPERATIONAL REVIEW: DIVISIONS
Second Quarter 2019 First Half 2019
Turnover USG(a) UVG UPG(a) Turnover USG(a) UVG UPG(a) Change
in underlying
operating
(unaudited) margin(b)
======================== ========= ========= ======= ===== ======= ===============
EURbn % % % EURbn % % % bps
========= ======= ====== ======= ========= ======= ===== ======= ===============
Unilever 13.7 3.5 1.2 2.3 26.1 3.3 1.2 2.1 50
========= ======= ====== ======= ========= ======= ===== ======= ===============
Beauty & Personal Care 5.5 3.5 1.6 1.9 10.7 3.3 1.7 1.6 100
Home Care 2.7 8.9 4.5 4.3 5.4 7.4 2.8 4.5 120
Foods & Refreshment 5.5 1.0 (0.6) 1.6 10.0 1.3 (0.1) 1.4 (40)
========= ======= ====== ======= ========= ======= ===== ======= ===============
(a) Wherever referenced in this announcement, USG and UPG do not
include any price growth in Venezuela and Argentina. See pages 6 to
7 on non-GAAP measures for further details.
(b) 2018 numbers have been restated following adoption of IFRS
16. See note 1 and note 9 for more details.
Our markets: Growth in our markets was mixed. Market growth in
Europe and North America was held back by the impact of weather on
ice cream sales. In the emerging markets we continued to see good
momentum particularly in China and South East Asia. India saw
strong market growth, though it moderated, as expected. Argentina
remains hyperinflationary and high levels of pricing continue to
weigh on consumer demand.
Unilever overall performance: Underlying sales grew 3.3% with
1.2% from volume and 2.1% from price. Emerging markets grew 6.2%,
led by Asia/AMET/RUB, which saw broad-based geographic growth,
whilst developed markets were weaker.
In the second quarter, we estimate the 2018 truckers' strike in
Brazil increased USG by 100bps. Second quarter growth was
suppressed by around 50bps due to weak ice cream performance; a
result of poorer weather, particularly in Europe following two
years of very strong summers. 80bps of Argentina price growth in
the quarter was excluded from USG due to hyperinflationary
status.
Turnover in the first half decreased 0.9% driven by the sale of
the spreads business, partially offset by a currency benefit of
1.1%.
Underlying operating margin improved by 50bps. Gross margin was
up 30bps, helped by efficiencies from our 5-S programme. Overheads
had an adverse impact on underlying operating margin of 10bps. Our
change programmes have helped to address stranded costs following
the disposal of spreads and we continue to invest in the ongoing
digital transformation of our business. Brand and marketing
investment decreased compared to the prior year, as we continued to
deliver zero based budgeting savings ahead of target, with an
increased focus on digital spend. More than two thirds of savings
have been reinvested, largely behind innovations and new brand
launches.
Beauty & Personal Care
Underlying sales grew 3.3%, with 1.7% from volume and 1.6% from
price.
Deodorants performed well, supported by our Rexona Clinical and
Dove Zero aluminium ranges, alongside the extension of Love, Beauty
& Planet. New formats continued to drive sales in skin
cleansing, including the incremental launch of Dove bath bombs as
well as Dove foaming handwash. Good performance in skin care was
supported by on-trend innovations including Pond's Instabright glow
cream. Hair care saw only modest growth for the first half, with a
challenging second quarter particularly in the US. Oral care
returned to growth in the second quarter, helped by innovations
such as Closeup natural whitening toothpaste and Signal White Now.
Our prestige brands, including Dermalogica, Hourglass, and REN, saw
double digit growth overall, and we announced the acquisitions of
Garancia and Tatcha, which are not yet included in USG.
Underlying operating margin in Beauty & Personal Care
increased by 100bps, driven by efficiency programmes in brand and
marketing investment.
Home Care
Underlying sales grew 7.4%, with 2.8% from volume and 4.5% from
price.
Fabric solutions performed strongly, benefiting from
premiumisation and the execution of our strategy to move consumers
into products with additional consumer benefits, including Omo
Perfect Wash in Brazil. China saw good performance from the
relaunch of Omo while in India Surf Excel continued to grow double
digit. Seventh Generation continues to be rolled out in Europe and
North Asia, building on the naturals trend. Home and hygiene grew
well, supported by double digit growth from Sunlight, and we
launched innovations such as the Cif Cleaner Choices range with
natural cleaning ingredients. In Indonesia we used our Home Care
brands to run the mosque cleaning programme during Ramadan, an
example of purpose-led growth. Good growth in fabric sensations was
supported by the launch of a redesigned Comfort core range,
focusing on clothes care, as well as a natural variants range. The
life essentials category was flat.
Underlying operating margin in Home Care increased by 120bps,
with improvements in gross margin, as well as efficiencies in brand
and marketing investment and overheads.
Foods & Refreshment
Underlying sales grew 1.3%, with (0.1)% from volume and 1.4%
from price.
In tea, sales declined with volumes impacted by weak consumer
demand in developed markets. This was partially offset by black tea
in emerging markets and our fruit, herbal and green tea ranges,
including Pukka's premium herbal offering. Sales in dressings were
flat with volumes slightly down as competitive intensity remained
high. Despite poorer weather in the second quarter compared to the
previous two years, ice cream grew slightly over the half. We saw
good ice cream performance in Asia/AMET/RUB and from innovations
such as Magnum white chocolate and cookies. Savoury performance was
helped by the launch of new snack pot variants meeting the trend
towards convenience. The introduction of Hellmann's burger and
spicy dipping sauces continue to broaden the brand beyond core
mayonnaise, and Sir Kensington's performed well.
Underlying operating margin in Foods & Refreshment decreased
by 40bps, as a result of an adverse impact on overheads related to
the disposal of our spreads business.
FIRST HALF OPERATIONAL REVIEW: GEOGRAPHICAL AREA
Second Quarter 2019 First Half 2019
Turnover USG(a) UVG UPG(a) Turnover USG(a) UVG UPG(a) Change
in underlying
operating
(unaudited) margin(b)
========================== ========= ======= ===== ======= ===============
EURbn % % % EURbn % % % bps
========================== ======= ====== ======= ========= ======= ===== ======= ===============
Unilever 13.7 3.5 1.2 2.3 26.1 3.3 1.2 2.1 50
========================== ======= ====== ======= ========= ======= ===== ======= ===============
Asia/AMET/RUB 6.3 6.3 2.5 3.7 12.2 6.2 2.9 3.2 70
The Americas 4.2 3.7 1.3 2.3 8.1 2.1 (0.1) 2.2 80
Europe 3.2 (1.6) (1.1) (0.5) 5.8 (0.6) (0.2) (0.4) (40)
========================== ======= ====== ======= ========= ======= ===== ======= ===============
Second Quarter 2019 First Half 2019
(unaudited) Turnover USG(a) UVG UPG(a) Turnover USG(a) UVG UPG(a)
======================== ======= ====== ====== ======== ====== ====== ========
EURbn % % % EURbn % % %
======================== ======= ====== ====== ======== ====== ====== ========
Developed markets 5.6 (1.6) (1.5) (0.1) 10.4 (0.7) (0.6) (0.1)
Emerging markets 8.1 7.4 3.3 4.0 15.7 6.2 2.5 3.6
======================== ======= ====== ====== ======== ====== ====== ========
North America 2.4 (0.2) (1.2) 1.0 4.6 0.1 (0.5) 0.7
Latin America 1.8 9.3 5.0 4.1 3.5 4.9 0.5 4.4
======================== ======= ====== ====== ======== ====== ====== ========
(a) Wherever referenced in this announcement, USG and UPG do not
include any price growth in Venezuela and Argentina. See pages 6 to
7 on non-GAAP measures for further details.
(b) 2018 numbers have been restated following adoption of IFRS
16. See note 1 and note 9 for more details.
Asia/AMET/RUB
Underlying sales grew 6.2% with 2.9% from volume and 3.2% from
price. South East Asia grew well with accelerating growth in
Indonesia, the Philippines and Vietnam helped by locally relevant
innovations delivered through our C4G organisation. Turkey
continued to see good volume growth despite double digit price
growth in response to the devaluation of the Lira. Sales in China
were up high-single digit led by premium innovation and strong
growth in e-commerce. Growth in South Asia was good, where we
continue to outperform in moderating markets. Africa returned to
high single digit growth in the second quarter despite trade
disruption surrounding the elections in Nigeria and the
introduction of a new currency in Zimbabwe.
Underlying operating margin was up 70bps driven by brand and
marketing investment efficiencies and improvement in gross
margin.
The Americas
Latin America grew 4.9% against a weak comparator due to the
Brazil truckers' strike in 2018. In Brazil the consumer environment
continued to normalise and our business was helped by innovations
including Rexona Clinical Protection. In Argentina, which continues
to be hyperinflationary, volumes declined 9.1% in markets that
declined close to 20%. All price growth continues to be excluded
for Argentina.
Underlying sales growth in North America was flat with price
growth of 0.7% but volume down 0.5%. In Beauty & Personal Care,
good momentum in deodorants was offset by weak performance in hair.
Foods continued to be impacted by high levels of promotional
activity, whilst ice cream declined slightly. Home Care delivered
strong growth as Seventh Generation performed well and Love, Home
& Planet, which builds on the success on Love Beauty &
Planet, had a promising start.
Underlying operating margin was up 80bps led by brand and
marketing investment efficiencies and a small improvement in gross
margin.
Europe
Underlying sales declined 0.6% with volumes down 0.2% and price
down 0.4%. Our European business faced challenges from continued
price deflation and adverse weather in the second quarter. Our
e-commerce and discounters channels grew strongly, helped by our
channel-focused divisional strategies. The broader retail
environment remains difficult, particularly in Germany where we saw
significant decline. Southern Europe performed strongly, helped by
growth in Home Care and Foods & Refreshment. Central and
Eastern Europe continued to grow well, with good performance in all
categories, particularly fabric sensations.
Underlying operating margin was down 40bps, impacted by the sale
of spreads and a decline in gross margin due to negative
pricing.
ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS - FIRST HALF
2019
Restatement of 2018 balances
2018 numbers have been restated following adoption of IFRS 16.
More detail is provided in note 1 and note 9 on page 15 and pages
21 to 24 of the financial statements.
Finance costs and tax
Net finance costs increased by EUR63 million to EUR351 million
in the first half of 2019. The increase was due to exchange rate
losses on cash balances in Zimbabwe of EUR40 million following the
significant devaluation of the new Zimbabwe dollar as well as
higher cost of debt.
The effective tax rate was 26.8% versus 25.9% in the same period
last year, primarily due to a non-taxable credit in acquisition and
disposal related costs in 2018. The effective tax rate on
underlying operating profit was 26.2% compared to 26.5% in the
prior year.
Joint ventures, associates and other income from non-current
investments
Net profit from joint ventures and associates was EUR85 million,
compared to EUR83 million in the prior year. Income from
non-current investments was EUR2 million, down from EUR5 million in
2018.
Earnings per share
Underlying earnings per share increased by 5.0% to EUR1.27. The
adverse impact of the spreads disposal was offset by the 2018 share
buy back programme. Improvement in underlying operating margin and
a positive currency impact were partially offset by the adverse
finance costs. Underlying earnings per share at constant rates
increased by 3.0%. These underlying measures exclude the post-tax
impact of business disposals, acquisition and disposal-related
costs, restructuring costs, impairments, one-off items within
operating profit and any other significant unusual items within net
profit but not operating profit.
Diluted earnings per share increased 3.4% at current rates and
2.3% at constant rates. Improvement in underlying EPS was partially
offset by a credit to acquisitions and disposal related costs
recognised in the prior year as a result of early settlement of the
contingent consideration for Blueair.
Free cash flow
Free cash flow in the first half of 2019 was EUR1.5 billion,
down from EUR2.0 billion in the first half of 2018. This included
lost underlying operating profit following the disposal of spreads
as well as an adverse impact from tax paid relating to profit on
the disposal, totalling EUR0.5 billion.
Net debt
Closing net debt increased to EUR24.2 billion compared with
EUR22.6 billion at 31 December 2018. The increase was driven by
dividends paid, acquisitions and a negative currency impact, partly
reduced by free cash flow delivery.
Pensions
Pension liabilities net of assets reduced to EUR0.5 billion at
the end of June 2019 versus EUR0.9 billion as at 31 December 2018.
The decrease was driven by good investment returns which were
partially offset by higher liabilities as discount rates continued
to decrease.
Finance and liquidity
On 4 June 2019 we announced the issuance of EUR650 million 1.5%
fixed rate notes due June 2039 and GBP500 million 1.5% fixed rated
notes due July 2026.
In February 2019 $750 million 4.8% bonds matured and were
repaid. In March 2019, $750 million 2.2% fixed rate notes matured
and were repaid.
COMPETITION INVESTIGATIONS
As previously disclosed, along with other consumer products
companies and retail customers, Unilever is involved in a number of
ongoing investigations and cases by national competition
authorities, including those within Italy, Greece and South Africa.
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 measures, 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 period average exchange rates into euro,
except for countries where the impact of consumer price inflation
rates has escalated to extreme levels. In these countries, the
local currency amounts before the application of IAS 29 are
translated into euros using the period closing exchange rate. The
table below shows exchange rate movements in our key markets.
First half First half
average rate average rate
in 2019 in 2018
================================
Brazilian Real (EUR1 = BRL) 4.282 4.125
Chinese Yuan (EUR1 = CNY) 7.659 7.715
Indian Rupee (EUR1 = INR) 79.149 79.478
Indonesia Rupiah (EUR1 = IDR) 16046 16663
Philippine Peso (EUR1 = PHP) 59.010 62.911
UK Pound Sterling (EUR1 = GBP) 0.873 0.880
US Dollar (EUR1 = US $) 1.130 1.212
============= =============
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 and changes in currency. 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. Also excluded is
the impact of price growth from countries where the impact of
consumer price inflation (CPI) rates has escalated to extreme
levels.
There are two countries where we have determined extreme levels
of CPI exist. The first is Venezuela where in Q4 2017 inflation
rates exceeded 1,000% and management considered that the situation
would persist for some time. Consequently, price growth in
Venezuela has been excluded from USG since Q4 2017. The second is
Argentina, which from Q3 2018 has been accounted for in accordance
with IAS 29, and thus from Q3 2018 Argentina price growth is
excluded from USG. The adjustment made at Group level as a result
of these two exclusions was a reduction in price growth of 1.3% for
the second quarter and 1.2% for the first half. This treatment for
both countries will be kept under regular review.
The reconciliation of changes in the GAAP measure turnover to
USG is provided 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.
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 Argentina
and Venezuela as explained in USG above. The measures and the
related turnover GAAP measure are set out in notes 3 and 4.
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 expenditures 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. Free cash flow 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 net profit to FCF is as follows:
EUR million First Half
(unaudited) 2019 2018
Restated(a)
============================================================ =======
Net profit 3,209 3,229
Taxation 1,145 1,100
Share of net profit of joint ventures/associates and
other income
from non-current investments (87) (88)
Net monetary gain arising from hyperinflationary economies (29) -
Net finance costs 351 288
======= ============
Operating profit 4,589 4,529
======= ============
Depreciation, amortisation and impairment 965 1,228
Changes in working capital (1,888) (1,697)
Pensions and similar obligations less payments (94) (76)
Provisions less payments 47 (61)
Elimination of (profits)/losses on disposals (36) 16
Non-cash charge for share-based compensation 95 115
Other adjustments 23 (283)
======= ============
Cash flow from operating activities 3,701 3,771
======= ============
Income tax paid (1,309) (1,081)
Net capital expenditure (558) (495)
Net interest paid (291) (194)
======= ============
Free cash flow 1,543 2,001
======= ============
Total net cash flow (used in)/from investing activities (716) (1,441)
Total net cash flow (used in)/from financing activities (856) (679)
======= ============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
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 significant
one-off items within operating profit
-- Non-underlying items not in operating profit but within net
profit are: significant and unusual items in net finance cost,
monetary gain/(loss) arising from hyperinflationary economies,
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) 2019 2018
Restated(a)
=================================================== ======
Operating profit 4,589 4,529
Non-underlying items within operating profit (see
note 2) 465 438
====== ============
Underlying operating profit 5,054 4,967
====== ============
Turnover 26,126 26,352
Operating margin (%) 17.6 17.2
Underlying operating margin (%) 19.3 18.8
====== ============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
Underlying earnings per share (EPS)
Underlying earnings per share (underlying EPS) is calculated as
underlying profit attributable to shareholders' equity divided by
the diluted combined average number of share units. 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 on page 19 for reconciliation of net profit attributable to
shareholders' equity to underlying profit attributable to
shareholders equity.
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) 2019 2018
Restated(a)
============================================================ =======
Taxation 1,145 1,100
Tax impact:
Non-underlying items within operating profit(b) 89 170
Non-underlying items not in operating profit but within
net profit(b) - (29)
======= ============
Taxation before tax impact of non-underlying items 1,234 1,241
======= ============
Profit before taxation 4,354 4,329
Non-underlying items within operating profit before
tax 465 438
Non-underlying items not in operating profit but within (29) -
net profit before tax(c)
Share of net profit /loss of joint ventures and associates (85) (83)
======= ============
Profit before tax excluding non-underlying items before
tax and share of net profit/(loss) of joint ventures
and associates 4,705 4,684
======= ============
Underlying effective tax rate 26.2% 26.5%
======= ============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
(b) Refer to note 2 for further details on these items.
(c) 2019 amount excludes EUR3 million gain on disposal of
spreads business by the joint venture in Portugal which is included
in the share of net profit/(loss) of joint ventures and associates
line. Including the EUR3 million, total non-underlying items not in
operating profit but within net profit before tax is EUR32 million.
See note 2.
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 2019 price growth in Venezuela and
Argentina divided by the diluted combined average number of share
units. This measure reflects the underlying earnings for each share
unit of the Group in constant exchange rates.
The reconciliation of underlying earnings 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) 2019 2018
Restated(a)
=========================================================== =======
Underlying profit attributable to shareholders' equity
(see note 6) 3,342 3,318
Impact of translation from current to constant exchange
rates and translational hedges (23) (18)
Impact of Venezuela and Argentina price growth(b) (58) -
======= ============
Constant underlying earnings attributable to shareholders'
equity 3,261 3,300
======= ============
Diluted combined average number of share units (millions
of units) 2,625.6 2,737.3
======= ============
Constant underlying EPS (EUR) 1.24 1.21
======= ============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
(b) See pages 6 to 7 for further details.
Net debt
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. It
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.
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
2019 2018 2018
Restated(a) Restated(a)
(unaudited)
=============================================
Total financial liabilities (28,985) (26,738) (31,599)
Current financial liabilities (5,616) (3,613) (11,080)
Non-current financial liabilities (23,369) (23,125) (20,519)
Cash and cash equivalents as per balance
sheet 3,911 3,230 3,991
Cash and cash equivalents as per cash flow
statement 3,789 3,090 3,811
Add bank overdrafts deducted therein 122 140 189
Less cash and cash equivalents classified
as held for sale - - (9)
Other current financial assets 913 874 866
======== ============= ============
Net debt (24,161) (22,634) (26,742)
======== ============= ============
(a) Restated following adoption of IFRS 16. Refer note 1 and note 9.
PRINCIPAL RISK FACTORS
On pages 28 to 33 of our 2018 Report and Accounts we set out our
assessment of the principal risk issues that would face the
business through 2019 under the headings: brand preference;
portfolio management; sustainability; climate change; plastic
packaging; customer relationships; talent; supply chain; safe and
high quality products; systems and information; business
transformation; economic and political instability; treasury and
pensions; 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
2019.
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 24; (ii) pages 2 to 10
comprise the interim management report; and (iii) the Directors'
responsibility statement can be found on page 25. No material
related parties transactions have taken place in the first six
months of the year.
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; inability to find sustainable solutions to
support long-term growth including to plastic packaging; the effect
of climate change on Unilever's business; 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. These forward-looking
statements speak only as of the date of this announcement. 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 2018 and the Unilever
Annual Report and Accounts 2018.
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations
Team
+44 78 2527
3767
+44 77 7999
9683
UK +31 10 217 lucila.zambrano@unilever.com
or 4844 JSibun@tulchangroup.com
NL +32 494 60 els-de.bruin@unilever.com +44 20 7822 investor.relations@unilever.co
or 4906 freek.bracke@unilever.com 6830 m
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
2019 2018 Increase/
Restated(a) (Decrease)
=======
Current Constant
rates rates
============================================ ======= ======== =========
Turnover 26,126 26,352 (0.9)% (0.7)%
Operating profit 4,589 4,529 1.3% 0.9%
After (charging)/crediting non-underlying
items (465) (438)
Net finance costs (351) (288)
Finance income 86 64
Finance costs (420) (337)
Pensions and similar obligations (17) (15)
Net monetary gain/(loss) arising from
hyperinflationary economies 29 -
Share of net profit/(loss) of joint
ventures and associates 85 83
After crediting non-underlying items 3 -
Other income/(loss) from non-current
investments and associates 2 5
Profit before taxation 4,354 4,329 0.6% (0.1)%
Taxation (1,145) (1,100)
After (charging)/crediting tax impact
of non-underlying items 89 141
Net profit 3,209 3,229 (0.6)% (1.5)%
Attributable to:
======= ============= ======== =========
Non-controlling interests 203 198
Shareholders' equity 3,006 3,031 (0.8)% (1.9)%
======= ============= ======== =========
Combined earnings per share
Basic earnings per share (euros) 1.15 1.11 3.4% 2.3%
Diluted earnings per share (euros) 1.14 1.11 3.4% 2.3%
==== ==== ===== =====
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
EUR million First Half
2019 2018
Restated(a)
======================================================== =====
Net profit 3,209 3,229
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 16 (4)
Remeasurements of defined benefit pension plans 267 142
Items that may be reclassified subsequently to profit
or loss, net of tax:
Gains/(losses) on cash flow hedges 83 36
Currency retranslation gains/(losses) 64 (755)
Total comprehensive income 3,639 2,648
Attributable to:
Non-controlling interests 216 185
Shareholders' equity 3,423 2,463
===== =============
(a) Restated following adoption of IFRS 16. Refer note 1 and note 9.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
EUR million Called Share Other Retained Total Non- Total
up share premium reserves profit controlling equity
capital account interest
======================================
First half - 2019
========== ========= ========== ========= ======= ============= ========
1 January 2019 as previously
reported 464 129 (15,286) 26,265 11,572 720 12,292
IFRS 16 Restatement(a) - - 68 (243) (175) - (175)
Impact of adopting IFRIC
23(a) - - - (38) (38) - (38)
========== ========= ========== ========= ======= ============= ========
1 January 2019 after restatement 464 129 (15,218) 25,984 11,359 720 12,079
========== ========= ========== ========= ======= ============= ========
Profit or loss for the
period - - - 3,006 3,006 203 3,209
Other comprehensive income,
net of tax:
Gains/(losses) on:
Equity instruments at fair
value through other
comprehensive
income - - 14 - 14 2 16
Cash flow hedges - - 83 - 83 - 83
Remeasurements of defined
benefit pension plans - - - 266 266 1 267
Currency retranslation
gains/(losses) - - 50 4 54 10 64
========== ========= ========== ========= ======= ============= ========
Total comprehensive income - - 147 3,276 3,423 216 3,639
Dividends on ordinary capital - - - (2,079) (2,079) - (2,079)
Cancellation of treasury
shares(b) (30) - 6,599 (6,569) - - -
Other movements in treasury
shares(c) - - 31 (180) (149) - (149)
Share-based payment credit(d) - - - 95 95 - 95
Dividends paid to non-controlling
interests - - - - - (237) (237)
Currency retranslation - - - - - - -
gains/(losses) net of tax
Hedging gain/(loss) transferred
to non-financial assets - - 35 - 35 - 35
Other movements in equity - - - 26 26 (13) 13
========== ========= ========== ========= ======= ============= ========
30 June 2019 434 129 (8,406) 20,553 12,710 686 13,396
========== ========= ========== ========= ======= ============= ========
First half - 2018
=== === ======== ======= ======= =====
1 January 2018 as previously
reported 484 130 (13,633) 26,648 13,629 758 14,387
IFRS 16 Restatement(a) - - 46 (235) (189) - (189)
=== === ======== ======= ======= ===== =======
1 January 2018 after restatement 484 130 (13,587) 26,413 13,440 758 14,198
=== === ======== ======= ======= ===== =======
Profit or loss for the
period - - - 3,031 3,031 198 3,229
Other comprehensive income,
net of tax:
Gains/(losses) on:
Equity instruments at fair
value through other comprehensive
income - - (4) - (4) - (4)
Cash flow hedges - - 35 - 35 1 36
Remeasurements of defined
benefit pension plans - - - 142 142 - 142
Currency retranslation
gains/(losses) - - (733) (8) (741) (14) (755)
=== === ======== ======= ======= ===== =======
Total comprehensive income - - (702) 3,165 2,463 185 2,648
Dividends on ordinary capital - - - (2,037) (2,037) - (2,037)
Repurchase of shares(e) - - (2,516) - (2,516) - (2,516)
Other movements in treasury
shares(c) - - (51) (135) (186) - (186)
Share-based payment credit(d) - - - 115 115 - 115
Dividends paid to non-controlling
interests - - - - - (201) (201)
Currency retranslation - - - - - - -
gains/(losses) net of tax
Hedging gain/(loss) transferred
to non-financial assets - - 96 - 96 - 96
Other movements in equity - - 50 (21) 29 (24) 5
=== === ======== ======= ======= ===== =======
30 June 2018 484 130 (16,710) 27,500 11,404 718 12,122
=== === ======== ======= ======= ===== =======
(a) 1 January 2019 restated following adoption of IFRS 16 and
IFRIC 23. 1 January 2018 restated following adoption of IFRS 16.
Refer note 1 and note 9.
(b) During 2019 170,000,000 NV ordinary shares and 18,660,634
PLC ordinary shares were cancelled. The amount paid to repurchase
these shares was initially recognised in other reserves and is
transferred to retained profit on cancellation
(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) Repurchase of shares reflects the cost of acquiring ordinary
shares as part of the share buyback programmes announced on 19
April 2018.
CONSOLIDATED BALANCE SHEET
(unaudited)
EUR million As at As at As at
30 June 31 December 30 June
2019 2018 2018
Restated(a) Restated(a)
Non-current assets
Goodwill 17,697 17,341 16,687
Intangible assets 12,547 12,152 12,011
Property, plant and equipment 12,067 12,088 11,911
Pension asset for funded schemes in surplus 2,053 1,728 2,340
Deferred tax assets 1,376 1,152 1,034
Financial assets 705 642 642
Other non-current assets 495 530 502
46,940 45,633 45,127
Current assets
Inventories 4,387 4,301 4,246
Trade and other current receivables 8,079 6,482 6,818
Current tax assets 265 472 505
Cash and cash equivalents 3,911 3,230 3,991
Other financial assets 913 874 866
Assets held for sale 34 119 3,404
========= ============= =============
17,589 15,478 19,830
========= ============= =============
Total assets 64,529 61,111 64,957
========= ============= =============
Current liabilities
Financial liabilities 5,616 3,613 11,080
Trade payables and other current liabilities 14,391 14,457 13,779
Current tax liabilities 1,072 1,445 924
Provisions 665 624 472
Liabilities held for sale 1 11 143
========= ============= =============
21,745 20,150 26,398
========= ============= =============
Non-current liabilities
Financial liabilities 23,369 23,125 20,519
Non-current tax liabilities 187 174 324
Pensions and post-retirement healthcare
liabilities:
Funded schemes in deficit 1,176 1,209 1,157
Unfunded schemes 1,417 1,393 1,460
Provisions 637 697 719
Deferred tax liabilities 2,272 1,900 1,942
Other non-current liabilities 330 346 316
29,388 28,844 26,437
Total liabilities 51,133 48,994 52,835
========= ============= =============
Equity
Shareholders' equity 12,710 11,397 11,404
Non-controlling interests 686 720 718
========= ============= =============
Total equity 13,396 12,117 12,122
========= ============= =============
Total liabilities and equity 64,529 61,111 64,957
========= ============= =============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
CONSOLIDATED CASH FLOW STATEMENT
(unaudited)
EUR million First Half
2019 2018
Restated(a)
====================================================== ========
Net profit 3,209 3,229
Taxation 1,145 1,100
Share of net profit of joint ventures/associates
and other income
from non-current investments and associates (87) (88)
Net monetary gain arising from hyperinflationary (29) -
economies
Net finance costs 351 288
======== =============
Operating profit 4,589 4,529
======== =============
Depreciation, amortisation and impairment 965 1,228
Changes in working capital (1,888) (1,697)
Pensions and similar obligations less payments (94) (76)
Provisions less payments 47 (61)
Elimination of (profits)/losses on disposals (36) 16
Non-cash charge for share-based compensation 95 115
Other adjustments(b) 23 (283)
======== =============
Cash flow from operating activities 3,701 3,771
======== =============
Income tax paid (1,309) (1,081)
Net cash flow from operating activities 2,392 2,690
======== =============
Interest received 78 45
Net capital expenditure (558) (495)
Other acquisitions and disposals (470) (1,035)
Other investing activities 234 44
Net cash flow (used in)/from investing activities (716) (1,441)
======== =============
Dividends paid on ordinary share capital (2,080) (2,033)
Interest paid (369) (239)
Change in financial liabilities 1,937 4,250
Repurchase of shares - (2,248)
Other movements on treasury stock (205) (264)
Other financing activities (139) (145)
Net cash flow (used in)/from financing activities (856) (679)
Net increase/(decrease) in cash and cash equivalents 820 570
======== =============
Cash and cash equivalents at the beginning of the
period 3,090 3,169
Effect of foreign exchange rate changes (121) 72
Cash and cash equivalents at the end of the period 3,789 3,811
======== =============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
(b) 2018 includes a non-cash credit of EUR277 million from early
settlement of contingent consideration relating to Blueair.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(unaudited)
1 ACCOUNTING INFORMATION AND POLICIES
The accounting policies and methods of computation are in
compliance with IAS 34 'Interim Financial Reporting' as issued by
the International Accounting Standard Board (IASB) and as adopted
by the EU; and except as set out below are consistent with the year
ended 31 December 2018. The condensed interim financial statements
are based on International Financial Reporting Standards (IFRS) as
adopted by the EU and IFRS as issued by the IASB.
After making appropriate enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
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 2018 are not Unilever
PLC's statutory accounts for that financial year. Those accounts of
Unilever for the year ended 31 December 2018 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.
Adoption of new accounting standards
IFRS 16 'Leases'
The Group has adopted IFRS 16 which replaced existing lease
guidance including IAS 17 'Leases', IFRIC 4 'Determining whether an
arrangement contains a lease', SIC-15 'Operating Leases-Incentives'
and SIC-27 'Evaluating the substance of transactions involving the
legal form of a lease'. The standard changes the recognition,
measurement, presentation and disclosure of leases. At the
commencement of a lease, lease payments (lease liability) and an
asset representing the right to use the asset during the lease term
(right-of-use asset) are recorded on the balance sheet. The
right-of-use asset is then depreciated on a straight-line basis and
interest expense recognised on the lease liability in the income
statement over the lease term.
The standard has no impact on the actual cash flows of the
group. However, as the standard requires the capitalisation, and
subsequent depreciation of costs that are expensed as paid, the
disclosures of cash flows within the cash flow statement are
impacted. The amounts previously expensed as operating cash
outflows are instead capitalised and presented as financing cash
outflows. The Group has restated 2018 numbers for the impact of
IFRS 16. Refer to note 9 for the restatement impact of IFRS 16 on
the financial statements and segment information.
IFRIC 23 'Uncertainty Over Income Tax Treatments'
On 1 January 2019 the Group adopted IFRIC 23. The Interpretation
addresses the accounting for income taxes when tax treatments
involve uncertainty that affects the application of IAS 12 Income
Taxes.
The Group applies judgement in identifying uncertainties over
income tax treatments and has considered whether it should adjust
its uncertain tax provisions in line with this new criteria. The
Group has elected to recognise the cumulative impact within opening
retained earnings.
2 SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT
Non-underlying items
Non-underlying items are costs and revenues relating to gains
and losses on business disposals, acquisition and disposal-related
credit/costs, restructuring costs, impairments and other one-off
items within operating profit, and other significant and unusual
items within net profit but outside of operating profit, which we
collectively term non-underlying items, due to their nature and/or
frequency of occurrence. These items are significant in terms of
nature and/or amount and are relevant to an understanding of our
financial performance.
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
2019 2018
============================================================== =====
Acquisition and disposal-related credit/(costs)(a) (77) 148
Gain/(loss) on disposal of group companies(b) 66 -
Restructuring costs (454) (367)
Impairment and other one-off items(c) - (219)
===== =====
Non-underlying items within operating profit before
tax (465) (438)
Tax on non-underlying items within operating profit 89 170
===== =====
Non-underlying items within operating profit after
tax (376) (268)
===== =====
Share of gain on disposal of Spreads business in Portugal
JV 3 -
Net monetary gain arising from hyperinflationary economies 29 -
===== =====
Non-underlying items not in operating profit but within
net profit before tax 32 -
Tax impact of non-underlying items not in operating
profit but within net profit:
Impact of US tax reform - (29)
===== =====
Non-underlying items not in operating profit but within
net profit after tax 32 (29)
===== =====
Non-underlying items after tax(d) (344) (297)
===== =====
Attributable to:
===== =====
Non-controlling interests (8) (10)
Shareholders' equity (336) (287)
===== =====
(a) 2018 includes a credit of EUR277 million from early
settlement of contingent consideration relating to Blueair.
(b) 2019 includes a gain of EUR60 million relating to disposal
of Alsa baking and dessert business.
(c) 2018 includes a charge of EUR208 million relating to
impairment of Blueair intangible asset.
(d) 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)
2018 5,175 2,488 6,067 13,730
2019 5,518 2,718 5,474 13,710
Change (%) 6.6 9.3 (9.8) (0.1)
Impact of:
Exchange rates(a) (%) 2.5 0.2 0.8 1.3
Acquisitions (%) 0.5 0.1 0.7 0.5
Disposals (%) - - (12.0) (5.3)
Underlying sales growth (%) 3.5 8.9 1.0 3.5
========== ====== ============= =======
Price(a) (%) 1.9 4.3 1.6 2.3
Volume (%) 1.6 4.5 (0.6) 1.2
========== ====== ============= =======
First Half Beauty & Home Foods & Total
Personal Care Refreshment
Care
Turnover (EUR million)
2018 10,084 5,048 11,220 26,352
2019 10,721 5,410 9,995 26,126
Change (%) 6.3 7.2 (10.9) (0.9)
Impact of:
Exchange rates(a) (%) 2.2 (0.4) 0.6 1.1
Acquisitions (%) 0.6 0.2 0.5 0.5
Disposals (%) - - (13.0) (5.5)
Underlying sales growth (%) 3.3 7.4 1.3 3.3
========== ====== ============= =======
Price(a) (%) 1.6 4.5 1.4 2.1
Volume (%) 1.7 2.8 (0.1) 1.2
========== ====== ============= =======
Operating profit (EUR million)
2018(b) 2,056 651 1,822 4,529
2019 2,322 652 1,615 4,589
Underlying operating profit (EUR
million)
2018(b) 2,220 646 2,101 4,967
2019 2,469 756 1,829 5,054
Operating margin (%)
2018(b) 20.4 12.9 16.2 17.2
2019 21.7 12.1 16.2 17.6
Underlying operating margin (%)
2018(b) 22.0 12.8 18.7 18.8
2019 23.0 14.0 18.3 19.3
========== ====== ============= =======
(a) Underlying price growth in Venezuela and Argentina has been
excluded when calculating the price growth in the tables above, and
an equal and opposite adjustment made in the calculation of
exchange rate impact. See page 6 for further details.
(b) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
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)
2018 6,017 4,152 3,561 13,730
2019 6,265 4,269 3,176 13,710
Change (%) 4.1 2.8 (10.8) (0.1)
Impact of:
Exchange rates(a) (%) 0.3 3.8 - 1.3
Acquisitions (%) - 0.3 1.6 0.5
Disposals (%) (2.4) (4.8) (10.8) (5.3)
Underlying sales growth (%) 6.3 3.7 (1.6) 3.5
======== ========== ======= =======
Price(a) (%) 3.7 2.3 (0.5) 2.3
Volume (%) 2.5 1.3 (1.1) 1.2
======== ========== ======= =======
First Half Asia / The Europe Total
AMET / Americas
RUB
Turnover (EUR million)
2018 11,735 8,083 6,534 26,352
2019 12,195 8,141 5,790 26,126
Change (%) 3.9 0.7 (11.4) (0.9)
Impact of:
Exchange rates(a) (%) 0.2 3.1 - 1.1
Acquisitions (%) - 0.6 1.3 0.5
Disposals (%) (2.3) (5.0) (12.0) (5.5)
Underlying sales growth (%) 6.2 2.1 (0.6) 3.3
======== ========== ======= =======
Price(a) (%) 3.2 2.2 (0.4) 2.1
Volume (%) 2.9 (0.1) (0.2) 1.2
======== ========== ======= =======
Operating profit (EUR million)
2018(b) 2,274 1,172 1,083 4,529
2019 2,339 1,270 980 4,589
Underlying operating profit (EUR
million)
2018(b) 2,345 1,349 1,273 4,967
2019 2,526 1,425 1,103 5,054
Operating margin (%)
2018(b) 19.4 14.5 16.6 17.2
2019 19.2 15.6 16.9 17.6
Underlying operating margin (%)
2018(b) 20.0 16.7 19.5 18.8
2019 20.7 17.5 19.1 19.3
======== ========== ======= =======
(a) Underlying price growth in Venezuela and Argentina has been
excluded when calculating the price growth in the tables above, and
an equal and opposite adjustment made in the calculation of
exchange rate impact. See page 6 for further details. See page 6
for further details.
(b) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
5 TAXATION
The effective tax rate for the first half was 26.8% compared to
25.9% in 2018. 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 2019 First Half 2018
Restated(a)
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 16 - 16 (4) - (4)
Cash flow hedges 89 (6) 83 32 4 36
Remeasurements of defined
benefit pension plans 274 (7) 267 206 (64) 142
Currency retranslation gains/(losses) 68 (4) 64 (756) 1 (755)
======= =========== ====== ======= =========== ======
Other comprehensive income 447 (17) 430 (522) (59) (581)
======= =========== ====== ======= =========== ======
(b) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
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 options by
employees.
Earnings per share for total operations for the six months were
calculated as follows:
2019 2018
Restated(a)
===========================================================
Combined EPS - Basic
=========================================================== ======== =============
Net profit attributable to shareholders' equity (EUR
million) 3,006 3,031
Average number of combined share units (millions
of units) 2,616.5 2,727.3
Combined EPS - basic (EUR) 1.15 1.11
======== =============
Combined EPS - Diluted
=========================================================== ======== =============
Net profit attributable to shareholders' equity (EUR
million) 3,006 3,031
Adjusted average number of combined share units (millions
of units) 2,625.6 2,737.3
Combined EPS - diluted (EUR) 1.14 1.11
======== =============
Underlying EPS
=========================================================== ======== =============
Net profit attributable to shareholder's equity (EUR
million) 3,006 3,031
Post tax impact of non-underlying items attributable
to shareholders' equity (see note 2) 336 287
======== =============
Underlying profit attributable to shareholders' equity
(EUR million) 3,342 3,318
Adjusted average number of combined share units (millions
of units) 2,625.6 2,737.3
Underlying EPS - diluted (EUR) 1.27 1.21
======== =============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
In calculating underlying earnings per share, net profit
attributable to shareholders' equity is adjusted to eliminate the
post-tax impact of non-underlying items in operating profit and any
other significant unusual items within net profit but not operating
profit.
During the period the following movements in shares have taken
place:
Millions
=======================================================
Number of shares at 31 December 2018 (net of treasury
shares) 2,614.2
-------------------------------------------------------- --------
Shares repurchased under the share buyback programme -
------------------------------------------------------- --------
Net movement in shares under incentive schemes 1.9
======================================================== ========
Number of shares at 30 June 2019 2,616.1
======================================================== ========
7 ACQUISITIONS AND DISPOSALS
Total consideration for acquisitions completed in the first half
of 2019 is EUR654 million (acquisitions completed in the first half
of 2018: EUR1,078 million). The main acquisition in the first half
of 2019 was Olly Nutrition, a premium supplements business in the
US.
8 FINANCIAL INSTRUMENTS
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 31 December 30 June As at 31 December 30 June
30 June 2018 2018 30 June 2018 2018
2019 Restated(a) Restated(a) 2019 Restated(a) Restated(a)
==================================== ========= ============= ============= ========= ============= =============
Financial assets
Cash and cash equivalents 3,911 3,230 3,991 3,911 3,230 3,991
Amortised cost 499 629 632 499 629 632
Fair value through other
comprehensive
income 327 329 288 327 329 288
Financial assets at fair value
through profit and loss:
Derivatives 412 194 209 412 194 209
Other 381 364 379 381 364 379
========= ============= ============= ========= ============= =============
5,530 4,746 5,499 5,530 4,746 5,499
Financial liabilities
Bank loans and overdrafts (1,044) (816) (1,131) (1,041) (814) (1,128)
Bonds and other loans (26,787) (23,691) (27,842) (25,390) (23,391) (27,426)
Lease liabilities (1,967) (1,981) (2,112) (1,967) (1,981) (2,112)
Derivatives (464) (402) (542) (464) (402) (542)
Other financial liabilities (123) (150) (390) (123) (150) (390)
========= ============= ============= ========= ============= =============
(30,385) (27,040) (32,017) (28,985) (26,738) (31,598)
========= ============= ============= ========= ============= =============
(a) Restated following adoption of IFRS 16. Refer note 1 and
note 9.
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
2019 2018 2018
====================== ====================== ======================
Assets at fair value
Financial assets at
fair value through other
comprehensive income(a) 116 4 207 160 5 164 143 4 141
Financial assets at
fair value
through profit or loss:
Derivatives(a) - 448 - - 276 - - 366 -
Other 155 - 226 145 - 219 185 - 194
Liabilities at fair
value
Derivatives(b) - (530) - - (542) - - (588) -
Contingent Consideration - - (156) - - (142) - - (199)
====== ====== ====== ====== ====== ====== ====== ====== ======
(a) Includes EUR36 million (December 2018: EUR82 million)
derivatives, reported within trade receivables, that hedge trading
activities.
(b) Includes EUR(66) million (December 2018: EUR(140) 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 2018. There were also no significant movements between the
fair value hierarchy classifications since 31 December 2018.
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 2018.
9 IMPACT OF ADOPTION OF IFRS 16
Upon adoption of IFRS 16, the Group has recognised leases on the
balance sheet with a right-of-use asset and related lease
liability. Refer to note 1 for a summary of accounting for leases
under the new standard. The Group has restated all prior periods
for the impact of IFRS 16 in line with the 'full retrospective
approach'. The Group has chosen not to recognise short-term leases,
which are those less than 12 months, and leases of low-value assets
on the balance sheet.
Financial statement impact
The below tables summarise the impact of adopting IFRS 16 on the
Group's consolidated financial statements. Only restated lines have
been included in the tables below:
(a) Balance sheet
The Group recognised right-of-use assets on the balance sheet
representing the right to use of the underlying assets from the
lease contracts. Current and non-current lease liabilities were
also recognised for the present value of the lease payments due
under the lease contracts. Deferred tax adjustments are due to
temporary timing differences arising from the recognition of
right-of-use assets and lease liabilities. Shareholder's equity has
been restated to reflect the cumulative impact of IFRS 16 on
retained earnings and currency translation adjustment as a result
of IFRS 16 restatement of foreign subsidiaries.
EUR million As at 31 December 2018 As at 30 June 2018
As previously Restatement Restated As previously Restatement Restated
reported reported
============== ============== ============ =========
Balance sheet
Property, plant
and equipment 10,347 1,741 12,088 10,050 1,861 11,911
Deferred tax assets 1,117 35 1,152 1,000 34 1,034
Other non-current
assets 648 (118) 530 619 (117) 502
Trade and other
current receivables 6,485 (3) 6,482 6,821 (3) 6,818
Total assets 59,456 1,655 61,111 63,182 1,775 64,957
Current financial
liabilities 3,235 378 3,613 10,670 410 11,080
Non-current financial
liabilities 21,650 1,475 23,125 18,951 1,568 20,519
Deferred tax liability 1,923 (23) 1,900 1,966 (24) 1,942
Total liabilities 47,164 1,830 48,994 50,881 1,954 52,835
Other reserves (15,286) 68 (15,218) (16,768) 58 (16,710)
Retained profit 26,265 (243) 26,022 27,737 (237) 27,500
Total equity 12,292 (175) 12,117 12,301 (179) 12,122
Total liabilities
and equity 59,456 1,655 61,111 63,182 1,775 64,957
============== ============ ========= ============== ============ =========
Only impacted lines and key sub-totals are presented in the
table above.
(b) Income statement and statement of comprehensive income
Operating profit has been restated to remove operating lease
payments previously recognised and to recognise depreciation
expense on the right-of-use assets that are now recognised on the
balance sheet. Interest expense on lease liabilities has been
recognised within finance costs. Adjustments to taxation are due to
the change in profit before taxation. Currency translation
gains/losses have also been restated to reflect the foreign
exchange impact of IFRS 16 on subsidiaries that do not have a euro
functional currency.
EUR million First Half 2018
=======================================
As previously Adjustments Restated
reported for IFRS
16
======================================= ============== ============ =========
Income statement
======================================= ============== ============ =========
Operating profit 4,474 55 4,529
Finance costs (272) (65) (337)
Profit before taxation 4,339 (10) 4,329
Taxation (1,102) 2 (1,100)
Net profit 3,237 (8) 3,229
Attributable to: Shareholder's equity 3,039 (8) 3,031
============== ============ =========
Statement of comprehensive income
======================================= ============== ============ =========
Net profit 3,237 (8) 3,229
Currency retranslation gains/(losses) (767) 12 (755)
Total comprehensive income 2,644 4 2,648
Attributable to: Shareholder's equity 2,459 4 2,463
============== ============ =========
Only impacted lines and key sub-totals are presented in the
table above.
(c) Cash flow statement
There is no impact on overall cash flows on the Group from the
adoption of IFRS 16. However, cash outflows for lease payments have
been reclassified from cash flows from operating activities to cash
flows used in financing activities.
EUR million First Half 2018
===================================================
As previously Adjustments Restated
reported for IFRS
16
=================================================== ============== ============ =========
Cash flow statement
Net profit 3,237 (8) 3,229
Taxation 1,102 (2) 1,100
Net finance costs 223 65 288
Operating profit 4,474 55 4,529
Depreciation, amortisation and impairment 983 245 1,228
Elimination of (profits)/losses on disposals 32 (16) 16
Net cash flow from operating activities 2,406 284 2,690
Interest paid (191) (48) (239)
Change in financial liabilities 4,486 (236) 4,250
Net cash flow (used in)/from financing activities (395) (284) (679)
============== ============ =========
Only impacted lines and key sub-totals are presented in the
table above.
(d) Impact on earnings per share
Basic and diluted earnings per share have been restated to
reflect the restated net profit attributable to shareholders'
equity as per the income statement.
First Half 2018
As previously Restated
reported
=========================================================== ==============
Combined EPS - Basic
=========================================================== ============== =========
Net profit attributable to shareholders' equity (EUR
million) 3,039 3,031
Average number of combined share units (millions of
units) 2,727.3 2,727.3
Combined EPS - basic (EUR) 1.11 1.11
============== =========
Combined EPS - Diluted
=========================================================== ============== =========
Net profit attributable to shareholders' equity (EUR
million) 3,039 3,031
Adjusted average number of combined share units (millions
of units) 2,737.3 2,737.3
Combined EPS - diluted (EUR) 1.11 1.11
============== =========
(e) Impact on segment information
Segment information for the Group's divisions and geographical
areas has been restated. Operating profit, underlying operating
profit, operating margin and underlying operating margin have been
restated to reflect the impact of IFRS 16 adoption on the income
statement for the six months to 30 June 2018 as follows:
First Half 2018 Beauty & Home Foods & Total
Personal Care Refreshment
Care
Operating profit (EUR million)
2018 as previously reported 2,037 638 1,799 4,474
Adjustments for IFRS 16 19 13 23 55
2018 after restatement 2,056 651 1,822 4,529
Underlying operating profit (EUR
million)
2018 as previously reported 2,201 633 2,078 4,912
Adjustments for IFRS 16 19 13 23 55
2018 after restatement 2,220 646 2,101 4,967
Operating margin (%)
2018 as previously reported 20.2 12.6 16.0 17.0
2018 after restatement 20.4 12.9 16.2 17.2
Underlying operating margin (%)
2018 as previously reported 21.8 12.5 18.5 18.6
2018 after restatement 22.0 12.8 18.7 18.8
========== ====== ============= ======
First Half 2018 Asia / The Europe Total
AMET / Americas
RUB
Operating profit (EUR million)
2018 as previously reported 2,248 1,156 1,070 4,474
Adjustments for IFRS 16 27 17 11 55
2018 after restatement 2,275 1,173 1,081 4,529
Underlying operating profit (EUR
million)
2018 as previously reported 2,317 1,333 1,262 4,912
Adjustments for IFRS 16 27 17 11 55
2018 after restatement 2,344 1,350 1,273 4,967
Operating margin (%)
2018 as previously reported 19.2 14.3 16.4 17.0
2018 after restatement 19.4 14.5 16.5 17.2
Underlying operating margin (%)
2018 as previously reported 19.7 16.5 19.3 18.6
2018 after restatement 20.0 16.7 19.5 18.8
======== ========== ======= ======
10 DIVIDENDS
The Boards have determined to pay a quarterly interim dividend
for Q2 2019 at the following rates which are equivalent in value
between the two companies at the rate of exchange applied under the
terms of the Equalisation Agreement:
Per Unilever N.V. ordinary share EUR 0.4104
Per Unilever PLC ordinary share GBP 0.3682
Per Unilever N.V. New York share US$ 0.4585
Per Unilever PLC American Depositary US$ 0.4585
Receipt
The quarterly interim dividends have been determined in euros
and converted into equivalent sterling and US dollar amounts using
exchange rates issued by WM/Reuters on 23 July 2019.
US dollar cheques for the quarterly interim dividend will be
mailed on 11 September 2019 to holders of record at the close of
business on 9 August 2019. In the case of the NV New York shares,
Netherlands withholding tax will be deducted.
The quarterly dividend calendar for the remainder of 2019 will
be as follows:
Announcement Ex-Dividend Record Date Payment Date
Date Date
=====================
Quarterly dividend - 25 July 2019 8 August 9 August 2019 11 September
for Q2 2019 2019 2019
Quarterly dividend - 17 October 31 October 1 November 4 December
for Q3 2019 2019 2019 2019 2019
============= ============ ============== =============
11 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 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 2018, with the exception of Alan Jope who was
appointed as an Executive Director following the Unilever N.V. and
Unilever PLC 2019 AGMs. Susan Kilsby's appointment as a
Non-Executive Director was also approved at the Unilever N.V. and
Unilever PLC 2019 AGMs, however her appointment will take effect
from 1 August 2019.
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
25 July 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR RIMLTMBATBBL
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