We are about to hand over to Unilever to begin the conference call. [Operator Instructions] I will now hand over to James Allison.

Good morning, and welcome to Unilever Second Quarter and Half Year Results Presentation. We think this may be the earliest that Unilever has reported half 1 results, attributed, if I may say so, to our systems and processes and to our financial accounting confidence. And whilst being first out of the blocks has some disadvantages, we're happy that it allows management more time to focus on looking forward rather than trying to explain the past. In the usual way, the presentation this morning will be given by Paul and Jean-Marc. Paul is going to share his perspectives on the first half year, and Jean-Marc will cover the financial highlights before Paul wraps up. We'll try and keep it nice and efficient for you, but there's a lot of ground to cover, but be sure we'll leave plenty of time for Q&A at the end. We start with the usual disclaimer relating to forward-looking statements and non-GAAP measures. And with that, let me hand over to Paul.

Thank you, James, and good morning, everyone. Before I start, let me just make a brief reference to the tragedy of the Malaysian Flight MH17. Our hearts, thoughts and prayers for peace certainly go out to all of the victims, families and their friends, and certainly for hope and safety of all of humanity to be free of fear, war and the twin consequences, in my opinion, of the face of anguish and mutual self-destruction. I think it is a clear reminder, again once more, that -- if we needed one, of how quickly geopolitical crisis in one part of the globe can affect us all intimately so close to home. Now on a happier note that we congratulate Tesco on the appointment of Dave Lewis as the next CEO. Dave has, obviously, an outstanding talent, and he has contributed much to Unilever over the many years. We're proud of his assignment there, and we wish him every possible success. It's also attributed to Unilever's bench strengths that talent like Dave can be considered for such a prestigious role. In Alan Jope, we have someone who can take over this wonderful Personal Care business and drive it to the next level. And I hope that many of you have a chance in the near future to meet with Alan. So let's get to our first half year results. Simply put, our ambitions that we have is to grow ahead of our markets, do that profitably, consistently and sustainably regardless of how tough the competitive conditions may be, and I think we've done this once more. The results we've published today reflect the ninth semester of good, quality growth, as you will see when Jean-Marc takes us through the details of the income statement. We continue to balance the short-term delivery…

Thank you very much, Paul, and good morning to everybody. Let me first start by just taking a few moments to walk you through the translation effect of currency since it's such a big theme and is -- has been so significant for the first 6 months of the year. Most currencies have weakened against the euro, compared with the first half of 2013. Now it's worth pointing out that this is driven by the exchange rate movements during the second half of last year, not in the recent months. The biggest impacts are Brazil, Argentina, Indonesia and India. But the U.S. dollar has also weakened compared with the first half of last year, while the sterling has strengthened. So together, this has reduced turnover in the first half by 8.5%. Now the currency translation impact on profits is larger than that on turnover. Now you know that we have a reasonably good match between costs and revenue generation by country, and there are some differences. Now normally, this is not an issue. The variations between core operating margin at constant and current rates are usually the same, typically plus or minus 10 basis points or less. But this year and in the first half, we have a double whammy. The stronger sterling pushes up the costs of all the U.K.-based part of our global resources. The category teams and R&D are examples of this. You also know our sales are more skewed to the emerging markets, where the currencies have been weaker, pulling down the revenues, as we've just seen. So this has produced a negative currency translation impact in the first half of around 30 basis points on core operating margin, hence, meaningful for the first time, with an impact on earnings per share down 12%. The impact…

Thanks, Jean-Marc. For the interest of time, let me just wrap up. The strategy we've set out and are implementing is serving us well in a challenging and volatile environment. I think you've got that. The first half results keep us on track to deliver our priorities for 2014. In fact, these priorities remain unchanged: volume growth ahead of our markets; steady and sustainable improvement in core operating margin; and, last but not least, a strong cash flow. With that, ladies and gentlemen, let's open the lines for questions.

Thanks, Paul. [Operator Instructions] So I think first on the line is Eileen Khoo.

Just 2 questions from me. The first one is on your margin. So your core operating margin was better than your new guidance, which, I think, you said, would be slightly down in the first half. So I'm wondering where the upside of price was for you. Was it due to cost savings being achieved faster than expected, maxing the mix, et cetera? Some color around that. And then the second question is on Latin America. It looks like your volume growth there decelerated. I was just wondering whether this was purely a function of the tougher comp. Or was there any other underlying factors? And could you give us a bit more color specifically to your performance in Brazil?

Okay, thanks for the question. I'll keep it very brief because the gross margin is up again 10 basis points despite a lot of headwinds, the currency headwinds, some of the cost that keep going up, the mix, which is obviously this time, the strong growth on Refreshments and Laundry working against us. Despite that, we go up 10 basis points. I think you see here the effects of our margin-accretive innovations. Our innovations, really, have been very, very good, like the Ben & Jerry's Cores or the melange or the compressed deos. And on the other hand, you see this enormous work that we continue to do on making this company more cost-efficient and agile. Secondly, you see that show up in the indirects, 30 basis points down despite the relatively softer volumes versus other quarters that we've had or other years before. It's actually a good achievement because you have to work quite as hard to get these results. And that's why you see our core operating margin performed the way it is. We managed that balance very well. I think for the second half, we should -- we have the same factors to deal with, but we should not expect that to be significantly different than what we have seen the first half. In terms of the Latin America business -- not to go specifically in all of the businesses, but you've asked about Brazil. You have clearly seen as well by reading the newspapers that the Brazilian economy has basically come to a grinding halt. It's a 2% growth and significantly less than we've seen in previous years. And then for the region itself, you have the uncertainties that are there in places like Venezuela and Argentina that affect our business equally. Despite that, we've had good growth, outperforming the markets once more, and we'll continue to do that. In Brazil, we've had good growth in our base business, with the majority of our business building share. And at the same time, we've used the opportunity to actually launch the -- a new range of Omo boosters for the wash, which are off to a very, very good start. So we've been able to get good business in Brazil compared to our competitive set, but the overall region, obviously, is not showing yet signs of recovery.

Thank you, Eileen. Celine?

Yes, Celine Pannuti from JPMorgan. I have, well, 2 questions, the first one on pricing. You just mentioned Venezuela, Argentina. Could you give us a number x your pricing, excluding this inflation? And in fact, my question on pricing is trying to understand the outlook in emerging market and in developed markets, where we -- I feel that in emerging markets, we're seeing less pricing than what I thought. And while in developed markets, we're continuing to see some negative pressure. We've seen that especially in Western Europe. So if you could comment on those 2 that would be great. My second question -- thank you for talking about the Food and how you are making that, trying to look more at the profit -- sorry, the growth angle to it and the emerging market footprint. I was wondering -- the final question, are you happy now with the disposal? Are you happy with the kind of portfolio you have? And as you look at being more growth-orientated, do you think that there are -- about the category, you should be -- or the -- or acquisition, you should be making in this category?

Yes. I'll have Jean-Marc go into the first part for a second on the pricing and take the European pricing as well then the whole thing. And I'll go into the portfolio.

Yes. I think I understood most the questions about pricing around South America. And if there's an additional part that I haven't covered, please come back to me. First point, you should know that Venezuela, as a country, is very small for us. It is less than 0.5% of turnover. So it really isn't material either in South America or in the totally of our numbers. So I just wanted to be very clear on that. Argentina is an important market for us. It's basically 2% of our turnover. And absolutely, the results in Argentina have been driven by pricing and only pricing. As Paul mentioned, if you just look at South America, however, we've had very good volume contributions from places like Brazil, some of the smaller countries. By the way, we've had some very good volumes coming through in Mexico and the like. So there's a much more better volume/price balanced equation for the entirety of South America. The actual contributions of Argentina's pricing, as well as Venezuela, if you want to put it together in the quarter, is small. It's not too different, a little bit higher but not too different than the same period last year.

Yes. So on the portfolio, if I could just go to the portfolio then very quickly. We've, obviously, done an enormous reshaping of the portfolio. We've divested, by memory, about in the last 5 years, EUR 2.5 billion. We've made acquisitions of about -- a little bit higher, about EUR 3 billion. On top of that, we've obviously made the acquisition on our Indian business. So we have spent our money wisely. And we actually just had a review with the board yesterday as a coincidence on our M&A, and we're very pleased with the returns we're getting on Sara Lee, Alberto Culver and Kalina. So, so far, that has worked out well for us. As a result, we've also reshaped the Personal Care portfolio. You now see 38% of the portfolio. And in fact, we have more brands in Personal Care that our leading brands than many of our competitors now. So Personal Care is getting a certain level of gravity and maturity that is serving us well. At the same time, the big challenge that we had, which I've talked about many times, was the U.S., which, frankly, have been operating very long on an independent strategy and, if I may be frank, had a portfolio that was not aligned with the company's overall strategy. For the first time in the history of the U.S., may I say, we have done major restructuring. The Alberto Culver acquisition, obviously, was a big help, but it allowed us to do a major restructuring without losing critical mass of our Food business to bring it more in line with our company's efforts. That has been the biggest transition, I think, North America has seen in its history. We have had -- obviously, in this quarter, the last part of it, was the divestitures of Slim.Fast and the Ragu, Bertolli business. So these are major effects that Kees Kruythoff and his team have handled tremendously well. Through all of that transition in the U.S., we've continued to grow our Personal Care share, as you can see from the reports you get from some of the others who showed their numbers to you. So we are very pleased with that. I think we're at a point right now -- we were planning to do about EUR 500 million divestiture. In the last year, we've actually done EUR 1 billion. So we're running a little bit ahead of what we were thinking. The opportunities were right. The price, obviously, was superb. We're at a point right now that I think our portfolio, plus or minus, is where it is to keep growing our business.

And I think, Celine, you also asked a question about Europe and pricing, specifically. There are really 2 stories taking place within Europe. If you take Southern Europe, Spain, Greece, Italy, you're actually seeing an improvement in pricing between Q1 and Q2. The pricing growth has actually been positive. That cannot be said for the more northern countries, be it France or Germany or The Netherlands, where there is downward pricing pressure. And obviously, the macro environment, the discounters and the promotional competitive activities have not been helped, so 2 different trends taking place in Europe on pricing.

Yes. Actually, I asked, in fact, for emerging markets on pricing.

Yes, emerging markets on pricing. We are, obviously, pricing there because of the enormous currency adjustments that we have seen, but the currency adjustments have been on such a magnitude that we don't see the market pricing that through right away. It takes a little bit of time to get that out. So that has not been -- we've not been able to capture all of that, for sure, in the first half. But we will be recuperating that as time goes on. But we want to do that in a way that we don't lose our strong, competitive position. So it's that fine balance that we're managing, and we're able to do that, as I show you, by having our gross margins still go up and our core operating margin on a constant basis go up. So -- but it's a fine balance, and we haven't recuperated all the pricing yet, for sure.

Thank you, Celine, a tricky line there. It's a little bit hard to hear you. Hopefully, we'll hear the rest a little bit more clearly. It think next on the line is Martin Deboo. Welcome back, Martin.

You've done a great job on margin at a time when markets are doing your bidding and believed that, that momentum in H1 will carry through to H2. And Jean-Marc, you've made quite a striking commitment to earnings growth. I guess, the question I want to ask is, is the calculation changing internally in terms of the balance between growth and margin? To what extent do you think that we're in a blip situation in EMs and top-line-driven growth is going to resume? Or to what extent do you think the new normal is 5% organic growth and, therefore, there's more of an imperative to deliver earnings growth through margin? Just to appreciate a high-level perspective on that.

That's good, Martin. The high-level perspective is, obviously, fairly simple. We want to have consistent performance. We think in this volatile market, the consistent performance is very important to us, that you can rely on us every 6 months that you see numbers, where we grow ahead of the market, so that -- which we call also then competitive growth but that we also do it with core operating margin expansion, which we call profitable growth. So we're balancing that. There is no doubt that the global market has come down. The global market growth for categories that we're in is about 2%, 2.5%, and that is definitely 1%, 1.5% less than we were a year ago. I warned about that. Some people didn't believe that, but I must be subscribing to different newspapers than they are. So the 2.5% for us is there to stay within the -- at least for the next 6 to 12 months, in my opinion. Within that, we will always be sure that we keep our cost under control to deliver as well on our core operating margin. And I think we have now shown once more that we can do both and keep our business healthy. The indicator of 60% of our business growing share, to me, is an equally important indicator as the core operating margin expansion. And we would not have been able, in my opinion, if I may be frank, to do such great work on costs and indirects if we've made it not clear to the company that -- internally, that, that is how we run the business. And I think the system now understands that with an increasing level of discipline.

Okay. Martin, thank you. Next on the line is Harold.

I had 2 questions. First one is, you've spoken quite a lot about maxing the mix and focus on gross margin overall. And we've clearly seen consistent progression of gross margins in recent results. I noticed that the gross margin is up 10 basis points in the first half on a constant-currency basis. It's somewhat slower than we've seen recently. Is there anything you could maybe add to that? Secondly, you seem to be kind of putting all the levers, achieving excellent disposal prices on the assets you're selling, tactical buybacks from the family and, clearly, the buying in of minorities clearly helping profits. And clearly, your balance sheet, overall, remains solid. I mean, this kind of very flexible approach to management is clearly helping shareholders. Is that something we should expect to continue?

Thanks, Harold. On the first one, I think the gross margin improvement, we're actually pleased about, because we had a lot of downforces. The slow growth is a downforce in a business like ours. The geopolitical environment, anything that you read in the newspapers, cost us EUR 10 million, EUR 15 million right away. In the Ukraine, we've seen the currency go down by half, or in -- what is now happening in the Middle East or -- these things absolutely don't help us, being such a global company. But likewise, what you see was the issues on the natural disasters, et cetera. Unfortunately, this world is in a period of -- a critical period of need for leadership to get these downforces reversed. And then the main effect that we have to deal with is that we've seen strong growth on our ice cream business, which was very good, helped by the weather, about 25 years, Magnum, Ben & Jerry's Cores, Gelato. We have now some good innovations. And our Laundry business, we have actually -- where we made a commitment for the long term to grow our Laundry business. We were in too many places defending. We defended fairly well. So that confidence is back. We know what the product qualities that we need, the marketing plans, and we're doing well with these attacks that are still happening at a ferocious level. But at the same time, we are also in a position to now, for the first time, again, proactively launch. And we launched in the Middle East. So the mix of Laundry and ice cream, actually, is pulling down the gross margin right now. I think that's a temporary effect that just falls into 6 months. Despite that, we're up 10 basis points. Now the second question, I'll hand over to Jean-Marc because, obviously, this discipline that you are after, that you, indeed, see and where we do the right things for the long term is very important for us. All the decisions we took in the quarter were not to manage the quarter. They are to manage this business for the long term and put it in a stronger position. So I'll let Jean-Marc talk about that in a second.

Sure. So I do think that we are pulling all the levers, but it is a reflection that we're just looking at the whole model in its entirety rather than just being focused on growth 5 years ago. Then, growth and comp used to be our definitions and it were externally based definitions. As you remember, from the investor conference, the presentation I gave, it's about translating revenues into operational performance and translating comp into earnings and earnings into cash. And so we'll do what's right for the business below the line, always in a responsible manner. But yes, we will continue.

Thanks, Harold. We've got a limit of 9:00. So we're going to try squeezing as much as we can in the next 6 minutes. Rosie, you're up.

Two quick questions from me. Firstly, China, in the second quarter, you're talking about slightly slower growth, which seems to be at odds to the first quarter. So I just wanted to know kind of what have changed there, any specific categories you can call out. And also, just, again, on pricing, you talked about the European outlook, but anything you can say on North America would be very helpful as well.

I'll do it very quickly. Thanks for asking that. On China, there has been a big slowdown in Tier 1 cities. Most of the companies have built brands and their equities in Tier 1 cities. I'm talking about the Shanghais and Beijings of this world. In fact, when you, again, read the papers, that slowdown has reflected itself in the markets that we are operating in, in now 2% or 3% depending on how you read it. There is a little bit more growth, obviously, in the Tier 2 and Tier 3 cities, but you need to build your businesses there and -- now that is what is happening right now. We are growing share in China in about 70% of our business, well ahead of our competitive set, and some very strong growth in the Skin Cleansing, the hand and body, the shampoos. So we're actually very pleased with our China business that is still performing well ahead of the market, but the Chinese economy, obviously, needs to pick up again. And that's what we're working on and, at the same time, expanding our businesses now into the broader footprint. That's why we've built -- we're in the process of building, actually, quite a lot of production facilities right now in the Chengdu region and to expand to the west of China. That's exactly meant for that reason. North America, the question on growth in North America, it's a little bit difficult because although you see the numbers of unemployment going down, which is, obviously, very good news, what -- for some reason, the newspapers don't pick up on this. There are less people in the active workforce, young, and the rest of the population as well has never been so low. So the broad base is not there.…

Thank you, Rosie. I think we've only got time for one more. So any others, please come to IR in the normal way, and we'll endeavor to answer your questions afterwards. So the final question is you, James.

It's a small number, but the underlying depreciation charge, I think, fell by about 10 basis points in the half year. It's 2.2% of sales. How does it keep going down given that you're consistently spending over 4% of sales by way of CapEx? And can we expect that to continue much further?

I won't get into the specific point. Please ask the investor team on the actual 10 bps. What I can tell you is that our CapEx, the depreciation levels are actually going to slowly come down given the period of serious CapEx investment, including in places like Europe, where we have been at 1 in 3 quarters. We'll be going down towards the 1.1, 1.2x to a much more healthy CapEx-to-depreciation level.

Paul, just to wrap up?

The -- well, first of all, I wish you all a happy holiday season, and get some rest before we start again on the second half. We are very confident that we will deliver the numbers, but we have to work on it very hard with the team. I also want to thank you all for not asking, for once, a question about Spreads now that the numbers are getting better. So that is appreciated. But seriously, we certainly look forward to a good second quarter again, and your support and interest is highly appreciated. I think the world deserve a break. And hopefully, we see many of you at the investor event in December. Thank you very much, and hopefully, see you soon. Bye-bye.

Thank you. This conference has been recorded. Details of the replay number and access code can be found on Unilever's website. An audio webcast will also be available on Unilever's website, www.unilever.com, and on the Investor Relations app.