Unilever PLC - Final Results

Performance highlights (unaudited)

Underlying performance

GAAP measures



vs 2017



vs 2017

Full Year






Underlying sales growth (USG)(a)






USG excluding spreads(a)



Turnover excluding spreads(b)



Underlying operating margin



Operating margin



Underlying earnings per share



Diluted earnings per share



Free cash flow



Net profit



Fourth Quarter












Quarterly dividend payable in March 2019                                                                                  €0.3872 per share

Full year highlights

·      Underlying sales growth excluding spreads was 3.1% with 2.1% volume and 1.0% price

·      Price growth in Argentina is excluded from underlying sales growth from July due to hyperinflationary status. Reported growth would otherwise have been 3.4% (3.6% excluding spreads)

·      Underlying operating margin increased 90bps with 50bps from gross margin

·      Underlying EPS increased 5.2%; constant underlying EPS was up 12.8%

·      Turnover was impacted by an adverse currency impact of 6.7% and the disposal of spreads

·      Operating margin up 810bps and diluted EPS up by 62%, driven by a €4.3 billion profit on the disposal of spreads

Alan Jope: Chief Executive Officer statement

"2018 was a solid year for Unilever, with good volume growth and high-quality margin progression.

Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.

We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions.

In 2019 we expect market conditions to remain challenging. We anticipate underlying sales growth will be in the lower half of our multi-year 3-5% range, with continued improvement in underlying operating margin and another year of strong free cash flow. We remain on track for our 2020 goals."

Our markets: Market conditions have been challenging throughout the year, particularly in the second half where currency devaluations and rising commodity costs put pressure on consumer demand. The economic crisis in Argentina led to the economy being classified as hyperinflationary.

Unilever overall performance: In 2018 we again delivered profitable growth with another year of strong gross margin progression and double digit growth of constant underlying earnings per share. Underlying sales excluding spreads grew 3.1% with 2.1% from volume. Price growth in Argentina which was excluded from USG from 1 July 2018 would have contributed 50bps. The deterioration in the conditions for consumers in Argentina resulted in a full year underlying volume decline of -10% which had a -30bps impact on Unilever volume growth. Emerging markets grew by 4.6% with 2.8% from volume driven by another year of strong growth in Asia AMET RUB. Sales in developed markets grew modestly, helped by a stand out year for ice cream in Europe as well as the continued transformation of our portfolio towards faster growing segments. Turnover decreased 5.1% which included an adverse currency impact of 6.7% and the disposal of spreads which was completed on 2 July 2018.

Underlying operating margin improved by 90bps to 18.4%. The improvement was high-quality with gross margins up 50bps driven by margin-accretive innovation and continued strong delivery from our '5-S' savings programmes. Brand and marketing investment was 10bps lower, whilst absolute spend in local currencies increased by €60 million, even after productivity gains from zero based budgeting. Overheads were down 30bps. Constant underlying earnings per share increased 13% and underlying earnings per share increased 5.2% after an adverse impact of 7.6% from currencies. Over €10 billion was returned to shareholders through share buy-backs and dividends.


Finance costs and tax

Net finance costs were €481 million in 2018 compared €877 million in 2017 which included a one-off cost of €382 million for the buyback of the Unilever NV preference shares. Cost of financing net borrowings was €57 million higher than 2017. The increase was primarily driven by an increase in debt which was partially offset by lower interest and no longer having the benefit in finance income from a one-off in Brazil relating to the interest element of an indirect tax amnesty programme. The average interest rate on net debt reduced to 2.2% from 2.7% in 2017. The pensions financing charge was €25 million, down from €96 million in 2017 reflecting a lower pension deficit at the beginning of 2018.

The underlying effective tax rate was 25.7% a small reduction versus 26.0% in the prior year. The effective tax rate was 21.1% due to a benefit from the disposals of our spreads businesses.

Joint ventures, associates and other income from non-current investments

Net profit from joint ventures and associates contributed €185 million compared with €155 million in 2017, mainly due to the Portugal portion of profit on disposal of spreads and growth in profits from the Pepsi Lipton joint venture. Other income from non-current investments was €22 million versus €18 million in the prior year.

Earnings per share

Underlying earnings per share increased by 5.2% to €2.36, after a negative currency impact of 7.6%. Constant rate underlying earnings per share increased by 12.8% primarily driven by underlying sales growth, improved underlying operating margin and our share buyback programmes. 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 were up 62.0% at €3.48. In addition to the underlying improvement, this increase was mainly driven by a €4.3 billion gain on disposal for the spreads business.

Free cash flow

Free cash flow of €5.0 billion was impacted by currency devaluation and higher working capital including a €0.4 billion increase relating to the disposal of spreads. This was offset by an increase in the proceeds on disposal in net cash flow from investing activities.

Net debt

Closing net debt was €20.8 billion compared with €20.3 billion as at 31 December 2017 mainly reflecting the cost of acquisitions whilst the proceeds from the spreads disposals were returned to shareholders through a share buyback programme of €6 billion.

The Boards have declared a quarterly interim dividend for Q4 2018 at the following rates which are equivalent in value at the rate of exchange applied under the terms of the Equalisation Agreement between the two companies:

Per Unilever N.V. ordinary share:                                  € 0.3872

Per Unilever PLC ordinary share:                                  £ 0.3361

Per Unilever N.V. New York share:                               US$ 0.4422

Per Unilever PLC American Depositary Receipt:          US$ 0.4422

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 29 January 2019.

US dollar cheques for the quarterly interim dividend will be mailed on 20 March 2019 to holders of record at the close of business on 15 February 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 Date

Ex-Dividend Date

Record Date

Payment Date

Quarterly dividend for Q4 2018

31January 2019

14 February 2019

15 February 2019

20 March 2019






Quarterly dividend for Q1 2019

18 April 2019

2 May 2019

3 May 2019

5 June 2019






Quarterly dividend for Q2 2019

25 July 2019

8 August 2019

9 August 2019

 11 September 2019






Quarterly dividend for Q3 2019

17 October 2019

31 October 2019

1 November 2019

4 December 2019