Unilever PLC (UL) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 26, 2022 3:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Unilever's Q2 and Half Year 2022 Results. We would like to now hand over to Richard Williams, Unilever's Head of Investor Relations, to begin the presentation.

Richard Williams - Head, IR

Thank you. Good morning, and welcome to Unilever's half year results update. We expect prepared remarks to be around 30 minutes, followed by Q&A of around 30 minutes. All of today's webcast is available live, transcribed on the screen. First, can I draw your attention to the disclaimer related to forward-looking statements and non-GAAP measures. And with that said, straight over to Alan.

Alan Jope - CEO & Executive Director

Thanks, Richard, and good morning, everybody. This is how we're going to run today. I'll give a quick overview of the first half of 2022 and an update against our performance on our strategic priorities. Then Graeme will take you through the details of the results and will share our outlook.

Unilever's first half performance does build on the growth that we delivered in 2021. We've been quick to price in response to significant commodity inflation, and that's given us the ability to continue to invest in our brands. Our big brands, priority markets, and key channels have again performed well in line with our strategy, as I'll cover in a minute or 2.

We've continued to improve the growth exposure of our portfolio, most recently by successfully completing the disposal of the ekaterra tea business, and with the acquisition of Nutrafol. And on July 1, we implemented our new organization model that does dramatically simplify Unilever and will support higher performance through increased speed, accountability and category focus.

That being said, the external environment remains very challenging. Input cost inflation continues to run at record levels. Graeme will show how costs are still significantly up versus a year ago. And even though a few commodity spot prices have eased in recent weeks, we're likely to see peak cost inflation sometime in the second half of the year. The threat of recession is starting to impact consumer confidence and change spending patterns and behaviors. And the pandemic is still with us with spikes in infection rates in several countries and the rolling lockdowns that we all know about in China.

However, against this difficult backdrop, we believe Unilever is well positioned. Our brands are in good health with more than 80% of our turnover with either stable or growing brand power. And this is critical as we reset pricing. And then dealing with inflation, we're drawing on our deep experience across many of our markets. We have a playbook, which has been fine-tuned in high-inflation markets over the years. It starts with precision pricing taken quickly and single-mindedly to protect the shape of the P&L and retain our ability to invest behind our brands. This is the correct strategy even if it results in low single-digit volume declines in the short term.