UNILEVER Q2 FY25 earnings call UL

The demerger of the Ice Cream business is on track for mid-November 2025, with the entity operating as a stand-alone business since July 1. A Capital Markets Day for The Magnum Ice Cream Company is scheduled for September 9 in London to present its strategy. Unilever intends to retain a stake of just below 20% in the demerged company for up to five years, signaling confidence in its potential. Proceeds from the eventual sale of this stake will cover separation costs, tax liabilities, and reduce net debt. Post-demerger, Unilever expects a net debt-to-EBITDA ratio of approximately 2x, while The Magnum Ice Cream Company is projected to have a solid investment-grade profile of around 2.4x.

Unilever is actively shifting its portfolio towards higher-growth segments, particularly Beauty & Wellbeing and Personal Care, and strengthening its presence in key markets like the U.S. and India. This involves bolt-on acquisitions such as Wild (refillable deodorant), Dr. Squatch (male grooming), and Minimalist (actives-led beauty). Concurrently, the company is executing a disposal plan of EUR 1.5 billion to EUR 2 billion, including non-strategic assets like The Vegetarian Butcher, Elida Beauty, Unilever Russia, and its water purification business, to accelerate portfolio rotation and focus on core strengths.

Developed markets continue to be a strong growth engine, delivering four consecutive quarters of underlying sales growth above 4%. North America's 5.4% USG, driven by 3.7% volume, reflects successful portfolio transformation and strong performance in Wellbeing brands (Liquid IV, Nutrafol) and Personal Care. Europe also maintained robust growth at 3.4% USG, with 2.8% volume, fueled by premium innovations like Wonder Wash and Cif Infinite Clean. This outperformance is attributed to focused investment in Power Brands and strong retailer partnerships.

Emerging markets are showing clear signs of improvement, led by Asia Pacific Africa, which accelerated to over 5% growth in Q2. India demonstrated strong performance with 5% USG in Q2, driven by volume and share gains. Interventions in Indonesia and China are yielding improvements, with expectations for further acceleration in H2. However, Latin America faced challenges, with a 4.6% volume decline in H1 due to macroeconomic slowdown^🌐s, currency depreciation, and pricing actions, though management expects some improvement later in the year.

Unilever is prioritizing operational excellence, with a focus on consistent gross margin expansion to fund competitive brand marketing investment (BMI at 15.5% of turnover). The productivity program is significantly ahead of schedule, now targeting EUR 650 million in cumulative savings by year-end. Overheads improved by 10 basis points due to productivity gains and tighter cost control, even while incurring costs for the Ice Cream separation. The company emphasizes a new culture of cost discipline across product and overhead levels.

The brand Vaseline serves as a prime example of Unilever's 'desire at scale' strategy, demonstrating an 11% compounded annual growth rate over the last four years and over 10% volume growth in 2024 and H1 2025. This transformation involved breakthrough science (e.g., Gluta-Hya), elevated brand aesthetics, and modern persuasion models, including social-first campaigns and influencer collaborations. The success of Vaseline, particularly in its biggest markets like the U.S. and India, is being replicated across other Power Brands to drive consistent high-quality growth.