Good. Thank you. Thank you, Steve, for such a kind introduction and thank you everyone for having us today. I hope you have had a good lunch. We are your 40-minute dessert. I don't know if that's very good, but we will try to give you a bit of an inner view into what is Unilever now, what are the changes that we are introducing in the company. Now I will be on stage doing the first part of the presentation, fundamentally showing this kind of profound change that is going on in Unilever. And then I will be followed by Harish Patel, who is the head of our US business. He will cover how our desire-at-scale model has been landing in our most important market, the US, and how this has helped to deliver 4% growth in volume terms in the last three years. Then Shini Fatak, our CFO, will share with you the value creation model of Unilever, but also given his previous experience as a CFO of our subsidiary in India, Hindustan Unilever, during a very, very successful period, he will show how Unilever is very well suited to take probably the biggest exponential growth opportunity that you can find in the world now in terms of potential volume growth with Unilever there. And then I will close.
Let me show you what is Unilever today. We are a 50, close to 51 billion euros business, 20% operating margin, more than 10 billion euros in underlying operating profit. We have delivered very, very solid cash with cash conversion at 100%. Six billion cash delivered in the last year. Six billion cash, six billion capital returned to shareholders in the last couple of years in a 75/25 split between dividends and share buyback. We are present in 185 countries. Every single day, 3.7 billion consumers use a Unilever product globally.
But if I have to leave with you one important message today, it's that many things have changed in Unilever. We have not been in Cannes since February 2022, so four years without being present here, and many, many, many things have changed in the company. We moved from a historically geographically led model into a simpler category-led organization in 2022.
We have made significant interventions in our portfolio. In the last year only, we rotated 15% of our portfolio, including the separation of ice cream that, as you know, was a business with very low level of complementarity with our current portfolio. And we are focusing our business in a much higher portfolio growth footprint.
We have made volume growth the most important metric in the company. It's very different to the Unilever of the past that has been very inconsistent about it. We have restored competitive level of investment in our brands. Recently, in an internal town hall, I was telling my people that being consciously uncompetitive is a criminal act. And we have built a much leaner structure with higher degrees of accountability and very clear incentive systems to ensure that we grow our top line and our bottom line in hard currency.
We have made very clear what are our seven priorities at the category level, geographical level, segment level, and channel level. This doesn't mean that the rest of the organization, the rest of the business is not important, but these are the areas in which we will invest disproportionately for disproportional growth in category terms. We are really shifting our portfolio into more beauty, more well-being, more personal care. Urbanization, wealth expansion, massive entry of the female gender in the labor market, low fertility rates, massive adoption of healthy lifestyles — this all plays in favor of categories in which you invest in yourself. And this is what personal care, beauty, and well-being are.
Personal care, beauty, and well-being are now 51% of our portfolio. Our intention in the medium to long term is to make it two-thirds of our business. We believe that these businesses structurally have more potential growth and they have more scope for premiumization.
In terms of geographical focus, we have made US and India the two clear anchors of our portfolio. They represent today 33% of our business, but our intention is to make it 45% in the medium to long run. US is 21%, India 12%. And it's very, very important for us the focus in the US because historically Unilever has been a kind of federation of local and regional brands. We believe that the US is the only market that provides simultaneously critical mass to build a big business locally, but at the same time provides a platform for international brands. And this is what we are doing with the acquisitions that we are doing in the US in order to build a portfolio that can travel internationally in the premium segment.
The times of Unilever buying a soap company in Colombia or a food company in Egypt or a home care business in Vietnam are gone. We will concentrate the capital allocation of Unilever in building a portfolio for the future in the US that can travel internationally.
India — Shini will cover that later — is our second largest operation, close to seven billion euros, very, very successful historically, but we are very, very conscious that the portfolio that brought us to a huge position of leadership in India is not necessarily the portfolio that will propel us into the future. And we will make the changes and investment there to ensure that we have a portfolio that is suited for the channels of the future in India.
We are moving into a more premium offering and with a significant presence in digital commerce. You know, we are really convinced that concentration of retail will accelerate in the context of AI and LLMs, and we believe that the profit pool for the staple sector is shifting upwards, and that's the reason why we are moving our portfolio upwards. 42% of our portfolio now in premium positions. Our intention is to really move it to 50 in the next few years. And we are really accelerating in digital commerce. 17% of our global evolving business is already in e-commerce. 17% of our US portfolio is in e-commerce today, growing double digit and going very, very fast.
We have built a portfolio now in which 30 power brands are the core for our investment. We have 11 brands that are beyond the one euro billion, 15 if you take that in dollars. They have been growing 3.3% in volume in the last three years on average. That represents 78% of our portfolio. There is 11 billion of revenue delivered that is not part of these power brands. Around two billion of that are brands that will be disposed in the near to midterm. The other nine billion are important brands, particularly to provide us resilience against economic volatility in emerging markets. But these power brands, these 30 brands, is where we are concentrating our investment.
We have a very attractive financial profile that has changed significantly since the last time we have been in Cannes. Our gross margin has expanded 460 basis points. Two-thirds of this increase in gross margin has been used to restore competitive investment levels in our brands. It's an implicit recognition that Unilever didn't invest enough in our brands for many, many years. But this is the past. We are now investing competitively with 16% of our revenue behind our brand marketing investment. One-third of the increase in gross margin has flown into the bottom line to achieve what has been our highest margin ever — 20%. We don't believe this is a peak. If you compare with some of the HPC players in our space, you know, some of them you know very well here in North America, they are significantly above us, and we really believe that we continue having significant scope in our gross margin to go up. Our return on invested capital is very competitive, you know, and 19% is definitely the top third of the sector.
We are now organized in five clear P&L pillars. Four at business group level — one for foods, one for home care, one for personal care, one for beauty and well-being. This covers 85% of our revenue. And these four business groups take care of the top 24 markets of Unilever.
All the rest of the markets of Unilever, we manage them under what we call the Unilever Markets Organization. The four business groups run a whole P&L end to end in these top 24 markets. They have full accountability, and the intention there is to provide focus, category focus, and category expertise to compete with the best pure players of the sector. In the Unilever Markets, from market 25 onwards, you know, we believe the benefits of scale continue. They are not big enough to separate our sales organization, and this is a very successful unit that last year grew 5.2%.
It has become accretive to Unilever with an expansion of operating margin of more than 250 basis points. We are operating that pillar now with 35% less headcount than two years ago. 95% of the P&L of the business groups is under full control of the business unit presidents. People like me or Shemma or the IT organization — I'm part of procurement — is managed centrally, but the business presidents have full control of the key revenue drivers and the key lines of cost and investment of their P&L.
And importantly, in the 19th of March of 2024, we announced a significant productivity program. At the same time that we were announcing the separation of ice cream, we have now reduced 17% our white collar workforce. This is a very different Unilever. This would have been very different — very difficult in the Unilever of the past. You have seen that in the significant improvement in our overheads — 50 basis points in the last year.
We have also changed incentive systems. You know, we are driving more accountability, differentiated performance. Historically, annual bonus — 90% of the people would receive an annual bonus between 80 and 120% of the par. In 2025, now that we are paying this, only 55% are in that kind of range. 45% of our people are receiving rewards this year below 80 or above 120% of the par. So it's a very, very differentiated reward system versus what we used to have in the past.
All these changes in Unilever would have never happened without the significant changes in leadership we have gone through in the last three years. You can see this number as a show of instability in the company, but we see it as the necessary refreshment of leadership that was absolutely crucial for a company that was underperforming. Eight out of the 10 board members were not there when we presented in Cannes in 2022. Nine out of the 11 leadership executives were not there, including myself, including Shini, four years ago. It's a huge, huge, huge change in the leadership of Unilever, and I believe this is showing in some of our improvement in performance.
Let me now go into how we are transforming our innovation model, how we are adopting new models of reach and engagement with consumers and persuasion with consumers, and also how we are executing flawlessly in the markets. This is the mantra that we have put in place. We call it Desire at Scale — fundamentally about elevating the offering of our brands and executing flawlessly in the markets. And it has two pillars: what we call SASSY brands — bold, disruptive brands — and a frontline machine, putting in place a frontline machine. SASSY is an acronym for Science, Aesthetics, Said by Others, and Young-spirited experiences. Science, Aesthetics, Said by Others — superior science for superiority in product use, aesthetics for premium look, and sensorial for wonderful experiences — is what is defining the way we interact with consumers through our product development initiatives. It's all about driving superiority in our innovation plan.
Three years ago, I was standing in front of the Dove shelf and I was not proud. That feeling has changed, and this is what is behind the 7% volume growth of Dove in the last two years.
I tend to say that our science has always been ahead of our marketing. Some people think the opposite, but I'm not. You know, Unilever has historically had some of the leading science in the sector. We have close to 4,500 scientists in the company, 500 PhDs. We spend around one billion in R&D every single year. But we have not leveraged that enough. Now what we are using is not only the flow of new R&D but also leveraging much better the historic R&D stock that we have not used in the past because our price points were not able to capture some of these great initiatives.
And we have seen this in some innovations like Wonder Wash that is really changing completely how people are washing in Europe — you know, close to 200 million in one and a half years since launch. The same in brands like K18, allowing us to reach $80 price points in hair care. So this is what we are really driving very, very strongly in our scientific program.
Irresistible aesthetics across our whole portfolio, from the high end of color cosmetics in prestige to the functionality of household cleaning through The Defiant or the new range of Seb probiotics. You know, it's all about premium look, it's all about on-shelf appeal, it's all about real functional and look differentiation. We have our new unit of packaging development in the company. We are making big steps. This is one of the areas in which we have made more progress in the company.
Elevated sensorial for wonderful experiences — you know, more extreme weather, really changing how people connect with skin care or hair care globally. Very different demands in places like India or places like the US when it comes to facial treatment, etc. Texture — a very, very important part of our scientific program. Now fragrances — significant changes in how people interact with categories like laundry, in which there is no tough dirt anymore, and elevated sensorials in areas like fragrances matter more than ever. We are investing 100 million in our own fragrance house. And significant changes in taste also in foods, particularly with adoption of hotter taste in categories like mayonnaise, condiments, etc.
All this is resulting in a much faster, much larger innovation plan that we are rolling out at speed and with a lot of focus in the premium sector. You can see here some examples. The impact of technology — our superior body odor control technology really driving our performance in deodorants, particularly in the US, in which a couple of years ago we were having some issues in the premium segment, and now we have retaken leadership. As I mentioned before, quick wash cycle — very, very important in our strategy for home care. When you wash in a machine during two hours, the one that does the hard work is the machine. When you wash in 15 minutes, you need great chemistry. And this is what this product brings into the market. And this is a principle that we're applying across our whole portfolio. We want to shift our portfolio into areas where there is more demand for science because we believe that this is a fundamental competitive advantage, particularly in a category like home care against local players in emerging markets. And I could go on and on.
Said by Others, Young-spirited — this is what we call the Social Fair Demand model, and it's all about a new way of reaching and engaging and persuading our consumers. I'm absolutely convinced that the times of big corporate, big brand messages are gone. You need an army of people talking for your brands today, and you need your brands to keep contemporary. And this is really, really tough with the kind of media fragmentation that we are seeing.
These are numbers only for the beauty divisions. We have now 180,000 content creators working for Unilever in the beauty and well-being division. When you look at the company as a whole, it's close to 300,000. In beauty, last year we had 75,000. This is a kind of exponential growth in the infrastructure that we are building for social media. We have increased the number of assets seven times last year in beauty. This is only possible through the adoption of AI at scale in content creation. We have increased by two the frequency of posting. The lifespan of a video now is four days. The time of lazy marketing — a couple of ads a year for a couple of innovations — are gone. Marketing today is hard work, and we are ensuring that in every single corner of Unilever we are adopting this model at scale.
Variety of creators, volume of content, velocity of posting. Young-spirited brands that are immersing culture, that are contemporary, that are experiential. This is behind the success of Dove or the success of Vaseline. Vaseline is a 155-year-old brand — in the last two years, 12% volume growth. All because of serious immersion in culture, serious adoption of social media modeling.
Social validation, the importance of event marketing, creation of significant amounts of quality content for algorithmic preference, and in a context of huge media fragmentation, more important for retail activation. These are the four key drivers in our model of reach and persuasion with our consumers.
Perfect stores. We have put together a template now to run our business in emerging markets, in traditional trade or in modern trade — physical modern trade or in e-commerce. Nine key metrics of perfect stores in physical presence. 11 metrics for our digital presence. This is an example of how we have executed Wonder Wash launch in the UK in this case, and this is what we will do, for example, with the FIFA activation for our deodorants, hair care, and skin cleansing business in the next few months here in the US and all around the globe.
We really believe that in a context of media fragmentation, physical presence in a store is more important than ever. We want to enter a store and feel that it's a Unilever store. If you go to central India and you go to one store, Unilever is 12% of the sales of that store. The second supplier is 1.6%. You have to fill it. And this is what we are doing with the level of investment that we are doing in store.
And the same when it comes to digital — we have built three hubs for digital commerce. US with the likes of Walmart.com or with the likes of Amazon, in which we are enjoying growth above 25%. It's all about joint business planning. It's all about leaning in retail media. It's all about creation of great content. In China with the likes of Douyin, TikTok Shop, we are growing more than 50%. It's all about content to commerce. And in India, where quick commerce is only 3% of our revenue but is growing more than 100%, for us it's all about how to supply the dark stores from which these products are delivered to homes. It's all about premium offering, it's all about availability, it's all about content creation.
With that purpose of fundamentally putting together media, marketing, and commerce, we have announced today an important strategic partnership with Google. We really believe that in the future the consumer journey of discovery of brands and shopping will be more conversational, will be done with much more presence of agents, and we want to be sure that we are at the forefront of technology when it comes to this. And this is the reason behind this deal that we have announced today in the morning. This will help us in our marketing but also in our modeling and simulation in R&D in order to shorten the innovation cycle significantly. So it's a very, very important development for us that we have announced this morning.
With this, I would like to really show a short video, and after that, Harish will show how all this is landing in the most important market, the US, and how this has helped us to deliver 4% volume growth in the last three years.
