Unilever PLC — 2023 Form 20-F summary
Reporting period: Fiscal year ended December 31, 2023. Although the request metadata specifies 2023 Q4, this filing is an annual report; it includes full-year results, not a stand-alone Q4 financial summary. The consolidated statements are prepared under IFRS as issued by the IASB and were audited by KPMG, which issued an unqualified opinion. Management and the auditor reported effective internal control over financial reporting; the assessment excluded OZiva and Yasso, representing 1.09% of year-end assets and 0.14% of annual turnover.
Business context and performance
Unilever is a global consumer goods company organized into five Business Groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream. It reported turnover of €59.6 billion; emerging markets represented 58% of turnover. Management’s Growth Action Plan emphasizes faster growth, productivity and simplicity, and a stronger performance culture, with investment focused on 30 Power Brands.
Key financial metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Turnover | €59.6bn; down 0.8% | €60.1bn |
| Underlying sales growth | 7.0%: volume 0.2%, price 6.8% | 9.0%: volume down 2.1% |
| Operating profit | €9.8bn; down 9.3% | €10.8bn |
| Underlying operating profit | €9.9bn; up 2.6% | €9.7bn |
| Operating margin | 16.4% | 17.9% |
| Underlying operating margin | 16.7%; up 60 basis points | 16.1% |
| Net profit | €7.1bn | €8.3bn |
| Diluted EPS | €2.56 | €2.99 |
| Underlying diluted EPS | €2.60; up 1.4% | €2.57 |
| Cash flow from operating activities | €11.6bn | €10.1bn |
| Free cash flow | €7.1bn; cash conversion 111% | €5.2bn; cash conversion 97% |
| Net debt | €23.7bn | €23.7bn |
Gross margin improved 200 basis points to 42.2%. Net material inflation was approximately €1.8 billion and was more than offset by productivity, pricing and mix. Operating profit included a €497 million gain on the Suave disposal and €499 million of restructuring costs. The prior year included a €2.3 billion gain on disposal of the global tea business, a major reason reported operating profit and EPS declined year over year.
Year-end total financial liabilities were €29.6 billion, cash and cash equivalents were €4.2 billion, and other current financial assets were €1.7 billion. Unilever reported undrawn committed credit facilities of $5.2 billion and €2.6 billion and said its financing arrangements were adequate for short- and long-term requirements. Contractual obligations totaled €55.3 billion, including €25.8 billion of bonds and €16.2 billion of trade payables and accruals.
Material changes and Business Group results
- Growth mix: Underlying sales growth slowed from 9.0% to 7.0%, but volumes returned to slight growth after declining in 2022. Reported turnover fell, reflecting adverse currency translation of 5.7% and net disposals.
- Competitiveness: Management said overall growth was not competitive. The share of the measured business winning value market share was 37%; share losses included private-label pressure in Europe. Brand and marketing investment rose to 14.3% of turnover.
- Beauty & Wellbeing: Underlying sales grew 8.3%, including volume growth of 4.4%; underlying operating profit was flat at €2.3bn.
- Personal Care: Underlying sales grew 8.9%, including volume growth of 3.2%; underlying operating profit rose 4.2% to €2.8bn.
- Home Care: Underlying sales grew 5.9%, but volume fell 0.9%; underlying operating profit rose 11% to €1.5bn. European volumes were weak.
- Nutrition: Underlying sales grew 7.7%, driven by 10.1% price growth while volumes fell 2.2%; underlying operating profit rose 0.4% to €2.5bn.
- Ice Cream: Underlying sales grew 2.3%, with price growth of 8.8% offset by a 6.0% volume decline; underlying operating profit fell 7.3% to €852m.
Unilever completed the Suave and Dollar Shave Club disposals and acquired OZiva and Yasso during 2023. The K18 acquisition completed in February 2024. A sale of Elida Beauty was expected to close by mid-2024.
Outlook, risks and contingencies
Management gave no specific quantified 2024 revenue or earnings forecast in the supplied filing text. It said it was focused on rebuilding gross margin, reinvesting behind Power Brands, increasing volume growth and improving competitiveness. The stated financial ambition is consistent, competitive growth and total shareholder return in the top third of its peer group. Unilever announced a €1.5 billion share buyback for 2024. The declared 2023 dividend was £1.48 per ordinary share.
Management expected inflation to normalize in most markets, a slow recovery in some emerging-market geographies affected by currency devaluations, and subdued growth in Europe. It cited geopolitical tensions, climate effects and consumer cost-of-living pressures as continuing uncertainties. Principal risks include changing consumer preferences, competition and innovation, climate change, plastic packaging, supply-chain disruption, commodity and currency volatility, product safety, cybersecurity, transformation execution, and legal, regulatory and tax matters. The company said cybersecurity incidents had not materially affected it to date; its risk disclosures nevertheless identify the threat landscape as elevated.
Contingencies: Brazilian indirect tax disputes relating to a 2001 corporate reorganization had tax assessments of €3.757 billion, disclosed as contingent liabilities rather than provisions; Unilever said it believed the authorities’ likelihood of prevailing was low, but noted there was no guarantee of success and further assessments could arise. Total disclosed contingent liabilities were €5.529 billion, including other Brazilian tax matters. The auditor identified the Brazilian tax dispute as a critical audit matter. Management also disclosed risk of impairment in Russia: its Russian business represented about 1% of Group turnover and net profit and had approximately €600 million of net assets at year-end.
Other unusual and judgement-sensitive items include the 2023 Suave disposal gain, restructuring costs, ongoing competition investigations, and hyperinflation accounting for Argentina and Turkey. The report says the 2023 income statement was reduced by a €142 million net monetary loss arising from hyperinflationary economies.
Important facts for investors to verify
- Whether underlying volume growth and the 37% share-winning measure improve, especially in Europe, Ice Cream and other weak categories.
- Whether gross-margin recovery can continue while Unilever increases brand investment, and how this translates into underlying EPS growth and returns.
- Cash-flow quality: 2023 free cash flow included €0.4 billion linked to an India tax refund; verify working-capital sustainability and subsequent cash conversion.
- Progress and final outcomes for the Elida Beauty disposal, K18 integration and announced 2024 buyback, including effects on leverage and per-share results.
- Developments in the Brazilian tax litigation, including possible judicial deposits or guarantees, and any changes to contingent-liability estimates.
- Exposure to foreign exchange, commodity costs, Russia-related impairment, and material legal, regulatory or cybersecurity events.
- Delivery and measurement of the updated climate targets: some emissions data is estimated, Scope 3 figures carry additional uncertainty, and proposed new Scope 3 targets were awaiting validation.