Unilever PLC (UL) Q1 2024 Earnings Report, Transcript and Summary

Good morning, and welcome to Unilever's First Quarter 2024 Trading Statement. We expect prepared remarks to be around 20 minutes, followed by Q&A for around 30 minutes. And all of today's webcast is available live-transcribed on the screen. In a moment, I will hand over to Fernando to take you through the details of the first quarter results. And after that, we will take your questions. Now first, let me set out some of the highlights of the quarter as I see them. On the results themselves, we delivered underlying sales growth of 4.4% with volume growth increasing to 2.2%. This growth was led by our Power Brands, up 6.1% in the quarter, with volumes up 3.8%, with growth across all 5 business groups. It is only the first quarter of the year. But with these results, we do see signs of improved momentum that supports our full year guidance. At the same time, we have used the quarter to progress our Growth Action Plan. We've also announced some important changes to the portfolio, and we launched a major productivity drive. Let me take these briefly in turn now, starting with the Growth Action Plan or, as we call it here, the GAP. Now as a reminder, this is a plan with 3 elements: intended to deliver faster growth, a more focused and productive way of operating, and a sharper performance edge; and all this with the goal of ensuring that in everything we do, Unilever is simpler, better and more impactful. Now first, on faster growth, it starts with our Power Brands. The enhanced focus here is to ensure a stronger execution of the core GAP plans as a means to deliver faster growth, including through category expansion. And the measures we are putting in place to achieve this will inevitably take time, but they are on track. On unmissable brand superiority, for example, insights gained from pilots covering nearly 1/3 of our turnover are being used to complete granular brand assessments. This will be extended to cover 50% of turnover by the end of May. And based on these assessments, targeted action plans are already being developed and will be in place across all the Power Brands in the second half of the year. And on innovation, having identified the key platforms, we are now focused both on brilliant in-year execution of the big initiatives and on building the multiyear pipeline that we expect to deliver the step-up in incremental turnover that we are seeking. Again, this will take time, but we are already seeing good examples of the bigger, more impactful innovations and approaches that we would like to replicate. Now some examples: Vaseline Gluta-Hya, going from strength to strength with its new variants and rollout to new markets supporting Vaseline's double-digit growth in the quarter; Liquid IV, which is being extended into sugar-free and has recently been launched in Canada and here in the U.K.; Nutrafol's entry into skin care, tapping into our R&D expertise; and the launch of Persil's 15-minute Wonder Wash, which we expect to create a new segment in the market by tapping into changing laundry habits; of course, the continued success of Hellmann's plant-based offerings; and Magnum's Pleasure Express range. Some of these we have discussed with you before, but that is the whole point. We want innovations that can scale and build category value over years, not just a constant churn of new news that doesn't really shift the dial. On the second element of the GAP, productivity and simplicity. We are making good progress on embedding a net productivity mindset and tracking the necessary measures, including reductions in cost per tonne, as we look to continue to accelerate gross margin expansion. We will say more about this at the half year results. And for today, let me say a little more about the work that we're committed to do to focus our global sustainability efforts around 4 key areas: climate, plastic, nature and livelihoods. Last month, we published our latest Climate Transition Action Plan with updated targets for achieving net-zero emissions across our value chain. We have also now shared details of the specific goals that we will pursue within each of the priority areas. Now on this, let me be clear, we are doubling down, not watering down, doubling down in those areas that most materially impact the business and where a more focused approach will enable us to drive real change at scale; and we are doing so with goals that are stretching, but that are also intentionally and unashamedly realistic. And on this, we were pleased to have got the support this week of the Science Based Targets initiative, which has formally approved our new Scope 3 near-term GHG reduction targets. And we want to continue to lead in this area and to build on the huge progress that has been made, but by evolving our sustainability agenda in a way that future-proofs the business and helps deliver the kind of positive change that we need. The third element of the GAP involves sharpening Unilever's performance edge. And we said that we would put a refreshed team in place to lead for this and that we would set clearer priorities, more visible and stretching in-year targets and that we would link reward more clearly to value creation. With the recently announced appointments of Mairead Nayager as Chief People Officer and Heiko Schipper as President, Nutrition, the executive team is now complete. Mairead and Heiko both know our industry well, and both come to Unilever with outstanding track records. Targets are in place to deliver the clearer, GAP-related priorities that we are all now focused upon. And at next week's AGM, we hope to get support for the reward framework that will help give expression to the shift that we want to make in strengthening the link between reward and performance. We will say more about the GAP at the half year point. But hopefully, this gives a flavor of some of the areas where activity has been most concentrated in the first quarter. The benefits, as we have always said, will build as we go through the year. And this is important because the market shares in the parts of the business that we can reliably measure remains too low despite the strong and the good performance of Prestige, Health & Wellbeing and Food Solutions, which is not included in our measure. We do expect to see the position begin to improve in the second half of the year as the GAP measures become increasingly established in the way we operate on a day-to-day basis. And as I've said, we were determined that in everything it does, Unilever is becoming a simpler, better and more impactful organization. And it is this thinking that led to the announcement last month to accelerate the GAP by driving our productivity agenda further and by simplifying the portfolio. Let me say a few words on each now. The productivity program we announced is hugely important as it will streamline the business, it will improve efficiency and the way we work and operate. Work to give effect to the program is already well underway. A dedicated cross-functional project team has been established to lead the process. Now there's much more to do, but we are confident of delivering the cost savings that we have set out of around EUR 800 million. We are clear that the program can and will be implemented in a way that speeds up decision-making and liberates trapped capacity within our business. Equally, we are very mindful that the people impact of these proposals is significant with up to 7,500 roles impacted. We will embark on a consultation process to ensure the changes are introduced with the appropriate sensitivity and care. On the portfolio, the separation of Ice Cream makes good strategic sense both for Unilever and for the Ice Cream business. As a global leader in an attractive category with outstanding brand power, we expect Ice Cream to thrive under a new ownership structure, one that is better suited to its distinct operating model. Work to separate that business is underway, and we expect the process to be complete by the end of 2025. And in the meantime, under Peter ter Kulve's leadership, we are working hard to address the reasons for the recent underperformance in Ice Cream. We are fully focused on getting the business growing competitively again and improve on all measures. For Unilever, separation will allow us to put more energy and resources behind our global and scalable brands in categories that have complementary business and operating models where we can leverage our innovation, R&D and go-to-market capabilities a lot more effectively. To summarize, our first quarter results give us confidence in our full year outlook. We've made significant progress in instituting our GAP measures, and work is underway to give effect to the broader portfolio and productivity program changes that we have announced last month. With that, let me hand over to Fernando to go through the details of the first quarter trading performance.

Thank you, Hein. Underlying sales growth in the first quarter was 4.4%, consistent with the growth we delivered in quarter 4 of the previous year. Importantly, underlying volume growth increased to 2.2%. We are laser-focused on volume growth as a key indicator of the quality of our top line performance as we deploy the Growth Action Plan. Our Power Brands that contribute approximately 75% of turnover led the way with underlying sales growth at 6.1%, driven by a strong contribution from volume at 3.8%. We saw growth across business groups with Beauty & Wellbeing leading the way and with both Home Care and Nutrition delivering a notable improvement in volume. As expected, price growth continued to moderate at 2.2% for the quarter with more impact felt in commodity-sensitive categories. Let's take a closer look, taking each business group in turn. Beauty & Wellbeing continued its strong performance with 7.4% growth in quarter 1, driven by volume at 5.6% and price at 1.7%. In core Hair, we saw balanced growth across our largest brands, with Sunsilk, Clear, Dove and TRESemmé all contributing well. The launch of Dove Scalp + Hair Therapy, clinically proven to support hair density, is off to a very good start. Core Skin Care delivered volume-led growth with another very strong performance from Vaseline, supported by its Gluta-Hya range. Pond's premium innovation helped to maintain its good momentum in emerging markets. AHC Carver stabilized its sales as we made progress with our brand reset plan. Prestige Beauty grew double digit, mainly from volume. All of the larger brands delivered positive growth with a strong performance from Tatcha, Hourglass and Living Proof. Our newly acquired K18 haircare brand also made good progress, although it is not yet included in the underlying sales growth metric. Health & Wellbeing also delivered another quarter of double-digit, volume-led growth with a standout performance from Nutrafol and Olly. Nutrafol made good progress in the core range while also extending into skin care through a daily supplement which addresses the root causes of acne. Olly performed well on the back of a very successful entry into China, and Liquid IV is poised to benefit from the brand extension to Canada and U.K. markets. The continuing double-digit growth of Prestige Beauty and Health & Wellbeing combined already for 13 successive quarters is successfully reshaping our portfolio and increasing our exposure to the critical U.S. markets and, in particular, to selected premium and online channels. Personal Care grew 4.8%, comprising 3.4% in price and 1.4% in volume, a good performance versus a particularly high prior year comparator, especially in North America. Deodorants grew double digit with a strong volume. That growth was supported by the launch of Whole Body Deodorants. Rexona and Axe also contributed well on the back of the continued momentum of the multiyear, 72-hours nonstop odor and sweat protection platform and the new Axe Fine Fragrances range. Skin Cleansing was flat with a small increase in price, offset by the decline in volume. That grew both volume and price with the launch of a premium range of body washes in the United States. In Asia, we saw the impact of commodity cost deflation on the personal wash business in India and market challenges in Indonesia, which resulted in declines in Lux and Lifebuoy, both large brands in these geographies. Oral Care continued to deliver good growth, driven by positive volume and price with a strong double-digit growth in our Closeup brand. As previously announced, Elida Beauty disposal will be completed during the second quarter. Home Care growth was 3.1%, with volume up strongly at 4.3% and price down 1.1%. The step-up in volume from the fourth quarter was significant and it was broad-based across Fabric Cleaning, Fabric Enhancers and Home & Hygiene. The negative price was driven by Fabric Cleaning where we saw higher-than-expected cost deflation in laundry powders, which resulted in negative price in key emerging markets such as India and Brazil. Fabric Cleaning volume growth was mid-single digit with improved contribution from Europe. Strong innovations, such as Persil Wonder Wash recently launched in Europe, will support delivery of volume growth, while price may remain negative or flat for the rest of the year. Fabric Enhancers and Home & Hygiene both delivered mid-single-digit growth, led by volume. Cif and Domestos both performed strongly with the successful Domestos Power Foam being extended into new markets and new variants. Growth in Nutrition was 3.7%, with price up 4.1% and volumes down 0.4%, but on an improving trend. The sequential improvement in volume is important, remembering that Nutrition is later in the commodity inflation cycle and is a category where there has been a substantial assortment rationalization, especially in Europe. Dressings was up mid-single digit with positive volume growth. Hellmann's was supported by good progress of its plant-based range, new variants of flavored mayo and a fourth consecutive year in the U.S. of the Super Bowl Make Taste, Not Waste campaign. Scratch Cooking Aids also grew well as Knorr launched superior bouillon and seasoning variants and extended its Eat for Good campaign behind locally relevant dishes. Unilever Food Solutions grew double digit with a strong volume, lapping a weak comparator in China. Horlicks extended its leadership in India and grew well, with positive volume and price driven by sustained market development, both in the kids and adults segments. Ice Cream growth was 2.3%, with 3.2% in price and negative 0.9% in volume. In-home was flat, whilst out-of-home grew mid-single digit; in both cases, led by price, offset by a decline in volume. The increase in pricing reflects necessary action taken given the increased cost of critical ingredients such as cocoa and sugar. Significant operational improvements have been put in place in Ice Cream in preparation for the Northern Hemisphere summer season that is coming. So that is the performance from the perspective of the business groups. Let's return to the group level. Turnover for the first quarter was EUR 15 billion, up 1.4% versus the previous year. Underlying sales growth contributed 4.4%, but with a reduction from acquisitions or disposal of 0.9% with the exit from Suave and Dollar Shave Club, partially offset by the addition of Yasso ice cream and K18 hair care. The total currency movement in the quarter was minus 2%, comprising a negative impact of minus 4% from the euro strengthening against the dollar and most emerging market currencies and positive 2.1% of extreme price growth in hyperinflationary markets. Based on the spot rates at the end of last week, we expect a broadly similar impact of currency for the full year. The full year outlook is unchanged, both for top line growth and margin. Our priority is to drive organic top line growth, and we expect full year underlying sales growth to be within our multiyear range of 3% to 5%. Within this, we are expecting a higher contribution from volume, a critical indicator of the quality of our growth, especially after a period of elevated pricing. A good first quarter give us confidence, but it is only 1 quarter, and we have much more work to do. We expect a modest improvement in underlying operating margin for full year 2024. We are highly confident on the impact of our productivity program as a key driver of our gross margin expansion. This is giving us the flexibility to increase the investment behind our brands in marketing and research and development. In terms of capital returns to shareholders, we remain committed to an attractive sustainable dividend. As previously announced, this will be supplemented by a EUR 1.5 billion share buyback program, which will commence later in the second quarter. With that, we look forward to taking your questions. Thank you.

[Operator Instructions]

Thank you very much for joining the call. Our first question comes from Warren Ackerman at Barclays.

Fernando, Jemma, it's Warren here at Barclays. I've got a couple. The first one is, can you update us on your competitiveness measures? I know you said you would improve in the second half. But on your new turnover weighted share measure, can you maybe give us a number? I think it was minus 75 bps globally at full year. Where are we now? And where are you making most progress on market share? What's running ahead? And what's running behind schedule? And within that, if you're able to kind of comment specifically on Prestige and Health & Wellbeing, maybe some of the kind of market share growth rates we're seeing on some of the big brands because I know that's not in your measures, so it's quite hard to figure out what's actually happening when you look at it on a 100% portfolio basis. And then the second one is just actually with your AGM upcoming, Hein, you've made a lot of changes to the measures on the remuneration, particularly interested about moving away from percentage margin and also moving more into sort of TSR. Could you maybe just update us on what the key changes are and how you think that will change and drive a performance culture in the company?

Warren, thank you for your questions. So first, on competitiveness, as you say, we are not providing an update on the precise competitiveness on a quarterly basis or not this quarter. But let me give you some broad strokes. First of all, if you look at it, we expect, and I think we mentioned this in the previous call as well, we expect from all the actions that we're taking a sequential improvement. So I would really look on an MAT basis for improvement towards the second half of the year. And as I expressed in my presentation, we're still not happy with the market share development where we are. Again, this is something that we need to improve, and I would see an improvement in the balance of the year. As you called out on some of the segments that are not in the measure, I do want to give you some comments. So on Prestige Beauty as well as on Health & Wellbeing, the growth has been double digit in the first quarter with some very strong performance on Dermalogica, on Tatcha, Hourglass doing well, Living Proof doing very well. So we're seeing individual brands doing well. I can't give you a precise competitive measure, but I think it should give you a good indication of the strength of that business, still going well. The same, by the way, on Health & Wellbeing with particularly strong results in Nutrafol. In the course of the year, with half year and then later on in the year, we will update you on the turnover weighted measure on competitiveness overall. When it comes to the remuneration side, we did indeed make a few changes. I think, first of all, in our short-term measures, we changed from a margin target or a [ one ] target to absolute profit improvement, a change that obviously I welcome because it gives us that latitude to continue to invest behind our brands and benefit really from gross margin expansion, which is something that we expect to realize in the course of the year. When it comes to the longer-term planning, we -- an important change was that we have reintroduced, I think it was there a while ago, we've reintroduced the relative TSR measure and, therefore, aligning interest of the shareholder better with management plans. We did keep underlying ROIC. In fact, we increased the importance of that somewhat, and we reiterated in the long-term plan the importance of USG. So sales growth, such an important measure for us, has been -- is in both in short-term plans as well as in the long-term plan. Importantly, in the organization, and this is not something that is up for the vote for next year, but as you may remember, we made some further changes within the organization by changing plans for lower management levels in the organization more towards in-year performance and along the lines that I just talked about. A qualifier for all of these bonus plans is around competitiveness. So competitiveness is an important qualifier both for top management as well as for middle management in the organization eventually. I trust that answers roughly your questions.

Our next question comes from Celine at JPMorgan.

So my first question is on the North American market, if you can a bit help us understand the moving parts there. You said double digit in Prestige and Health & Wellbeing. So the underlying for the rest of the business, has that slowed down? It seems that there's been a bit of a weaker volume mix. So if you could discuss that. And then whether you've seen any impact from Personal Care/Beauty deceleration in the U.S. market that has been flagged by other corporates. Then my second question would be on Latin America, which has been very strong. If you could comment about the main driver behind the volume growth and whether we see that pricing deceleration continuing in the rest of the year.

Celine, this is Fernando. Well, North America first, it's just we have a good performance in North America despite a very, very strong comparator in Personal Care in the same quarter last year. We grew last year our Personal Care business 12% behind what was a re-pipeline of our Deodorant business, in particular, after some issues in customer service. The market growth in U.S., we sit in around 3% to 4% range. The economy is resilient, low unemployment, inflation is sticky that shows a robust economy. We continue seeing some level of polarization in the market with some marginal increase in private label, particularly in the food space, but structural premiumization in Beauty & Wellbeing and Personal Care. That, of course, is really a favorable element to our Prestige Beauty business and continue growing double digit. Excellent performance in [indiscernible], also double-digit growth. It has been now 13 consecutive quarters in which we have had double-digit growth in these 2 pillars of our business. We have not seen any material destocking at retail level at this stage. And of course, we are aware of some of the comments that some specialty beauty retailers have done in terms of a slowdown in Prestige Beauty. But in our brands, we have not seen this kind of reduction of demand at this stage. We have brands growing very, very strongly. They are like Dermalogica, Hourglass, Tatcha, all of them really booming. Latin America, excellent performance. The quarter 1 volume growth of 8.1%, continuing this kind of high single-digit volume growth. Our 3 core geographies, they are Brazil, Mexico and Argentina, all growing very, very strongly. Some issues in pricing in Brazil, particularly in the laundry category, the commodity inflation there and some customer putting pressure in the value segment. We are defending our position in the market, and that has some implications in terms of pricing, but our volume is very, very strong. Mexico, continued, very, very robust economy there. Our business growing double digit. All our business groups growing volume and price in Mexico. And in Argentina, of course, we have an exceptionally strong company. Some of our competitors have abandoned some key categories, and we are really getting significant benefits in terms of volume growth there.

Our next question comes from Guillaume at UBS.

Hein and Fernando, a couple of questions for me, please. The first one is on your Deodorants franchise because it's been now more than 2 years that Unilever has been growing in double digits in that category. And it seems there's a particularly strong contribution from volume. And also, it's despite the fact that you are slightly under-indexed to the fast-growing premium segment in North America. So my question here is, what is driving this continued strong performance in Deodorants? Is it reflective of a very dynamic category growth? And if so, do you think that would be sustainable? Or is it more down to significant share gains, particularly outside of the U.S., in regions like Latin America? So any color on Deodorants would be helpful. And then my second question is on Europe. Last year, you were mentioning some share losses to private label as one of the key reasons for your volume weakness. Now in Q1 this year, volumes remained negative, but they've considerably improved relative to Q4. So here, wondering, do you think private label market shares have now reached a plateau as far as Europe is concerned and should be other results less of an issue going forward? And also still on the Europe topic, if you could say a quick word on your Fabric Care business because it looks like there was a dramatic acceleration in underlying sales growth in Q1.

Thanks a lot, Guillaume, for your 2 questions. Let me take them. I mean, first of all, on Deodorants, why is it going well? Well, first of all, we have very good products. That usually helps. And we have 3 of our best brands in that with Rexona or Sure, Dove and Axe, of course. And under each of the these brands, we have very strong, I think, we have very strong plans. Rexona or Sure is all about protection. We've been very consistent in that, and I think that consistency really helps. It's the rollout of this brand that is actually causing the -- or is the main cause for growth. So it's now in more than 100 countries globally. On Dove, 2 different programs: one, Advanced Care for Women; and then, of course, Dove Men+Care. Dove Men+Care is a very strong, growing proposition for us. But also here, it is primarily growth globally and outside of the United States. And then thirdly, on Axe, which is more for teens and it's more fragrance-based, we're introducing new fragrance varieties in the next months, actually. This is something that we're actually very positive about. Axe had a bit more of a difficult time in the past. But actually, we see that now coming back. So we're very positive about it. But the strongest-performing regions on Deos are Latin America and Europe. So you are absolutely right, the premiumization thing that we've talked about in the past in North America, that did hurt our shares, but Deo growth is very robust, it's resilient and it's very global along the 3 brands that I called out. And then your question on Europe, I think very clear, look, in Europe, what we've done is we dialed up our promotional intensity somewhat because we really felt that we had to draw a line under the volumes there. So you do see additional promo intensity in Europe. We dialed promo intensity somewhat down in the rest of the world, by the way, particularly in North America. But in Europe, we did that. So if you would ask me now, how does that then work market share-wise versus private label? I think it's fair to say that from what I see in our categories, yes, it's plateauing. But once again, we did dial up a bit on the promo side. I want to remind you on Europe on 2 things. One, on Nutrition, Nutrition volumes, obviously, sequentially better; but in Europe, negative. And that is -- that's still a -- it's sort of -- it's lapping now that SKU rationalization and delistings, conscious delistings that we did last year. And we expect improvement in that segment from quarter 2 onwards. What we're very positive about in Europe is Home Care. Home Care volumes are up nicely in Europe, and that's particularly on behind our innovation, where it's innovation in, yes, in household care, such as Domestos, but we're very, very positive about the opportunities in Fabric Cleaning, particularly behind Wonder Wash, the product that we recently introduced under the Dirt Is Good brand. But the other business groups where it's B&W and Personal Care, they are growing double digit in Europe, and I would say that is pretty rare.

Our next question comes from Fulvio at Berenberg.

I've got a couple. On the non-Power Brands, I calculate that these have declined roughly 1% organically in the quarter with volume mix down around 2.5%. So I just wanted to check that this is correct, just from the figures that you provided. And then my second question was, what should we expect, I guess, from these non-Power Brands for the rest of the year? I mean, are you planning on perhaps cascading some of the innovations from the Power Brands to the rest? Or could we see an improvement in that 25% of your portfolio? And then, sorry, just one other question is I was wondering also if you can share the performance of Power Brands in Q1, excluding the Ice Cream power brand since that business is going to be separated anyway.

Thanks, Fulvio. I'm not sure I got your third question precisely, but I'm looking around the table. We'll come back to you on that one. I mean, first of all, on the non-Power Brands overall, look, as we said, the focus for us, it's really about priorities. In our Growth Action Plan, we talked about creating unmissable brand superiority on all the 6 dimensions. We're talking about developing the market and category growth on bigger and better and fewer innovations, a few of the examples that we called out, and to make sure that we can truly execute very well. We wanted to make -- we focused on those brands that are roughly 75% of our turnover. And of course, now with the enhanced growth, that share is actually increasing. It doesn't mean neglect of the other brands, but it's fair to say that they performed less well. The -- let me check. On the other brands, the portfolio of Elida Beauty is still included in the other brands. That is a deal that we closed in December -- sorry, that we signed in December, but that will be closed in June. So that is a part of that. And then some of the other brands are mainly local food brands in Europe. I think that is it, but just want to make sure that I answer that third question. I wasn't really sure, Jemma.

Yes, Fulvio, just to check, I think your third question was Power Brands excluding the Ice Cream Power Brands, is that right?

Yes, exactly.

I see what you mean. Yes, no, I mean, look, I mean the Power Brands and the way that we reported them and talked about them are including the Ice Cream brands. And clearly, in 2024 and, look, how we're going to deal with that in the course of 2025 is a next year's question. But for this year, we run them absolutely integrated, they're a part of the company and we do not split out results.

Our next question comes from Jeff Stent at BNP.

Just on that point, can you give -- just a small accounting question, can you give us any guidance, a view of when/if Ice Cream may move into discontinued items? As things stand, would that potentially be from the start of next year? Any thoughts on that would be great.

Yes, it will be sometime during 2025. Jeff, it's around here. So -- but at this stage, we need to really solidify the plans of the separation, but it will be probably in the second half of 2025.

Our next question comes from Bruno at Bernstein.

I have 2 on the sustainability announcements that were made. I just -- when you're talking about the changes in living wage and then the new commitments, you're only referring to living wage. So I just wanted to clarify that it implies the living income typically by small farmers in cocoa and other commodity supply chains are excluded from your commitment. And what does that mean for the sustainability of those kind of operations and just clarify a little bit? The second thing is, I can sort of see the need to focus in the efforts you're doing. But given what you're announcing, do you think there's any longer-term implications for sustainability being harder than people thought, really costing more money? And therefore, do we think as more and more of the sustainability programs have to land, is it going to be part of the future discussions of group profitability, the cost and profitability that all these programs will have as you get closer to more important targets?

Thank you, Bruno, for the question. I'll give a bit of background, and I'll get to your living wage one. But I do want to make very clear, as I said in the video, we are not watering down on sustainability. As we said, we're doubling down. But I want to make 3 points here. First of all, the whole strategy is around focusing our resources on the key priorities, the 4 platforms on climate, nature, plastic and livelihoods. So that is super important to make progress, and it's very much in line with the choices that we made in the Growth Action Plan. Secondly, it's about urgency in driving action and setting, therefore, shorter-term targets. And that has really meant to make progress in those areas where we have -- where we can actually make the biggest impact. And thirdly, it's about driving systemic change in areas where we need actually to work with stakeholders to remove roadblocks. Think about, for example, plastics, it's something that you simply cannot do on your own. But it's a good bridge as well into your question on living wages. We are a company that we have spearheaded living wages as a concept, and we spent a lot of time on it. I spent a lot of time on it as well over the last couple of months. And we have reiterated, and I think that is most importantly, we have reiterated living wages as 1 of the 4 priorities within our overall framework. We have realized living wages across all of our operations within the company. And to make impact and to focus and to drive that change, we're also asking our biggest suppliers, responsible for more than 50% of what they supply, to actually help us realize living wages in the value chain. But by like the top 30 brands, by declaring it for that number of suppliers, we believe that we will actually make the biggest progress. Now that doesn't necessarily exclude the living income part. The -- we have our programs. Those are, for example, through the Ben & Jerry's program, but other programs on smallholders. All of these programs will continue to proceed. The 250,000 smallholder farmers program, that is not changing. So on living income, we're not necessarily changing what we do. We just didn't call it out as a target because we feel that when you talk about targets, those are the areas in which you want to make the biggest change.

Let me add that we welcome any development in the sustainability space that implies a common regulation industry-wide and ensures a competitive playing field to any player in the industry.

Our next question comes from Victoria at Bank of America.

My first question would be on the mix, especially in Home Care where you have quite a lot of innovation. Is there any way you could quantify or guide us a little bit for first quarter mix contribution overall and in Home Care? And also given the first quarter results, you are keeping your guidance unchanged because you are talking about acceleration through the rest of the year and a lot of pillars of growth coming and comps helping. Why are not you upgrading guidance? Should we be aware of any potential headwinds in the remaining 9 months of the year?

Let me take this one. The mix is slightly positive in the first quarter at the group level and also in Home Care, in which we are putting a significant focus in premium innovation. As you have seen, the launch of Wonder Wash is an initiative that we are very keen. We believe it has a lot of potential in creating a new segment in the category, particularly in developed markets like Europe. Great performance of Cif and Domestos, also other some of our premium brands. So the contribution of mix in Home Care is above the contribution of mix to the whole group during quarter 1, but we will not go into more specifics about that. In terms of guidance, it remains unchanged. We are very clear about the sensitivity of earnings to every line of the P&L. But it's very early in the year. And there are some elements of unpredictability in the current scenario, particularly the price growth, volume growth dynamic that will take some time to normalize. And of course, we want to confirm the positive trajectory of our gross margin that is giving us significant flexibility to continue increasing the investment behind our brands with the addition of sustaining the kind of superior volume growth that we are achieving in the last few quarters. So it's just 1 quarter in the year. There is a lot of work to be done in the rest of the year. We are confident with the progress that we are having, particularly in the margin space. We are very happy with the additional investment we are putting behind our brands. But at this stage, we prefer to remain cautious.

The next question comes from Tom Sykes at Deutsche Bank.

One question on sort of relative on market share. So I think for many, success will be defined by gaining share in developed markets where you're up against your biggest and most successful peers in areas like Personal Care and Home Care. And it feels like we're getting a little bit of evidence from that in these numbers. But is that something that you feel is happening now? Or you have more chance of success of happening near term, given maybe you're picking your fights, a little better innovation, et cetera? So any kind of view on that dynamic would be great, please. And then just on the Ice Cream, have you clarified at all whether there would be any tax liabilities of separating that business? And indeed, if it was eventually to IPO, would there be any further stand-alone costs that will be needed to be put into the business, please?

Thanks a lot for that question. I'll take the first one, and Fernando takes the second one. I mean on market share, and at the beginning of the call on the question of Warren, I would say the same, we won't give you precise numbers at the first quarter on market shares. We'll come back to that at the half year. But as I said, on an MAT basis, we do expect, from the plans, improvement in the second half. At this point, it is not at a level where it needs to be. But at the same time, let me just double-click on something that we talked about before. Our market share losses, overall, stem from primarily 3 areas: one was in Europe, and that was to private label, mostly at least to private label; North America, we talked about premiumization, and we're really onto it and developing the right plans to get in there; and then thirdly, Indonesia, mostly driven by consumer actions in the second half of the year. I mean on the third one, let me -- and then I'll roll back. So Indonesia, we are actually getting back. You've probably seen the results on that yesterday. We are hopeful that, that will get -- come back to normal levels in the second quarter. Sellout levels are already back to on that level. So market shares will be trailing, but it will come back. On the U.S., that's a longer fix, but we're working through that. So stay tuned on the plans. And as I said, on Europe, I think we've taken a bit of a different stance on Europe. Europe is very important for us. We're a large player in the market. We've dialed up a bit on the volume side to make sure that we've drawn a line under this. And we've recorded strong growth overall in Europe. But it's too early yet to declare victory. And again, we will come back on the market share picture in the course of the year.

Regarding Ice Cream separation, we are pretty confident that is a value-creation initiative for our shareholders. Of course, there is an element of tax leakage, tax value leakage. But you have to remember also that the announcement of Ice Cream separation is combined with the launch of a comprehensive productivity program in which we expect to deliver cost savings of around EUR 800 million. That should more than fully offset the dis-synergies and the potential leakage that we have when we separate Ice Cream. The separation is fully in motion now. It will involve 57 countries in Unilever. It is expected to be completed by the end of 2025. And as we announced on the 19th of March, we are working in a demerger as the most likely separation route. This is an option that gives us absolute control in terms of the separation. Of course, as we mentioned also that day, other option for separation will be considered if they offer a superior value creation for our shareholders.

The next question comes from David Hayes at Jefferies.

Two for me. So just coming back to the ESG commitments, I guess, particularly on plastic, it feels to us like maybe there's certain actions, maybe past actions that are being more freed up now, now that your measure is a bit more balanced and steady in this area. So I'm thinking, for example, you have the smaller packaging sizes in emerging markets. Are there certain things that you were not able to do, that you were hindered doing because of the aggressiveness of the ESG commitments that are now changing? Can you give us any examples of those? And then secondly, just on the 4 to 6 midterm guidance post Ice Cream divestment, which you talked about in the release a few weeks ago. Ice Cream, apart from last year, gave you sort of one-off dynamics. Was it really dilutive to growth over the last few years? So just wondering whether there's anything else behind that 4 to 6 step-up in terms of plans, investment plans or whether it's just about the additional focus and improving execution around the GAP.

Thanks, David, for your questions. So I mean on ESG and on plastics, look, what we've done is we've specified the targets on plastic a bit more. So we have made, over the last years, considerable progress as a company. We've reduced our virgin plastic intake by 18%. We've increased the use of recycled plastic or PCR by 23% since our base year. And if you look at that comparably in the sector, these are actually -- that's strong progress. But at the same time, when we worked through this and when looking at the targets that we have for 2025 and '26, we simply saw a huge hockey stick that we would have to pass on, I mean, in the next 2 to 3 years. So we have revisited those targets. We've brought them to a more realistic although still very, very ambitious targets. And reality is on plastic is you cannot do this alone. It is not a matter of money or investing, but it's also driving systemic change on refill and reuse, for example, which could be a solution for single-use plastic solutions. You need the cooperation of retailers, you need the cooperation of governments in terms of law change when it comes to food safety, et cetera. So I think what we've done with that plastic -- with the new targets on plastic is we have not watered down or diluted or whatever or held back on investment. No, we kept that the same, but we brought in realism and, at the same time, a double down on driving systemic change. I was personally, myself, over the weekend in Ottawa to lead on behalf of the Global Business Coalition efforts to get a global plastics treaty done and worked with governments for a number of days to actually get that done. So I think this is very important to us. But once again, we need to be realistic in what we can achieve and, at the same time, advocate for strong systemic change. I want to come back on one question that Bruno asked before, and that is on money and on the investment because, Bruno, I realized that I didn't answer that. Once again, our renewed focus and urgency and drive for systemic change was not a result of saying, hey, this is too high of an investment or we cannot bear the cost or whatsoever. No. It was a deliberate choice to drive performance in ESG, and that's really it. And again, on plastic, not a matter of money, but a matter of, hey, can you actually achieve this in the whole construct of working with different stakeholders.

Then on Ice Cream, of course, our Ice Cream business is potentially an excellent business. It's a world-leading business in the industry, some of the most exciting brands in the ice cream market, and it has strong growth prospects. But it was a clear outlier in our portfolio with a very different margin structure, much more capital intensity, less cash conversion and, of course, a complete different channel profile, a cold chain, a low level of complementarity with the rest of our portfolio in terms of manufacturing, distribution, R&D systems, et cetera. So we believe that the separation will result in a more focused Unilever. It will be a simpler business, a much more focused portfolio. And this will allow us to grow faster, to have a higher structural margin and a higher structural return on assets and cash conversion.

Our final question comes from Olivier at Goldman Sachs.

Just one quick follow-up in that case. On Latin America pricing, which was only 1.3% in Q1, now the region obviously includes Argentina, which is in hyperinflation. So just trying to -- if you could help me reconcile what kind of pricing you have for Mexico and Brazil. You mentioned pressure coming from Fabric Care in Brazil already, but do you know when pricing will improve in the regions?

Yes. Again, very, very strong performance in Latin America overall, 8% growth in volume, 1% in price, that is very low for Latin American standards. As you know, we cut pricing in Argentina at 26%. So we don't reflect the whole inflation or the whole pricing of our business in Argentina. Brazil is lapping a very, very high pricing, particularly in categories like Home Care. So the pricing of Home Care in Brazil in the first quarter last year was about 30%. So there is a kind of comparator element that basically reduced significantly the price of Latin America. We see a bit more pricing in Latin America than the one that we presented, reported in quarter 1. But overall, we are very happy with the development of the business. They are with very, very strong volume performance across the board in Mexico, Brazil, Argentina.

Thank you, Olivier. So that was our final close -- call. So thank you very much. We'll bring the call to a close here. If there are further questions, please do e-mail them through to the IR team, and we will set up a time to speak to you later today. Thank you very much.