Unilever PLC (NYSE:UL) Q2 2020 Earnings Conference Call - Final Transcript
Jul 23, 2020 • 03:00 am ET
Good morning and welcome to Unilever's Half Year Results. As at Q1, we are presenting our results to you from our respective homes, so please bear with us if things are not smooth as normal. Alan will begin with an overview of the business and performance and we'll cover each of our three divisions before passing to Graeme to cover the region's results in more detail. Alan will then wrap up with some concluding remarks. We'll keep the prepared remarks around 30 to 40 minutes, leaving plenty of time for Q&A. All of today's webcast is available live transcribed on the screen as part of our accessibility program. First, can I draw your attention to the disclaimer to forward-looking statements and non-GAAP measures? And with that, let me hand over to Alan.
Well, thanks, Richard, and good morning, everybody. The performance in the first half, particularly Q2 I think has shown the true strength of Unilever in these most demanding conditions. We demonstrated the resilience of the business, in our portfolio, in our continuing step-up in operational excellence and in the financial position of the business. We've unlocked new levels of agility and in responding to these unprecedented fluctuations in demand, and we continue to strengthen the strategic future of the company.
Before I get into the results, I would like to use this moment to thank every member of the Unilever team for the outstanding commitment and hard work that they've shown in these most difficult of circumstances. Thanks, guys.
Now to the results themselves. Underlying sales declined 0.1% in the first half. Volumes down 0.3% and price growth of 0.2%. And this essentially flat growth in aggregate masks some very big positives and negatives across our categories and geographies and we'll explain those in the course of this call.
Underlying sales growth was led by our developed markets, which grew 2.4% while emerging markets declined by 1.9%. Graeme is going to share more about what's happening at a country level and this de- versus de- [Phonetic] in the aggregation needs decomposition to understand what's really going on. Underlying operating profit was up 5 -- was EUR5.1 billion, which is a 3.8% increase versus the same period last year on a constant rate basis.
And the business generated underlying free cash flow of EUR2.9 billion, which is up EUR1.3 billion versus last year. And that was led by working capital improvements as we focused on managing our receivables with rigor. I explained during our Q1 update that we are targeting the business on delivering competitive growth, absolute profit and cash. And to avoid any doubt, I'm repeating in that our margin target outlook is withdrawn both for this year and beyond. Our focus for the year will continue to be volume-led competitive growth, absolute underlying operating profit and cash delivery. Margin is simply a byproduct of this.
Underlying EPS increased by 6.4% and we are maintaining our quarterly dividend in line with the prior period.
Now, from the start of