20-F: Unilever PLC Reveals Details of Securities and Governance in Annual 20-F Filing

Unilever PLC's 20-F filing details the company's registered securities, governance structure, and financial performance, highlighting a focus on growth and sustainability.

Summary

• Unilever PLC's 20-F filing provides a comprehensive overview of the company's securities, governance, and financial results.
• The document highlights the registration of ordinary shares and American Shares on the New York Stock Exchange.
• It also details the rights of PLC Ordinary Shares and PLC ADS holders.
• The filing outlines Unilever's approach to pre-emptive rights, allowing for share allotments up to one-third of issued capital with certain limitations on disapplying pre-emption rights.
• The document references the company's Annual Report on Form 20-F for the fiscal year ended December 31, 2019, and a deposit agreement filed with the SEC on June 24, 2014.
• The report emphasizes Unilever's commitment to sustainable living and its Growth Action Plan aimed at faster growth, productivity, and a stronger performance culture.
• The company delivered underlying sales growth of 7% in 2023, driven mainly by price growth, with a return to volume growth.
• Turnover growth was down (0.8)% due to adverse currency and net disposals.
• Underlying operating margin was up 60bps on the prior year, to 16.7%, driven by improvements in gross margin.
• A further buyback programme of €1.5 billion has been announced for 2024.
• The document also addresses the company's Climate Transition Action Plan and its commitment to sustainability.
• The report mentions changes in directors and key personnel, including the appointment of Hein Schumacher as CEO and Fernando Fernandez as CFO.
• The document includes a cautionary statement regarding forward-looking statements and the risks and uncertainties that could affect the company's actual results.
• The report also contains data on the Group’s Scope 1, 2 and 3 emissions.
• The document comprises regulated information within the meaning of Sections 1:1 and 5:25c of the Act on Financial Supervision (‘Wet op het financieel toezicht (Wft)’) in the Netherlands.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive aspects such as strong cash flow and progress on sustainability, there are also negative aspects such as declining turnover and market share losses. The overall tone is cautiously optimistic, with a focus on the company's Growth Action Plan to improve performance.

Positives

• Unilever delivered underlying sales growth of 7% in 2023.
• Underlying operating margin was up 60bps on the prior year, to 16.7%.
• Cash flow performance was strong.
• A further buyback programme of €1.5 billion has been announced for 2024.
• The company is making progress on sustainability.

Negatives

• Turnover growth was down (0.8)% due to adverse currency and net disposals.
• Underlying earnings per share (EPS) was up only 1.4% because of a negative currency impact of 9.6%.
• The lack of EPS growth is the primary reason why our share price has been flat over recent years.
• Ice Cream performed poorly, while Home Care European volumes declined double-digit.
• Nutrition also saw volumes in Europe decline in the face of rising costs and increased competition.
• The percentage of our business winning market share on a rolling 12-month basis was disappointing at 37%.

Risks

• Unilever’s global brands not meeting consumer preferences.
• Unilever’s ability to innovate and remain competitive.
• The effect of climate change on Unilever’s business.
• Disruptions in Unilever's supply chain and distribution.
• Increases or volatility in the cost of raw materials and commodities.
• Economic, social and political risks and natural disasters.
• Failure to meet high ethical standards.
• Managing regulatory, tax and legal matters.

Future Outlook

The company expects the world economy to remain in a state of flux over the year ahead, with continued volatility due to geopolitical tensions and the effects of climate change. They anticipate inflation easing to more normalised levels in most markets and expect a slow recovery in emerging market geographies hit by significant currency devaluations. Growth in Europe is expected to remain subdued.

Management Comments

• Ian Meakins, Chair: 'I believe we have the resource and expertise needed to get our brands growing consistently and competitively.'
• Hein Schumacher, Chief Executive Officer: 'The Growth Action Plan is highly operational, reflecting the need to step up the quality and the consistency of our execution.'

Industry Context

The announcement reflects the broader industry trends of focusing on core brands, driving productivity, and emphasizing sustainability. Unilever's actions align with competitors who are also optimizing portfolios and adapting to changing consumer preferences.

Comparison to Industry Standards

• Unilever's performance is being compared to its principal competitors, with the document noting underperformance relative to some peers.
• The document mentions specific areas where Unilever is doing well, such as Beauty & Wellbeing in the US and Home Care in Latin America, as well as global Deodorants and Food Solutions businesses.
• However, it also highlights areas where Unilever is lagging, such as Ice Cream and Home Care European volumes.
• The document also mentions the acquisition of K18 prestige hair care brand in the US and the planned disposal of the non-strategic Elida Beauty personal care brands.

Management Changes

Stakeholder Impact

• Shareholders: The company aims to deliver top-third Total Shareholder Return (TSR) through consistent and competitive growth.
• Employees: The company is focused on dialling up its performance edge and rewarding out-performance.
• Consumers: The company is focused on driving unmissable brand superiority, innovation and investment behind its 30 Power Brands.
• Customers: The company is working with customers and strategic partners to create category growth opportunities for its brands.
• Suppliers & Business Partners: The company is working with suppliers to support the transformation in our soy supply chain, including investment in a ‘Green Refinery’ in Brazil which will increase the availability of deforestation-free soy for our business and the wider industry.
• Planet & Society: The company is honing its sustainability efforts around four critical platforms – climate, nature, plastics and livelihoods.

Next Steps

• The company will focus on driving organic growth of its brands.
• The company will continue to evaluate opportunities to improve Unilever’s portfolio.
• The company will continue to work hard to become a more sustainable business.
• The company will bring forward a revised Remuneration Policy for shareholders to consider at the 2024 AGM.

Key Dates

Keywords

Unilever, securities, governance, financial performance, ordinary shares, American Depositary Shares, pre-emptive rights, share allotments, sustainability, Growth Action Plan