We're about to hand over to Unilever to begin the conference call. [Operator Instructions]. We will now hand over to Andrew Stephen.

Good morning and welcome to Unilever's half-year results presentation. This time last year, we noted that we were reporting earlier than Unilever had ever done before. Well, today, we're earlier still. I think that points to the improvements made over the last five years to our financial systems and processes. 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; Jean-Marc will cover the financial highlights and Paul will wrap up. And we'll leave plenty of time for Q&A. Now as usual, I draw your attention to the disclaimer relating to forward-looking statements and non-GAAP measures. And with that, I'll hand over to Paul.

Well, thank you Andrew and good morning, everybody. During this holiday period, thanks for joining us on what I call a good ice-cream day here in the UK. Now, the first half results again demonstrate the progress we're making to transform Unilever into a more resilient company; one that is able to deliver the consistent, competitive, profitable and responsible growth that you are now getting accustomed to, hopefully. This is now the seventh year in a row that we're actually delivering that. Now, this remains a challenging trading environment. Despite that, turnover is up by 12%, helped by currency tailwinds and a 2.9% underlying sales growth. Core operating margin is up by 50 basis points, with the quality of improvements actually showing that we have a sustainable growth model. Gross margins are up, behind mix and innovation. Overheads are down, with rigorous cost control. And we've invested significantly, again, in brand and marketing to ensure future growth. That's what we call the virtuous circle of growth in action. Core EPS is also up 16%, with just over 8% growth at constant exchange rate. And cash flow, an area we told you we would be focused on as well, is up more than €300 million in the first half of the year. All in all, a good performance in a difficult market which illustrates the benefit of our consistent long-term focus coming through. It also reflects that we're definitely now a different Unilever. However, I would be the first to acknowledge that the underlying sales growth today, despite, obviously, the portfolio mix that we have, is still below the levels that Unilever is capable of. So there's certainly more to do and I will come back to that in my concluding remarks. As I said before, the market conditions in the…

Thank you very much, Paul and good morning to everybody. I have often talked about the importance of applying all the levers, namely revenue, margin and cash, that lead to competitive earnings per share growth and this particularly in the low growth environment in which we find ourselves today. And this, I can say, has been evident, again, in our first half-year results of 2015. So, let's have a look at each of the levers in turn, the first one being top-line growth. Sales increased by 12% to €27 billion. Underlying sales growth of 2.9% for the first half includes 1.1% from volume and 1.7% from price. Importantly, emerging markets grew at 6% with volumes up 1.9% and pricing at 4%. Very briefly turning to developed markets, they declined by 1.3%, volumes slightly positive at 0.1%, but pricing was negative with deflation in all of our main European countries to date. In North America, our total market share is up, but our sales are down by just under 1% and this, due primarily to changes in customer stock levels. M&A has reduced turnover by 1.1% and this mainly through the effect of the disposals that took place last year of the U.S. pasta sauces; Slim Fast; BiFi and Peperami, as we were reorienting our North American business. So, in the second half of this year there will be a net positive impact from M&A, I'm happy to say. Currency translation added 10.1% to turnover. Nearly all the key currencies stronger against the euro during this period of time, only exceptions were the Brazilian real and the Russian ruble. Turning to core operating margin, core operating margin increased by 50 basis points at current rates. The drivers of the improvement thus demonstrates the virtuous circle of growth and our financial model…

Thank you, Jean-Marc. Let me just use the last few minutes to wrap up. Over the last six years, Unilever has become a more robust and resilient company. In a volatile world, we're taking the next steps to ensure we continue to create long-term value. The first half, we sought to demonstrate, again, that we're doing what we said we would do, for seventh year in a row. Growth momentum is improving, with volumes picking up. Our innovation pipeline, although back-half weighted, is stronger than ever and gaining good traction. And many of you have commented on that. China has returned to growth. We're implementing a sharpened strategy. And all four categories are making progress against those objectives we've set and communicated to you. All of our categories are growing and investments are up in each of them. Homecare margins are improving strongly, while keeping top line momentum. Ice cream margins and cash flow are up, without compromising growth, driven by innovation, including the move to premium. And we've put in place the new standalone baking, cooking and spreads unit; a major undertaking, but, again, completed on time. We also continue to drive cost savings to create the fuel to invest behind growth. The project Half simplifications have already delivered more than €500 million in savings and are now being extended as an integral part of our business model. This is taking us even closer to benchmark levels of overheads with the major disruptions that come without the major disruptions that come with so-called big-bang restructurings. We're further strengthening our go-to-market capabilities, with investments in extending distribution and growing new channels, like e-commerce. For example, this week alone, we announced a strategic partnership with the Alibaba Group to expand our online sales in China and give consumers in rural areas…

[Operator Instructions]. So I believe the first question is from Harold.

Well first of all, I would just like to echo what Paul said on Jean-Marc, from all of us. It's been a great few years for you here at Unilever and definitely, the improvements you've made in the reporting has made our lives, as analysts, a lot easier to do as well, so thank you. A couple of questions on the business, you mentioned China is back to a modest growth. You also mentioned the e-commerce helping in that. And you've also, as you said, signed a deal with Alibaba there. Could you just maybe give us a bit more insight as to exactly what's going on in the online shift from a channel perspective, but also from a Unilever perspective, in China? Just some insights would be great. My second question is on LatAm. Volumes have actually accelerated quite significantly, up 3.3% and that's despite pricing accelerating further in Q2. So how come your volumes are doing so well, despite the pricing keeping pushing upwards? Thank you.

I'm sure Jean-Marc appreciates your comment, but I saw him smiling on his face. He's too modest to say anything, but he appreciates it, Harold. The China shift is important and quite rapid, actually. In China, if you look at the total market, the Chinese economy is growing 7%. Despite what people say, the ups and downs, there's obviously an enormous potential in total China still. But what you really see is a rapid shift away from traditional retail which is more or less stable in its markets, at least for the market that we operate in and moving rapidly to online, where we see the bulk of our growth. You saw the agreement that we signed with Alibaba which gives us a good cooperation with them and allows us to extend our products into the rural areas which is definitely our next frontier and also, at the same time, work with them to attack the continuous issue that we have there with counterfeit product. So, I think it's a major breakthrough for us. Our total business is doing well which we have said. We took the tough decision, quicker than others, may I say, to really adjust our inventory levels. We said that it would take until now. It has literally been done until now. We're now able to pull our innovation through, much faster than we would have been able to do before. So we will actually see our growth in China accelerate over the second half. And we definitely will be in solid positive numbers, ahead of the overall growth of the Chinese economy. I feel that although it has been tough for that part of the world, although we had to explain it to you guys, once more, we're making the right decisions for the long…

Paul, would you say, does that mean your Brazilian volumes and organic growth are both in positive territory despite--?

Yes, the volumes and organic growth are both in positive territory, that's exactly right.

I think the next question is from Celine.

Celine Pannuti, JPMorgan. I have two questions. My first one on top line and the outlook you have given, where you are talking about slightly ahead of H1 for the year. At Q1 stage, you were talking about that you were seeing more tailwinds than headwinds. Could you update us of what you see the market growth as we go into the second half of the year? And it seems that you mentioned U.S. is not as good as you thought. If you could pinpoint in the other market where maybe those tailwinds didn't continue into the second quarter or may not continue into H2. That's my first question. My second question from Jean-Marc and he'll be pleased to hear it's maybe the last then, I would like to understand the moving part into the H2 margin. You say it was a bit more difficult comp. I think on overhead that's the case, but you had a strong benefit from overheads in H1. I think there was an impact from lower restructuring cost and a pension that you mentioned in the European margin performance. How much of -- if you can quantify how much of that helped the overheads and whether this as well will recur in the second half or whether there were one-off parts in the first half. Thank you.

Given the fact that you've always been a strong supporter with a strong buy recommendation on Unilever, despite our market outperforming results, I'll give the first question to Jean-Marc, first, to give his last answer to you.

Sure. Celine, I will miss your questions, but let me try and answer the last one. If you just -- there are absolutely moving parts to our margins. But overall for the year, we estimate our margins to be up, but not to the same extent that they were for the first half. We will be investing in the second half. We will continue behind our brands. There are difficult comparators within overheads. Let's see all the work that we can do in maxing the mix and supply chain. But I think that most important for you is that for the core operating margin for the year it will definitely be up; it will definitely be consistent with our financial growth model and aspirations, but not at the level that we achieved in the first half of the year.

On market growth, we have roughly -- how we measure this is average weighted news and market share that we can get. And that's really difficult in the emerging markets to do that accurately, so I always take them a little bit with a warning sign. But the market growth, Celine, is about 2.5%. Here, again, we're growing 2.9% over the first half. So on a global basis we have a little bit more than half of our brands growing market share and that's how we beat it. And I think that will slightly improve upon over the second half, as we've mentioned to you. In terms of the U.S. and Europe, what you basically see is there is a volume component in Europe that is positive. And our volumes actually are up in Europe, but that is offset by a price decrease with the general deflation that we see, especially around brands which are being used by the retailers, obviously, in this stable environment to attract consumers. So, slight volume growth we're pleased about, with a little bit of deflation. In the U.S., it's more or less flat. We don't have any significant ups and downs to report. The reason that volumes are slightly down in the U.S. doesn't bother me too much, because we really have seen some reasonable de-stocking in some of our customers, but our overall shares in the U.S., we actually have 60% plus of our business building share. So we feel fairly comfortable that we will start to show positive numbers there. The rest of the emerging markets, whilst I am positive for Unilever and I think the numbers that we're just producing shows why I made that comment last time we all talked together, I still remain moderately optimistic that, where we're currently, we can maintain that performance over the second half. So that we anywhere come out between, for the year, between the 3% and 3.5% top line growth in these markets that we're currently operating in which actually requires the acceleration over the second half, as you can calculate yourself.

And the next question is from Martin Deboo.

It's Martin Deboo at Jefferies. I just like to amplify Celine's first question. Let me phrase it this way, why is your H2 growth guidance as cautious as it is, given that you've got something like a 2 percentage point easier volume comp which reflects the helping hand of lapping the China de-stock? You're underlining volume performance across H1 is, if anything, improving. I get it that pricing is coming off, but arguably pricing isn't coming off that much, so why are you, in my eyes, as cautious as you are on H2? Secondly, is one, I think, for Jean Marc. Jean Marc, what was the trend on your commodity basket in H1? And where do you think that's going in H2? Thanks for those.

If I start again on the first one, we can talk ourselves up in great numbers, but we would be fooling ourselves. There is no doubt that we have slightly easier comps in the world. But it's also, if we have done now the 2.9%, this being very granular here for a second in the answer, 2.9% over the first half, if we need to come in between 3% and 3.5% that means we need to have a topline growth over the second half of 4% in a market that is growing 2% to 2.5%. And there are some -- we can talk about the positives, but I don't want to make us feel depressive, but the slowdown in Brazil is real. That country is in a recession. Argentina has been holding the things together, but we also think that there is uncertainty on the horizon there. In China, continues to be a volatile market, as we have seen with the recent stock market. So if we all like to live in a world where we say everything works for us, but what history now shows, certainly over the seven years I have been here, that there are some down sides that we will be talking in the six months from now. And to go from a 2.5%, 3% growth level that we're now on to get to the 4% growth level with our mix of brands that we have is still a step up. We can all fool ourselves, Martin, if you want to, I've always had a straight direct conversation with you and the market and I think I'd like to keep it that way. So we feel that that is probably the most prudent outlook that we now have for the second half.

In terms of commodities, Martin, no change to guidance, we continue for the year flat, including currency effects. You may know, out of our basket of around €20 billion of commodities, around 20% to 25% is indirectly or partly affected by oil; that takes around four to six months to work through all the normal forward covers and get into our P&L. So, slightly up in the first half; slightly down in the second half, including currency effect, if you want to get very granular, but for the year no change in guidance.

Our next question is from Jeremy.

It's Jeremy Fialko from Redburn here. Just the one question from me, can you talk a bit about the prestige business that you have been assembling in the first half of the year? The first point is do you think that with these four acquisitions that you've made that's a good level for you now to, let's say, take a bit of a pause from doing transactions and see how you can grow them over the course of the next year or so? The second question is if you can talk a little bit more about how you can benefit from the scale of having those four businesses together and how you'll go about boosting your distribution with those brands. Thanks.

With the acquisition of REN and Kate Somerville are relatively small and then Dermalogica and Doctor Murad are a little bit bigger, we have a business that is rapidly approaching €500 million; €400 million plus at the moment. We think that is certainly the critical mass. We will be a major player right away now in that segment. And actually, this builds on a very strong personal care business. Our personal care business in total is now the second biggest personal care business in the world after L'Oreal and is obviously very well performing. And you've seen again -- the last quarter last year, the first quarter this year, the second quarter this year, you will see that our personal care business, again, is on a continuous improvement path. So, we think that we have the critical mass to be a player in this segment and, first and foremost, to attract the talent. We have had some great talent that has come in that understands the business. We're very blessed with the talent that is in the company since we acquired; Dr. Murad himself; Jane and Raymond Wurwand from Dermalogica. These are great people that understand their businesses very well. And, at the same time, we now have enough critical mass to attract other people as well. We have specifically focused on skin and hair. They are -- skin certainly, is not only the biggest segment of this enormous market, overall market is about €70 billion. Skin is the biggest part of that. And hair, where we have technology advantages, where we have know-how and where we can also actually use the innovations that come in at premium to trickle down on our core businesses. We will run this business separately, because the go-to-market systems and the activity systems are quite different. I've studied the past, I've studied some of our competitors. Obviously, we're not rushing into this; that's why you see these moderate acquisitions. We're learning our way into this in a very mindful way. And if there are some opportunities to strengthen our current portfolio, we would certainly look at that, but for now I think we have enough on our plates to integrate these brands and make them work for us.

The next question is from David Hayes.

Two from me, just firstly, obviously, the new baking and spreads unit set up on July 1. Can you just talk about whether there's a retrospective growth number that you have for the first half, having broken that business out now and then, moving forward, what you see the target being or what the management of that unit's targets are for that performance? What do you think is realistic and what their objectives are in terms of change in the way they manage that business now that that's set up? Secondly, on the destocking in North America that's been mentioned a couple of times, I just wonder whether you can be a little bit more specific about what's driven that destocking; whether you can quantify it for the first half and then how it plays out for the rest of the year. Is that done now or is there more impact of that through the third and fourth quarters? I just wanted to get the dynamic specifically on that. Thank you very much.

On the BCS unit, as we now call it, we don't break that out; we report it under foods and we continue to report it under foods. And what you've seen is our total foods business, from the minus 0.8% that we reported, over the six months it's now growing 1.4%. So there's a significant step change, but most of that is coming from our savory business which is now top-of-class growth in that category and, actually, in Europe, was the fastest-growing category over the first six months. Our spreads unit is still going down in terms of absolute numbers. And the bread-eating habits, the rapid change that is happening in that market, the prices of butter that are for the first time in history, may I say, below the prices of margarine doesn't make that easy at this point of time. Despite that, we're growing share in the segment; moderate share growth we find in Europe and we're starting to see that also in the U.S.. So we think that the benefit of setting up this unit is going to be the speed with which we're going to roll out these innovations in the company and then, obviously, driving efficiencies in its total operating structure which should also reflect in costs. And I'm fairly confident that we will deliver on that as we move forward. But we will not break out the unit separately and have no plans to do so. Obviously, management itself is well incentivized behind their specific targets; that goes without saying. On the destocking in the U.S., we look at our market shares, we look at the latest shares that are reported. I just saw Andrew Woods putting out a shares this morning on the U.S. which broadly look good for us in food. In fact, they are record shares and increases driven by ice cream, but also by balance of our businesses. Our personal care business is more or less flattish in share, with a little bit of competition in the hair segment that we have to deal with right now and we're responding to. But overall, our business in the U.S. is good performing. Our destocking is, basically, in the major retailers, where in a low-growth environment of the U.S. we just see again a little bit of better management of their total stock levels. And that's reflected in these numbers which I think, again, we will not have to deal with in the next months, moving forward. Jean-Marc, you wanted to add to that?

No, I just wanted to emphasize there is nothing unusual whatsoever. And if you were to put a number over the first half, it's around a little more than 1%.

Javier.

I second Harold on Jean-Marc. Good luck in your next post. I have a question with regards to the personal care business. It seems to me that it's the only business that margins are down 20 bps and it seems like you most have increased A&P spend in the most in this area. Are you getting the return in that spending in personal care? And if you aren't, is it the consumer? Is it the competition? Is it the shift in retailing from online in China to specialty retailers in the U.S.? So, that's question number one. And question number two has to do with the acquisitions. But from the angle of their scalability, it seems like very small brands and the acquisitions that you did before targeted more emerging markets and the distributions. So, this time around, these acquisitions do not seem to benefit from your pipeline in emerging markets, so should we expect other kinds of acquisitions, going forward? Thank you.

If I may start with the last one on the acquisitions, on developing markets and developed markets, I remember sitting here and when we were buying the Alberto Culver brand, first with Sara Lee brands, people were saying, why do you buy in Europe? That has been a very strategic acquisition in terms of making our European volumes grow again and strengthen our brands and that was right. And then Alberto Culver, why do you buy in the U.S.? Not only has that been very important for the U.S., where we're now number one in hair and it's really built our personal care business which I explained then; but, as I did on this call as well, it has been an Engine for expansion in emerging markets. If you look at the beauty market as well, the prestige beauty market, it's actually fairly concentrated and 70% of these markets is only in a very few countries. This is not a story of let's expand into all of these emerging markets; let's expand in the markets where the beauty business is very much concentrated at this point in time. Japan is a very big market for skin, for example, it's one of the biggest markets. So we will be focused not on expansion into new emerging markets with this category, but we will be very much focused on building that business in the markets where currently prestige beauty is. Now in terms of small or big, it doesn't really matter. These are fairly big brands for prestige beauty already, especially Dr. Murad and Dermalogica. But I also want to remind you that every big brand has started out small. And we will do some moderate learning and then we will grow these brands which we think we can obviously grow above market and to add some of our other brands to it, like Regenerate or Nexxus or the other ones I talked about. So, we think that strategy is prudent. It's also a strategy that manages the risks that come with it and the investments. And you've also seen that it is, at the same time as we do all of this, accretive to any number that you can think of. So we think, like on all the other acquisitions that we've made, more or less, that this is a very responsible way to spend our shareholder money. In terms of the first question which was -- remind me the first question, I apologize, I'm looking at my notes here, the low growth?

Absolutely, is that when you look at personal care, the growth is 3% and there was the margin investment and do you think that this is an issue of competition? Is it shifts in channel? Is it the categories and stuff? What do you feel is happening there that [indiscernible].

Yes, no, got it. I had written it down, but I didn't write down personal care, I apologize. The growth of personal care is -- what you see now is, again, in quarter 4 we had a 2.1% growth; we had 2.7% growth in first quarter; now a 3.3% growth in the second quarter. So, personal care is on an uptick. And we've actually heavily invested behind personal care. We have an enormous string of innovations coming through that we feel actually very pleased about and they are back-half weighted. But we have the Dove Advanced hair series which is obviously launched and doing very well. We had the dry spray launch, I talked about, in the U.S.; we've launched the TRESemme premium; we've introduced Lifebuoy in China; we have this upgrade of Lifebuoy Active Naturol. So, I could go on. If some people were doubting the innovation capabilities, I think you see in this category a very strong innovation pipeline and actually, more so in the future now that we have the prestige business as well. And we're spending money behind that. 20 basis points for us is a rounding, to be honest. We expect on the total year to be positive, but we have to invest. The other reason we had to invest is that still in some parts of the world, notably in the U.S., we see very heavy competition on haircare especially, where one of our competitors wants to gain share at any cost. And it reminds me a little bit of some of these detergent battles which we have successfully fought. We have to be sure that we stay competitive on our brands and that's what we're doing.

And the final question on the line is from Richard.

It's Richard Withagen from Kepler Cheuvreux. Just a quick question on your European margin, obviously the environment in Europe has been tough, but still you managed to improve your margins considerably in the second half of last year and also in the first half of this year. So is the current level of roughly 17.5%, is that the normal sustainable level going forward? And the second part to this question is could we expect that actually to go up further? And what would be driving that?

It's my honor to give the last question of this conference call to my friend, Jean-Marc which will also be the last question he will answer after 50 quarters of history. So, take it with emotion. And since we're talking about the margins in Europe, also have a few tears in your eyes. Here he goes.

It's unfortunate to say, but I can't give you the answer on the last part of your question, because we don't give any guidance on margins on a European level. Absolutely, the margins are high, if I'm not mistaken, 17.4%. By the way, they were at around 17.7% in the second half of last year. So, overall, it is high margin. Now, a lot of the increase in the first half is driven by savings; by higher gross margins; lower overheads and good discipline driven by [indiscernible]. There has also been the positive impact from pension plan changes in the Netherlands, as well as lower restructuring costs. So there has been some impact from pensions in the first half, but overall these are high margin levels playing the role within the total portfolio.

Okay, I think this concludes our conference call. I want to thank you again, once more for your support and interest. We're overall pleased with these results. Once more, not only because of the absolute numbers, we can always talk 0.5% more or less in any of them, but it's the robustness of the numbers. It's a top-line growth slightly ahead of the markets; it's a gross margin improvement; it's an investment in brand spending; it's a discipline around indirects that is better and then, getting again a core operating margin improvement which ultimately is 16% earnings per share. That is the robustness that we want to have in this model. Call it boring, call it efficient, call it effective; in a more volatile world, that is what we want to do. Seven years in a row. And there is no reason why we cannot do this for the whole year with moderate confidence over the second half. My only thing is don't run ahead of yourselves. We have been fairly explicit that we see it anywhere between 3.5% and 4% on the top-line growth for the second half which gives you a total year slightly south of 3.5% and then, our margin progress will be what you've, more or less, become accustomed to, that is what we deliver. And that allows us not only to have a solid year in 2015, once more, but also to guarantee that we maintain this performance for future years to come. That's the long-term strategy that we put in to Unilever and that's not something that we will deviate from. Let me finally say, before I wish you all a happy holidays and taking a break, let me finally thank Jean-Marc, once more. I've learnt a lot from him over the last 5 1/2 years, 6 years that we've worked together. He has been a super CFO for Unilever. He certainly helped us put this virtuous cycle of growth in place. And I'm grateful for the robustness with which he leaves our company, certainly on a high, with a high level of confidence that we have a model now that can withstand the shocks of time. And that is ultimately the proof of a good strategy and Jean-Marc has been a major part of that. And, obviously, having an internal promotion again as a CFO which we haven't had for a while, may I say, is something that we all are very proud of here. Thanks for your support, once more. Enjoy the holiday season and hopefully see you soon, either on the roadshows or shortly after that. Thank you very much.

This conference has been recorded. Details of the replay number and access codes 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.