Unilever Stock

Okay. I think we're going to kick off. I'm delighted to welcome Unilever to Boston. Thank you, Fernando and Priya for being here, especially Priya for coming all the way from Mumbai, from your CMD.

So the session today is going to be a set piece presentation from Fernando followed by Priya. I'm then going to ask a couple of questions. But importantly, we do have a breakout after this. So all your questions, do please join us for that. So with that, Fernando, thanks again.

Thank you very much. Thank you, Warren, and thank you for having us in the Barclays conference. It's always a pleasure to be here.

For me, it's a privilege also today with Priya today. She is the CEO of Hindustan Unilever. As you know, it's our second-largest company. After a separation of Foods, it will be close to 17% of our revenue and a key engine of growth for the future. So most of the presentation will be Priya basically taking our position in India and how do we believe it will be a key contributor to the performance of Unilever in the next few years.

But let me kick off basically highlighting a few things about Unilever at an aggregated global level. And this is a very different company to the one you used to know 3 years ago also. Many things have changed in Unilever. We have dramatically transformed our portfolio. As you know, 2 big moves, the separation of ice cream as an independent company, The Magnum Ice Cream company doing very well.

Also we are in the process of combining our food business with McCormick in what we believe it will be combination that will generate one of the best food companies in the globe, a real global flavor powerhouse with very strong positions, both across retail and food service and in some of the categories of foods that are having tailwinds instead of headwinds coming from GLP-1.

We also made significant bolt-on acquisitions in the last few years. Since 2019, in particular, our track record in bolt-on has been very, very successful. The likes of Nutrafol, Liquid I.V, Tatcha, Dermalogica, Paula's Choice, et cetera, really contributing to make our U.S. business much more competitive, defining what we believe is a superior growth footprint in the U.S. and from where we are now stretching these brands internationally.

We have also changed our marketing philosophy dramatically. Our mantra internally is all about elevating our brands through what we call desire at scale, superior science, standout aesthetics, great sensorials, brands that are recommended by others, said by others, times of big messages from corporations probably are gone and also making our brands contemporary.

A brand like Vaseline 150 years to reach $1 billion. In the last 3 years, we have added $400 million to the company, to the brand. Real step in execution, what we call perfect store programs all around the globe. Probably the best example of that is what we have done during the World Cup recently around across 120 markets, executing more than 150 special items. More than 50,000 content creators working for us really stepping up, showing what Unilever can do now at a geographical scale that probably is really unmatched.

But fundamentally also significant changes in terms of our culture, much more agility, much more performance management intensity, significant change in our incentives with absolute focus in volume growth and profit growth in hard currency and all driven by significant changes in our leadership, both at board and executive level. 8 out of 10 board members have changed in the last 3 years, 9 out of 11 leaders in the -- top leadership tier of the company are new to a position in the last 3 years, including myself and Priya. So many things changing in Unilever. And I feel results are more in the right direction. Our performance in the first half has been strong. It has been led by what will be our remaining company after the separation of Foods, what we call HPC, Home and Personal Care.

We have upgraded our outlook. In the first half, we did 4.8% USG with more than 4% in volume. And when you look at our HPC business, 6% underlying sales growth, with volumes about 5%.

With significant investment behind our brands, we are in -- around 16% of revenue in brand and marketing investment. 3 years ago, that level was 13%. So we are the times in which Unilever used to under-invest behind the brand to manage the bottom line are going.

This put us in a very good position to deliver against our commitment in the midterm guidance. We believe that this is a company that can deliver 4% to 6% consistently at the USG level with at least 2% coming from volume.

And we are in the right track. But the first half or the quarter 2, that was the quarter in which we delivered the highest volume growth in 15 years is not an outlier. When you look at the performance of Unilever across the last 10 quarters, we have delivered for the group 4.1% underlying sales growth with close to 3% volume, and we have delivered 4 HPC for remaining company, 4.6% USG with 3.3% volume growth and a margin expansion of close to 200 basis points.

So not an outlier in the first half. We are gaining momentum. The company is becoming more competitive. We are definitely growing ahead markets. across most of our geographies. And this we believe is a track record that is starting to build.

We will become after the separation of Foods $39 billion HPC pure play with very good balance between our 3 key categories, Beauty & Well Being, Personal Care and Home Care. We have a very active business in India, and particularly beverage and food that will continue being strategic for us in the medium term.

We are the second largest BPC company globally and we are the #1 company in home care in emerging markets. So very, very solid foundation, leading positions and with an interesting geographical profile.

It's getting difficult to get growth in developed markets. It's true that we have been developing in U.S. very, very good business. We have delivered 3% to 4% volume growth in the last 3.5 years. But it's true that the fundamental drivers of growth of the future are attached to your presence in emerging markets. And we will have a reason with 62% revenue in emerging markets. These are regions that have a better expansion to big consumption drivers, superior population growth, significant urbanization potential, expansion of female presence in the labor force, wealth expansion and a fragmentation of number of households. All these are fundamental trends that really support superior growth in emerging markets.

And remember also the macroeconomic terms, emerging markets are becoming much more attractive than in the past. Only 7% of the global population lives with double-digit inflation today. Public finances in emerging markets are better than the ones in developed markets. So there are many things that suggest that the historic negative currency effect of emerging markets will be lower in the future.

We have unrivaled positions in emerging markets. We are the #1 HPC company in emerging markets. So we have at scale 80% of our positions at category geography cells are in #1 position, 95% when we talk about #1 and #2. And in the first half of the year, we delivered 6.5% underlying volume growth through a clear elevation of our brands. There are multiple growth opportunities across emerging markets. I feel Priya will cover this better, but we see expansion of consumption with the potential for premiumization.

We see opportunity for building new segments, new categories, and we see opportunity to occupy new adjacencies in our portfolio. So these 4 key drivers are the ones that we are really driving across all our emerging market businesses. India is by far our biggest company in emerging markets.

And I feel when you look at the next 5 years, it's probably the market that for fast-moving consumer goods shows the only large exponential potential. We believe that India will have a significant expansion of the per capita consumption. And when you compare in absolute terms, in absolute growth, it will only be behind U.S. in terms of contribution to the fast-moving consumer goods industry.

We have a fabulous company there, and I'm very happy for Priya to present that.

Thank you, Fernando, and thank you, Warren, for having me at Barclays conference. So I'm Priya Nair, and I'm the CEO and Managing Director of Hindustan Unilever, which is the arm in India of Unilever.

Let me just take you through some numbers of HUL. It's $6.5 billion turnover. We are publicly listed market capitalization of $48 billion in India. We reached 9 out of 10 households in India. And in greater than 90% of our turnover, we have #1 position. We sell 85 billion packs in a year in the country and reached 9 million outlets. There are about 9.3 million outlets in the country, and we have an EBITDA margin of 23.6% in the financial year last year.

Over a decade, HUL has had significant value creation between 2015 and 2025. We grew turnover 2x, EBITDA 3x and our operating cash flow 4x. So a strong performance over the last decade.

What I probably want to spend the most time on is the India opportunity, as Fernando mentioned. And in that context, I think very important to think of some facts on India. -- population, 1.5 billion, with a median age of about 30 . So young country. GDP is poised to become the #3 country in the world on GDP and under-indexed significantly on FMCG at $63 per capita versus our nearing neighbors as well, very underindexed on CPG. But possibly the change that is going to take place in [indiscernible] income distribution will drive CPG growth and consumption.

And I'm going to talk most about that and the change that has taken place India. This presents the biggest opportunity for HUL. There are 5 structural shifts taking place in India, which are changing India. The first is the population is transforming. We have 377 million Gen Z consumers in India. And these consumers are changing every on consumption in consumer products, whether it's the way they discover our brands, whether it's the way they buy our brands, it is changing radically.

The next is more women at work. Fernando mentioned this. In India, the workforce participation of women have changed from 25% to 40%. And this dramatically changes how they buy our categories, convenience they seek, think about beauty and personal care, how they want to look as they step out of their home. A digital society, 50% of the world's digital payments go through India today. So that's the shift that's taken place in terms of India.

Our road connectivity, the government has invested significantly in the infrastructure and roads. And what that changes is when a village or a small town becomes more proximate to an urban center.[indiscernible] The consumption. We actually did a study for HUL of how much change this has when a village is connected to a large town, it changes 30% delta growth for HUL. And indeed, villages are changing, more electrification, more tap water. Think of the way they wash their clothes, take a bath. Every product category that we are in, interfaces when and changes when you have tap water in the home. So the villages are becoming more modern. And of course, data changes everything. It changes access for villages who are no longer -- who did not have access in the past.

So these are the 5 structural shifts taking place in the country. And there are multiple growth opportunities that are emerging across segments. Small towns are growing 2x faster than average towns in the country. There are new demand spaces emerging, newer channels, quick commerce in India is 10-minute delivery. It has already become sizable. And of course, social media platforms are changing. India is Meta's largest country today already. So with almost 400 million consumers in Meta in the country.

And success, therefore, in India is winning across segments, and I'm going to describe to you what Fernando shared. When you think about India, the first way to look at the market is in terms of income distribution. 35% India lives in what we call democratizers, which are the household income of Africa. 60% of India is the household income of Indonesia and about 5% of India has a household income of France.

Remember, we're talking about 1.5 billion people. You're dividing 1.5 billion people across these 3 vectors of household income. The other way to think about how consumption takes place is where they live.

So 70% of India lives in Tier 4 and rural, 20% of India lives in small towns and 10% of India lives in the cities.

And look at where they buy as well. This changes everything of how they consume online, modern trade, large grocers and also small general trade stores. So when you look at it in this manner, that's really how we look at this 24 cell metrics in which we divide growth opportunities of India.

When I look at it and I'm just going to an example of hair care and the hair care market. If you look the hair care market, therefore, just given the population distribution of the country, if the hair care market in urban cities grows at X, the delta growth in rural is 2x. It's just the math of where consumers live in the country and where growth will come from.

In that context, this is really 4 strategies that exist to unlock growth. This is still a very big opportunity in a market like India, which is consumption-led growth. and I'm going to talk more about it, which is consumers consuming more. In the context of hair care, it's essentially the number of times they wash their hair as they start to become more affluent changes, and you see more hair washing occasions.

The next is premiumization, moving from mass shampoos to premium shampoos, so really changing value-added products for value-added benefits. But the biggest opportunity by far lies in market making. So when consumers become more affluent, it change from just using a shampoo. So just from hair cleansing to hair care. So they start adding mass conditioners, serums and that's the transformation that takes place. And online, what's happening is completely new demand spaces in hair are emerging. Think hair styling, think dry shampoos. So that's really how the market evolves with completely new spaces emerging.

So these are the 4 strategies that Fernando referenced in terms of consumption, premiumization, market making and new spaces. And our opportunity and our portfolio is uniquely positioned in India to win across these 4 cells. So we have access packs in Clinic Plus and Sunsilk. We have the biggest premium brand in the market, which is Dove shampoo. We have market-making conditioners, serums and masks. And we've already launched Nexxus online and have the opportunity to bring in more of our Unilever brands like K18 into the market.

So I'm going to talk to you the 4 pillars of our strategy and how this works in India. Our opportunity and our goal is to deliver competitive volume-led growth, and that's really the focus of the business. Let me start with consumption and give you some numbers on consumption. If you look at the numbers in India, and this is between value seekers in the country already today and the more affluent, this is the index across each of the categories in which we play between the consumption and for the value seekers and affluent.

So in laundry it's x versus 1.2x. So it just shifts as consumers start to have more money, the amount of product they use starts to change.

In soaps, it's 1.3x. In tea, it's 1.5x and in hair care and shampoos, it's 1.7x. And our market share, relative market share in each of those categories, we have 4x RMS in laundry, 2.5x in soaps, 1.2x the RMS of our nearest competitor in T and 3.5x the RMS of our nearest competitor in shampoo. So we are very well placed to get a lion's share of the consumption spend.

Let me give you an example of laundry and how the market consumption is shift. The biggest reason for the shift in consumption that takes place is when consumers move from hand wash to machine wash. As they move into machines, they use more product. We are the leaders in premium and have the largest index in premium. And therefore, as the market shifts, the consumption that they use in each occasion of wash starts to change. We are well placed on this. As I mentioned, we have 3x the market share in premium, 1.6x in mass, mid and x in mass. We are now the leader also in mass, and we have overtaken our nearest competitor across the tiers in which we play.

Looking at the next opportunity, which is premiumization. We have a tailwind in terms of our premium share, our premium shares at 1.3x of our mass shares. But most importantly, we own the premium equities of the market, the #1 premium equities of the market, whether it is Dove, Surf Excel, Horlicks, Vaseline, Vim or Red Label, these are the premium #1 brands in the categories in each of their relevant categories.

I just want to give you an example from soaps. We have the 2 premium brands. We have 2x the share in premium versus mass. The market growth is over 2x versus mass. And we are outpacing the growth in premium in the market. But the best example for us is Dove, it's Unilever's largest brand.

For HUL, Dove was just a few years ago, a #9 brand. So if you looked at a rank order within India of our brands, Dove was the #9 rank. Today, it is already the #5 rank for HUL. And we are absolutely convinced it will be the #2 brand for HUL. That's how fast Dove is growing. Incredible headroom for us to grow, not just in soaps, but in beauty and we'll talk more about that. And why is this happening?

This is simply happening because of what Fernando said, which is we are making Dove more desirable and extending it to more categories. Let me show you this was Dove in 2022. And this is Dove today. I hope you all agree that it looks more desirable and in more categories. Dove in India was essentially known as just a soap and a shampoo. It's the #1 shampoo in the market. It is also the #1 premium soap of the market. It has now been extended not just in hair into treatment. We've just entered into body lotions and the skin care. So you can see how the brand grows and the opportunity that we have with Dove in the market.

The same is true for Vaseline. Vaseline in India, 155-year old. We all know the iconic brand that is across the world, known as body lotion and a petroleum jelly. This was Dove in 2024 -- Vaseline in 2024.

This is Vaseline today, present not just in its core formats of lotions, but now with Vaseline Gluta-Hya. We've entered Vaseline in face care with Cloud Soft. And of course, in lips where we are iconic. With a social-first idea, very, very well known of: if it's Vaseline, it's verified. It talks to the trust that consumer has and the social-first nature of how we are building out Vaseline in India.

Again, growing double digits. The third area I want to talk about is market making. The biggest opportunity we have as the market leaders in India is to make the markets in each of the categories in which we play. And just to ground you in some numbers, these are the format segment penetrations in India. Hair masks under 1% penetration in India; sun care, 2% penetration in India. Body wash liquid, body washes is 2%. It's essentially a soap bar market to date.

Dish wash liquids, 7%. Again, dish wash bars are what are used in the country. Laundry liquids, 13% penetration, face cleansing, 17% penetration, people essentially still using soaps to wash their faces.

And underneath what you see is the index versus Indonesia on penetration to India. I said to you that 60% of India now has the household income of Indonesia. So you can imagine the transformation, and we are leading the market development of each of these subsegments in the country. And we have a repeatable and proven playbook to do this. This is what we've done across whether it is in terms of understanding deep understanding of consumers in the country, the formulations of the product, whether it's understanding the triggers and barriers to educating consumers of how to trade and transform and develop the market or whether it is the partnerships that will take to build these new segments or the social first playbook.

But mostly, it's because we are investing multiyear behind this. And that compounding effect of the multiyear investments is what it takes to build these new segments and make these markets. Just as an example is laundry liquids. This same transformation has already taken place in China. In China, it's 3.3x of India, the size of the market. And Thailand, it's 2.6x the size of the market. Liquids is only 6% by volume of the total laundry market today, huge headroom for growth. And this is driven as washing machines grow in the country. Only 1/3 of the consumers today in the country wash with washing machines. It's still a predominantly hand wash market.

And as that shifts, the liquid penetration in the country will shift. We are the leaders of liquids, and we are developing the liquids category in India. So that's just as an example. The other example I want to share is sun care. I said you 2% is the penetration of sun care in India, highly underpenetrated. If you look at the top 5% of India, the power spenders, there's a 21x difference in the penetration versus the average person in India. Working women, there are 200 million women stepping out to work. As they do that and this country is becoming hotter, you can imagine the need for a basic sunscreen is very high. For us, the opportunity is not just at the top end of the pyramid where we have acquired Minimalist, which is our first big acquisition in skin care. Simple is a brand, Unilever brand we're building out in India. We have Lakmé, which is the market leader of sun care, but we've also created access for consumers at the bottom of the pyramid. So at under $0.10, we today have access packs, which give consumers access into the sun care category. That's what you see with Lakmé and Glow & Lovely sunscreen, which we've just launched in the country.

So with this, we have a robust portfolio to win and develop the market mostly in sun care. So that is the last growth driver that I want to share, which is new spaces. We are entering decisively into select growth spaces, whether this is masstige, deodorants, protein or ready-to-drink, this is an area where we are selectively entering and doubling down. I'll talk to you about the first, which is Minimalist, the acquisition we did 18 months ago. In 18 months, it's already doubled in turnover, huge headroom for us to grow, whether it's in terms of the awareness buildup that we will create for Minimalist, really the synergy benefits of distribution and driving distribution more from online to offline, still a large headroom for Minimalist in the country.

On the next is in terms of protein, we've just entered the protein market in India, fast-growing market with Horlicks, which is the nutrition brand in India with a ready-to-go product as well as a powder, again, doubling down behind this segment in India. And that's really an algorithm for growth, which is competitive volume-led revenue growth. We will generate the fuel to invest behind our brands and generate that fuel so that we can invest behind our brands. Our EBITDA margin guidance is between 22% to 24%. And with that, we will have volume-led profit growth. We are stepping up our capital investments from 2% to 3%, both in terms of capital for growth, but also for bolt-on acquisitions.

So with that, Fernando, I hand back over to you.

Excellent. Thank you very much, and I feel the proof of everything that is happening in India is the performance that we are having this year, 10% in the last quarter, and the business is accelerating. There are serious structural shifts in India that make India, particularly with the slowdown in China, the largest exponential growth opportunity and probably the only exponential growth opportunity globally. And there are multiple opportunities in different aspects, more consumption, premiumization, market making, emergence of new categories, new adjacencies for Unilever.

We have very, very strong leading positions. We have brands that have been elevated. We have a social-first marketing model that has been put in place with very strong presuation activity system behind. And we have unmatched talent in India that give us a lot of confidence that Unilever will be probably the company that will benefit the most for this kind of explosive growth that we are seeing in the market in India. Many companies are discovering where India is in the map. We know the map of every ZIP code in India.

India is the blueprint of what we are doing in emerging markets. Emerging markets is 62% of Unilever revenue, and we believe it will be a key driver of our performance in the next future. And we will achieve that kind of success fundamentally through the combination of elevated brands, strong leading positions that we already have, a fundamental change that has happened in our performance culture.

And we believe that all this has been starting to materialize in our performance. And the proof of that is our superior volume growth. In the last 3 years, we have been operating at around 3% volume growth. This year is accelerating, but also profit growth in hard currency. We are very conscious when you have 62% of revenue in emerging markets, you have to really deliver profit growth in hard currency. This is a fundamental change also in how we look at the business.

Thank you very much. And Warren, we can take some questions.

Okay. Priya, a fascinating presentation. I'm going to ask you about channels in India. As Unilever followers have always known, you've been extremely strong in the mom-and-pop stores. How do you replicate that massive moat into the new channels of the future like quick commerce, where other players are less disadvantaged when it's more about digital and less about mom-and-pops and last mile distribution. Maybe you can touch on that. And is there any implication on margins as well?

Yes. So first, Warren, before I go into quick commerce, I just want to mention that even in general trade, there are changes taking place. So there's more specialist channels emerging in general trade. Cosmetic stores, health and beauty stores, and we are doubling down behind these channels.

So general trade in India is not going away anyway. It will continue to be a very, very large and the most dominant part of the Indian ecosystem. When you think about quick commerce and for those of you who are not familiar with quick commerce, it's 10-minute delivery in the country. The biggest challenge for quick commerce is actually ensuring that they have high turnover and really ensuring that they manage a very, very lean product portfolio. And they like large brands as a result, large brands that have well-defined demand signals.

We are working join up with the quick commerce players to ensure that we have an advantage with them with regards to supply chain end-to-end so that we can manage a very, very lean, agile portfolio with them, huge advantage for large companies and large brands. And in fact, our margins are better in quick commerce versus modern trade versus general trade. So it's actually structurally in our favor, Warren.

And then I think, Fernando, you quoted as saying you missed the party in beauty in China, and you will not miss the party in India. But looking longer term, Priya, how are you going to win in the Indian beauty market because everybody else wants a piece of the action is where the growth is longer term. What needs to happen? And how many more Minimalist-type acquisitions do you need to do to get there?

So Warren, I think, first, huge opportunity for beauty in India. I think it's important to first break this up into the segments of beauty. When you think about hair care, we have an unrivaled portfolio in hair care. The biggest opportunity in hair care, like I said, is first the move, the shift that's going to take place from mass to premium, and Dove is by far the #1 hair care brand in premium.

That is the largest opportunity in the market. We are also building out our portfolio in Masstige, whether it's the launch of Nexxus, we still have a large number of the Unilever brands we can enter with K18. So that is absolutely on the plan, but huge opportunity for us is just Dove. Just Dove on its own is the single largest opportunity in hair care.

When we think about skin care, again, the biggest opportunity lies. Just think about the structure of the market that I was sharing, 70% of India lives in rural, 20% in large cities and 10% in the metros. Big opportunity with Vaseline, We're entering with Dove. And of course, we have the bolt-on acquisitions like Minimalist. We've also entered with our Unilever portfolio with Simple and still big headroom to enter with all our Unilever Prestige brands.

I don't know, Fernando, whether you would like to add.

Yes. Everybody, of course, look at the opportunity with the 5% of rich in India. And it's an important opportunity -- we have 75 million people with the income per capita of France. So you have a potential France in beauty there. And I believe that the portfolio that we have built in the U.S., in particular, is a portfolio that will travel into India at the right time. At the same time, we are making bolt-on acquisitions. Minimalist is one of them. And you have seen how quickly that brand has scaled up. So in 18 months, we doubled the brand from 50 million run rate into 100 million run rate. But the biggest premiumization opportunity in India, let's take the case of hair care, is to move consumer from INR 1 a sachet into INR 2 a sachet, $1 to $2. In INR 1 a sachet, we have Clinic Plus. In INR 2 a sachet, we have Dove. Dove now is 20% share of the market in India.

So I feel Priya mentioned that -- and this is economics. There is the famous Robert Solow transitional dynamics, convergence of economics. Poorer states are growing faster than richer states. And this is providing Unilever with the kind of structural advantages that we have in India, a huge opportunity to really upgrade our portfolio.

And Priya, can you talk a little bit about the new marketing model and how that kind of works in India, the kind of sassy approach. And everybody has got smartphones now, everybody is following different people. How are you actually putting that into play?

Huge opportunity, Warren, for us. Just to give you some numbers, we already reached 30,000 creators in India. By far, the largest player in the market in terms of creator marketing and our outreach to creators. Just given that we have 20 large brands, our opportunity to really work with creators is a different order than most companies. That, combined with all the work we're doing to really raise the desire of our brands, whether it's in terms of aesthetics, whether it's in terms of how we talk on our brands, making them more young, more contemporary is all the work we're doing. And we are working more with using AI now to really augment the human effort to really raise our game, whether it's in terms of content creation, whether it's in terms of media. That's the work that's happening.

There are challenges, however. I mean, we've got oil at $100, I think, today, and we've got near-term challenges coming in India with inflation. So how are you sort of trying to animate the journey, but also dealing with pricing? And I guess a bit more specific, what kind of volume should we expect and pricing from here? And how do you feel about sort of the elasticity of that pricing to volume relative to kind of local players and their specific supply chain challenges?

So as a company, we've dealt with inflation, deflation cycles before. We know how to manage these over time. And if you think about our categories, Warren, essentially, our categories are everyday staples, whether it's soaps, whether it's detergents, whether it's tea, and therefore, the elasticity to price is lower. It's more discretionary high-value categories, which tend to have a high elasticity to price. Of course, we will price as calibrated. We have a large savings program. So we know how to run this. It's cyclical. What's important is the structural tailwinds that we're creating for margins, which are more led to premiumization, more because of market making. The tailwinds are structural, the cyclicity we manage.

Okay. I think it's important to highlight also in most of the categories in India, -- and the same in emerging markets. We tend to operate a portfolio of 3 to 4 brands in each of the key categories. That give us the ability to really manage down trading and uptrading of consumers in inflationary periods and deflationary period. So it's just -- and the point is our categories tend to be relatively inelastic in places like India. But if you look at our shares are higher in the premium segment of the categories that are even more inelastic than the average of the category. So I feel I would not like to -- I would like to have a more stable scenario, but we can deal with this kind of a scenario in a much better way than most of our competitors.

And maybe turning to you, Fernando, maybe touching on the U.S. You mentioned it in passing. What are your top 3 priorities in the U.S. for the next 12 months? Maybe you can touch on U.S. Foods, which has been struggling, U.S. hair, which seems to be improving and then the outlook for U.S. Prestige and wellness, especially in light of more competition in liquid I.V., and Grüns given the PG deal. Just the U.S. has been great. It slowed down a little bit. So kind of how do you see it? And maybe you can touch on some of the subcategories.

Well, the first thing to say is just in the last 3 years, we grew volumes in the U.S. at 4%. This year, it's around 3.3% in the first half of the year. So I believe that we have through a fundamental transformation of our portfolio and a step-up in our capabilities in the market, we have received Best Supplier of the market award from the 2 biggest retailers, physical retailers in the U.S. We must be doing something well there. So I feel we have fundamentally transformed our portfolio in the U.S. and it give us a kind of superior growth -- volume growth footprint. I feel the U.S. is very, very important for us, first of all, because it's 22% of our revenue after the separation of food but also because the investment that we are doing in bolt-on acquisitions in the U.S. have as a fundamental objective, building a new layer of global brands that can travel internationally.

And we mentioned brands like Paula's Choice or K18, et cetera. I see Paula's Choice in India in the next 5 to 10 years, no doubt. So U.S. is a super, super important market for us. In the short term, it's true that we have seen the market has softened a bit. I think the consumer is pinched in the U.S., the K-shaped economy is very, very clear. We tend to have a portfolio now in the U.S. that is more exposed to the premium segment than to value that give us some kind of coverage there. Markets are becoming a bit more competitive. I feel in wellbeing, many people discovering the category. And I feel there are many, many entries -- new entrants into the category. Prestige Beauty is doing very well for us. I feel good in the first half, around 10% in Prestige Beauty. And our core beauty is really accelerating. And remember also -- in the U.S., we have a very, very strong personal care business. And deodorants, skin cleansing, we have leading positions in deodorants. It was a category we struggled for a couple of years with the development of the super premium segment. We have regained market leadership in the first half of this year, and we are very confident about our future there.

So in U.S., continue developing our new brands that we have acquired in the last few years. We will continue allocating capital to the U.S. I feel this is a very different Unilever in terms of allocation of capital into acquisitions. There are 2 markets in which we are allocating our whole budget of around $1.5 billion and $2 billion a year. One is U.S. and one is India. In the past, there was a good opportunity in a company in Colombia or a detergent business in Angola, and we would buy because the strategy was about really solidifying our local positions. I think now Unilever has a very, very different strategy that is solidify our growth footprint in the U.S. and build a portfolio of premium brands, digitally native, clinically proven that can travel internationally from there into the world to build a real new layer of portfolio. So that's basically what we are doing, and we'll continue doing that.

And the final one, Fernando, before we go to breakout. You delivered 5.5% volume growth in the quarter, which is the best performance since 2010. And some people think it's almost too good to be true. And they're asking how much is World Cup benefit? How much is Amazon Prime timing? Is there prebuy in there? And with pricing now moving up meaningfully in the second half, how should we think about the likely volume reaction and ensuring that you have the right price pack gaps versus competitors? There are 2 parts, the 5.5% and then the kind of the price.

We delivered 5.5% volume growth in the second quarter. Are we a 5.5% volume growth company? I don't believe so. But I feel we are increasingly confident that Unilever is becoming a 2% to 3% volume growth company consistently across time. And if we deliver that and we deliver pricing in line with the kind of general CPI inflation that we have seen historically, I feel the prospects of Unilever becoming a consistent delivery in the 4% to 6% underlying sales growth range is the probability is increasing and increasing with every quarter that goes by.

So in the second quarter, we have a couple -- there were some benefits of comparator. There were not significant one-offs. There is something around Amazon Prime in U.S., around $25 million to $30 million, particularly in wellbeing and Prestige Beauty. That was a kind of one-off effect. We are getting some benefit in places like India, in which in this kind of inflationary periods, we tend to do very well and our shares in some categories like laundry tend to accelerate. But we don't consider that a one-off because there is always a very seasonal effect of that.

So we are confident that the prospects of a remaining Unilever in the 4% to 6% range consistently with 2% to 3% volume, 2% to 3% price is something that we are increasingly confident about our...

World Cup?

The World Cup, it was -- we don't have yet the measurement in terms of brand equity. Of course, we don't do the World Cup and the investment of the World Cup for the sales of 3 months around the World Cup before and after that. It's fundamental about how this strengthen the brand equities of our brands. But of course, it has a significant impact in our sales in the U.S. As I mentioned before, our deodorant business, in particular, was a main beneficiary, and we regained market leadership in the U.S. around the World Cup time.

So it's just -- if you ask me today, I feel it was a great initiative, 50,000 content creators dealing for 120 markets around the U.S. And I feel this point about how we have changed our way of reaching and persuading consumers.

Priya, we were in India a couple of weeks ago. They have mapped 250,000 influencers there. They are using 270 in 19,000 ZIP codes. There is no other company doing that. We are doing 300,000 content creators globally. Very few companies can do that. So I feel our ways of doing marketing are improving. Our product development is improving. Priya showed some pictures of how that look today versus 3 years ago, and this is what is driving our performance now.

We're going to call it there. Thank you both very much, and we're going to move to breakout. Thank you.

Thank you.

[Presentation]

Good morning, and thank you for joining us for Unilever's Second Quarter and Half Year Results. In a moment, Srini will take you through the details of the results. But first, let me highlight the key elements of our performance over the first half as I see them and how desired at the scale is fundamental to our strong delivery.

I have said consistently that volume growth is our overriding priority. It is a true measure of demand and even more important signal of progress during times like this of heightened volatility. It is particularly encouraging, therefore, to be able to present today a strong volume-led half for Unilever. And not just a strong performance, but an accelerating one, with underlying sales growth in the second quarter of 5.8%, with volume up 5.5% and. This is Unilever's best quarterly volume performance since 2010.

Our underlying volume growth over the last 4 quarters average 3%, a testament to the strength of our brands and our disciplined execution. This strong first half results reflect progress against our key strategic priorities, including most notably, the performance of our power brands, now sitting at 78% of our turnover. These brands continue to outperform, delivering underlying sales growth in the second quarter of 6.9%, with 6.8% coming from volume. A strong innovation program meant there were particularly great performances from Dove, Dirt is Good, Comfort, Sunsilk and Vaseline. Prioritizing these brands means focusing resources and investing competitively, which is why our brand and marketing investment is concentrated on our power brands.

Significantly, today's results also reflect broad strength across our HPC business with underlying sales growth in the second quarter of 7.6% and with volume up 7.4%. It was also a good half for our emerging market businesses, which maintained the good momentum with 8.3% growth in the second quarter, with 7.4% coming from volume. India led the way with quarter 2 underlying sales up 10% and volume up 5%. This was a strong broad-based performance. It reflects the evolution of our emerging market portfolio to increasingly focus on high-growth segments, social first demand generation and go-to-market transformation alongside the benefits from corrective actions in fundamentals that we have taken over recent times in key markets.

Our developed market business delivered a robust performance with volume growth in the second quarter of 2.8%. North America continues to outperform, led by personal care, beauty and prestige, while markets in Europe remain subdued. And in terms of profitability, we delivered 10 basis points of margin expansion and continue to invest competitively behind our brands while generating earnings growth of 2.4% in hard currency.

This strong first half results are a direct consequence of bringing our mantra of desire at scale to life across the business. Desire at scale is a growth operating system, shaping how we build brands, how we innovate, how we activate them in markets and how we convert demand into sales, whether in elevating the quality, reach and relevance of our brands through the sassy framework combining science, standout aesthetics, superior product experience, social proof and contemporary execution or through embedding the concept of a frontline sales machine by taking our actuation programs and the quality of our execution to new better levels in every market.

Sassy brands and frontline machine are 2 sides of the same coin and at the heart of each is a focus on making our brands and our activations culturally relevant. Our progress on this was recently recognized at the annual Com Festival of ativ where we were the most awarded advertiser of any of the company's present. Our brands received 35 awards, a demonstration of Unilever's ability to rethink how we create demand in this world of infinite content and distribution through algorithms.

Here are local teams competed for the chance to play the final in the Emirates Stadium. Our 5 power video series has over 130 million views and 180,000 hours of work time, deepening almost cultural relevance in our second largest home care market with double-digit for cleaning growth in the second quarter. Dove won 6 can lions for its partnership with Revit during the launch of the intensive repair 101 serum hair mask. -- the publish and amplify customer reviews, whether positive or negative, real consumers, real feedback, real beauty. The campaign created more than EUR 1 billion impressions and help make our product the #1 here mark in the U.S. during the campaign.

Or take Liquid I.V., with its role in the Amazon Prime Videos hit series of campus is one of the most popular cities this year, reaching 56 million viewers worldwide over the first 12 days of release. Liquid I.V. is integrating to a series with the main character becoming a Liquid I.V. brand ambassador within the show in cell. These are creative executions, designed to travel, earn attention, strengthen brand equity and converting to growth. We know the mark for leadership continues to rise and we will ensure we stay a different tier of demand generation.

Being a frontline machine means activating our brands within these big cultural moments and across the biggest cultural events. And they don't come much bigger than the FIFA World Cup, where Unilever Personal Care was an official sponsor. We have not approached the World Cup as a conventional corporate sponsorship or a one-off event. We have activated 35 runs across more than 120 markets by bringing creator content, social media production, retail distribution and local store conversion together on an unprecedented scale, involving more than 50,000 content creators with a combined audience of more than 600 million people and 180 limited edition products.

We have leveraged the event to further strengthen our creator first operating model. including through the House of Fresh, with in-person creator hubs in Mexico City, New York and Miami, enabling creators to build dedicated content from live events and boost the storytelling to a wider audience. We also develop our capabilities around AI-enabled content at scale using our AI studios. And we will go on capturing the learnings and deploying them in future sports marketing events that will continue to play a key role in building demand and on equity.

The FIFA World Cup has been a pivotal moment for Unilever showing our ability to turn a global cultural moment into coordinated execution across creators, content, retail and shopper conversion at the scale, few companies can match.

Before Srini takes you to the results in more detail, let's roll the video.

[Presentation]

Thank you, Fernando. Let me start with our growth. The first half was characterized by strong high-quality growth. Underlying sales grew 4.8% with 4.2% from volume and 0.6% from price. Growth strengthened further in second quarter with underlying sales growth of 5.8% and volume growth of 5.5%. Importantly, growth was broad-based and supported by stronger execution across the business. On a 2-year basis, volume growth averaged 2.7% in the first half providing further evidence that the improvement we are seeing is becoming more consistent and sustainable.

The 3 HPC business groups led delivery, Beauty & Wellbeing, Personal Care and Home Care, all accelerated in the second quarter supported by strong power brand performance, premium innovations and improved executions, particularly in emerging markets in North America. Pricing in second quarter was 0.2% and 0.6% for the half. Lower price in quarter 2 was largely due to timing and some deliberate choices. For example, in Home Care, we continue to lap the corrective pricing actions in Brazil. And in Personal Care, we deliberately elevated promotional support behind FIFA World Cup activations. These actions enabled us to drive quality volume growth.

As commodity-related pricing lands in the market and we normalize promotional spend post FIFA, we expect pricing to lead growth during the second half of the year. Our power brands continue to demonstrate the strength of the strategy and the quality of execution behind it. In the first half, Power Brands grew at 6% with 5.4% coming from volume. Momentum strengthened further in the second quarter with growth of 6.9% and volume of 6.8%. On a 2-year basis, power brand volume growth averaged 3.5% underlying the consistency of their outperformance.

In the second quarter, 15 of our 30 power brands grew in double digits. Dove, Vaseline, K18, Hourglass and Comfort were particularly supported by innovation, premiumization and stronger execution. Nonpower brands returned to positive growth in the second quarter. We continue to optimize our tail brands and related investments while strongly supporting local jewels.

Beauty and well-being delivered high-quality first half with underlying sales growth of 5.9%, including 4.5% from volume. -- performance accelerated in the second quarter with growth increasing to 8.1% and volume growth to 6.9%. Growth was broad-based across categories and geographies. with emerging markets maintaining strong momentum and developed markets improving.

Hair Care led performance with 9% underlying sales growth in the first half. Dove, Sunsilk and K18 all delivered double-digit growth supported by innovation and premiumization. K18 continued to benefit from its bio technology-led innovations, while Dove was supported by premium innovations, including the fiber repair range.

Skin Care grew low single digits led by volume. Vaseline continued to deliver double-digit growth, supported by premium innovations across Gluta-Hya and Proderma. We're also seeing the benefit of strong cultural relevance, including K-pop star Jennie being appointed as global brand ambassador. In the second quarter, our prestige beauty portfolio accelerated further with Paula's Choice, Hourglass and Tatcha all delivering double-digit growth. Overall skin growth was partially offset by the softer delivery of local brands in Asia Pacific and Africa.

Well-being grew low single digit in the first half with an improved second quarter. Liquid I.V. grew high single digit in the first half supported by stronger activation, international expansion and the timing of shipments for Amazon Prime Day. We continue to focus on innovations and activations to drive market development. the category opportunity and the unit economics remain very attractive. Olly delivered double-digit growth driven by distribution gains, growth in the digital channels and emerging markets performance.

Beauty and well-being underlying operating profit increased by 1% to EUR 1.3 billion. Underlying operating margin increased by 10 basis points to 19.5% as improved overhead efficiency more than offset gross margin headwinds and the increased investment behind Power Brands and premium innovations. Personal Care delivered strong first half with underlying sales growth of 4.8%, including 4.1% from volume. Growth strengthened in the second quarter with USG increasing to 5.9% and UVG of 6.8%. This reflected a broad-based momentum across deodorants and skin cleansing.

Deodorants grew across both developed and emerging markets. In the U.S., we regained market leadership. It sustained high growth in Dove. In Latin America, Rexona supported a strong return to growth in Brazil following the actions taken to improve format mix and reset the shelf space. In cleansing grew mid-single digit led by volume. Dove delivered high single-digit growth, supported by premium innovations, while Lux grew mid-single digit behind fragrance led innovation in China. Growth in the U.S. and emerging markets was partially offset by a flat performance in Europe.

Oral Care grew low single digit, with growth in Asia Pacific Africa offset by softer market conditions in Europe. The FIFA program amplified the Personal Care momentum in the second quarter. It brought together media, creators, customers and in-store execution behind brands, including Rexona and Dove. It's about a strong volume growth and helped us build new capabilities in creative-led content, AI-enabled asset creation and stronger perfect store execution. The activation also had some impact on price in the quarter, reflecting higher promotional support alongside strong prior year comparators. We expect pricing to build in the second half as higher commodity costs are reflected in the market.

Underlying operating profit increased by 4.8% to EUR 1.5 billion, while underlying operating margin improved by 10 basis points to 22.2% in as productivity and overhead efficiencies offset gross margin pressure. Home Care delivered an outstanding first half and was our fastest-growing business group. Underlying sales grew 7.6% with almost all of the growth coming from volume. So accelerated further in the second quarter to 9.1% with volume growth of 8.6%. Performance was broad-based across categories, brands and markets, with share gains across the 3 home care categories.

These gains reflected stronger execution, investment behind our power brands and improved competitiveness in key markets. Fabric Cleaning led the performance with strong growth delivery in India, Brazil and Indonesia. India delivered its strongest home care growth in 3 years, supported by innovations and continued share gains. Brazil delivered high single-digit growth as the corrective actions taken last year helped restore competitiveness. Fabric Enhancers maintained strong momentum, led by comfort and supported by premium formats and fragrance led innovation. Home and hygiene also performed well with Cif delivering double-digit growth and Domestos growing in high single digit.

Home Care remains our business group with the highest exposure to commodity inflation and emerging market footprint. In the first half, we've executed our playbook well with calibrated pricing combined with formulation flexibility and channel-appropriate pack price offerings. In half 2, we expect the growth profile to shift more towards pricing.

Underlying operating margin increased by 30 basis points to 15.8%, reflecting strong overhead discipline and productivity delivery despite commodity and currency headwinds. Underlying operating profit increased by 3.2% to EUR 0.9 billion. Foods grew 1.2% in the first half driven by volume. Growth slowed in the second quarter to 2% and as continued strength in the emerging markets was offset by weaker performance in North America and Europe.

Condiments grew low single digit, led by volume with good performance from Hellman in emerging markets. In U.S., condiments performance was below our expectations arising from increased competition in the faster-growing premium segments such as avocado oil mayonnaise. This issue is well understood and we have targeted innovation and execution plans in place to strengthen our competitiveness and improve the performance during the second half.

Emerging markets remained resilient with strong performances from Helman's across Brazil and Asia Pacific, Africa. Cooking aids was flat, Knorr low single digit with good performance across emerging markets, offset by category softness in developed markets. Unilever Food Solutions also continued to grow, supported by good momentum in China and in the U.S. alongside strong performances across Middle East and Latin America and Southeast Asia. Underlying operating profit was EUR 1.5 billion, down 4.3%. Underlying operating margin was unchanged at 23.3% and as lower gross margin from commodity inflation and increased investments in the value propositions were offset by overhead efficiencies and continued cost discipline.

Turning to regions. Emerging markets continue to be a strong growth engine with strong volume net growth in the first half. In North America, we continued our volume outperformance while Europe was subdued. Asia Pacific Africa delivered 7.3% underlying sales growth with 6.1% from volume. In the second quarter, India led the performance with growth accelerating to 10%. Delivery was balanced between volume and price.

We had double-digit growth in Beauty & Wellbeing and Home Care, with Hair Care and Home Care, both reaching record share levels. China grew mid-single digit, led by beauty and well-being with all the business groups contributing. Our growing presence in the faster growing digital and e-commerce channels supported the improvement despite a soft market.

Indonesia grew 7%. Performance was broad-based across business groups, and led by double-digit growth in Home Care and Beauty & Wellbeing. This was also supported by a sharper focus on high-growth segments, social-first demand generation and the ongoing transformation of our go-to-market model. Africa also grew mid-single digit, led by volume.

Latin America delivered 7.6% growth with 5.7% volume, accelerating in the second quarter to $0.089 growth and 8.8% volume. Brazil returned to strong volume-led growth as the corrective actions taken last year restored competitiveness led by fabric cleaning and improving momentum in deodorants. Looking ahead, Brazil tax reforms are expected to bring lower prices from the start of next year, which may lead to some temporary retail stock reductions in the fourth quarter.

In the second quarter, Argentina delivered high single-digit volume growth, while Mexico delivered mid-single-digit volume growth led by Personal Care. North America grew 2.7% with 3.2% from volume and continued to outperform the market. Growth strengthened in the second quarter to 3.6% with 4.4% volume led by deodorants, skin cleansing and our prestige beauty brands. Europe declined by 0.5% in the first half in softer market environment with the shortfall concentrated in food, beauty and well-being and Personal Care Group, while Home Care continued to gain share.

Turning now to turnover. First half turnover was EUR 25.6 billion, up 0.5% on last year. This reflected strong operational delivery. Underlying sales growth was 4.8%, including 4.2% from volume. Acquisitions net of disposals added a further 0.7%. The acquisition contribution was led by Dr. Squatch, Minimalist and Wild and with one month of [ Gruns ] following the completion in June. These businesses are all aligned to our strategy of increasing exposure to premium and higher growth spaces.

The disposal impact reflected the continued reshaping of the portfolio as we concentrate investments behind fewer, bigger and more scalable brands. Currency reduced our first half turnover by 4.9%. Importantly, that impact eased materially to 2.4% in the quarter as the moments in the U.S. dollar and in most of the emerging market currencies became less adverse.

Based on July spot rates, we expect the full year impact to be around 3%, implying a meaningfully lower headwind in the second half. Underlying operating margins increased by 10 basis points to 20.3% in a materially tougher cost environment while we maintain competitive investments behind our brands. Our gross margins improved sequentially related to second half of 2025. However, on a year-on-year basis, gross margins declined by 70 basis points, given inflation headwinds arising from Middle East conflict and a calibrated approach to pricing.

We responded decisively in the areas which are within our control through productivity, sourcing flexibility, reformulation, pricing architecture and better cross-functional execution across procurement, supply chain, R&D and the business groups. For the second half, we expect gross margins to remain at similar levels to the first half on an absolute basis despite higher inflationary impact. We will see benefits of higher pricing landing in the P&L.

Brand and marketing investments remained competitive at 16.1% of turnover with incremental investment focused on our power brands. Overheads improved by approximately 70 basis points, reflecting the completion of our EUR 800 million productivity program ahead of the schedule and together with the continued simplification and cost discipline. Underlying operating profit was EUR 5.2 billion, up 0.9% versus the prior year with strong operational performance offset by currency headwinds. Underlying earnings per share increased 2.4% to EUR 1.61.

Operational performance contributed more than 7 percentage points of growth, reflecting strong volume-led sales growth, modest margin improvement and continued productivity delivery. Finance costs increased as a result of higher cost of debt, although they remain well controlled at 2.5% of average net debt. We continue to expect the full year finance cost to remain below 3%. Excluding the currency impact, tax was a modest positive contributor. The underlying effective tax rate increased slightly from 26% from 25.6% in the prior year, reflecting fewer benefits from tax settlements and other one-off items.

Our full year expectation remains around 26%. Share buybacks contributed 0.7 percentage points to the EPS growth following the completion of the EUR 1.5 billion program in June. Minorities and other items added 1.3 percentage points. Currency reduced the underlying EPS growth by around 6 percentage points in the first half. We expect this headwind to moderate in the second half, consistent with improving currency impact turnover and profits. Overall, this is a strong earnings performance delivered despite a significant currency headwind, while we continue to maintain competitive investments behind our brands.

Free cash flow was EUR 1.5 billion, an increase of EUR 0.5 billion versus the prior year. Improvement was driven primarily by operating profit and a strong working capital performance. Capital allocation remains disciplined and unchanged. We increased the second quarter dividend by 3% and completed the EUR 1.5 billion share buyback program Inc. As announced alongside the Foods transaction, we expect operational performance and transaction proceeds to support a EUR 6 billion of share buybacks between 2026 and 2029. This reflects the strength of our cash generation and a disciplined approach of returning surplus capital to shareholders.

On portfolio development, we completed the acquisition of Gruns in June. Gruns is a fast-growing U.S. super green supplements brand. It's highly complementary to our existing well-being portfolio and increases our exposure to premium, high-growth and digitally led consumer spaces.

Turning to the outlook. Based on the momentum we have built in the first half, we have upgraded our full year outlook. We expect underlying sales growth to be within a multiyear range of 4% to 6% and with around 3% UVG for the full year. Inflationary pressures are expected to continue in half 2 with heightened volatility. We are confident of managing this while maintaining supply resilience. As we land pricing, we do expect some volume sensitivities.

For the second half, we expect growth of 4% to 5%, led by pricing. As shared earlier, currency in half 2 is expected to improve versus first half of 2026. We continue to expect a modest improvement in underlying operating margin versus 2025. While the external environment remains uncertain, we enter the second half with stronger fundamentals, improved pricing, disciplined cost management and healthy brand investments. Taken together, this gives us the confidence in telling another year of competitive growth, modest margin improvement and strong cash generation.

And with that, back to you, Fernando.

Thank you, Srini. Let me sum up after what has been a very successful first half of the year. We have been consistent in our conviction that to truly succeed in this fast-changing environment, you have to simultaneously perform and transform. Our delivery in the second quarter and in the first half as a whole is further evidence that we are doing that. The transformation of our portfolio remains on track with the acquisition of Gruns in June and our progress on combining Foods with McCormick. At the same time, we have delivered a strong volume-led first half with broad-based strength.

Our strategy built on desire at scale is working. We are creating a marketing and sales machines with brands that are embedded in culture and with innovation driving the outperformance of our power brands. This gives us confidence in our full year delivery, including volume growth of around 3% for the year with growth in the second half led by pricing.

Thank you for listening. And with that, Srini and I will now take your questions.

[Operator Instructions]

Our first question comes from Celine at JPM. Go ahead, Celine.

Yes. So my first question, obviously, a very strong volume-led performance this morning. I wanted to understand, first of all, if you can talk about sell-in, sell-out, if you've seen any difference. But more importantly, I want like to understand the resilience of the performance. You seem to imply that you have gain probably market share. But how resilient you're seeing the performance is going to be when you raise prices, you are giving us a guidance for the second half, which is reassuring. But can you talk about your confidence and the visibility you may have that the volume will effectively sustain are going to be 15-plus-percent level in the second half of the year?

My second question is for the full year, you now raised the guidance on volume to 3% versus 2% prior. Can you talk about how the markets you are facing in terms of market growth has developed. It seems effectively that the emerging markets are doing very well. How confident are you about the emerging market performance? And do you think that is there anywhere where you -- if you could as well talk about where you gained market share specifically that brought you to 3% for the full year?

Thank you, Celine. Well, we are really pleased with the first half performance, strong volume growth, strong support with our brands, disciplined management of our overheads and expansion of operating margin in the context of significant cost volatility and the return of commodity inflation. And this has been the best quarter in terms of volume growth in more than 15 years, 4.2% at company level power brands at 6%, Dove, our largest brand at 9%, with a strong acceleration in emerging markets, while U.S. continue outperforming is a readily soft market there.

But it's not a strong quarter in isolation. We have delivered 2.7% underlying volume growth across the last 10 quarters. and we have accelerated in the last year to 3.1%. We believe this is a result of stronger brands. 60% of our revenue is now increasing what we call a miser brand superior course the metrics of brand. And we continue investing strongly behind our innovation. So we believe this -- the performance is resilient is broad-based.

Of course, Emerging Markets is a highlight. We have a portfolio that is diversified in terms of short office category segments, price points and this give us resilience against volatility. India that is, as you know, our second largest market has accelerated strongly. We have achieved record market share in both laundry and here that are our 2 biggest categories there. In the case of laundry, we are growing more than 5% above the average of the market. China is getting slowly better. We grew mid-single digit there. good acceleration in foodservice, but also our beauty business is really doing very well.

In Indonesia, we are happy with the improvement in fundamentals that we have seen there. we are operating there with probably the lowest level of stores that we have had in history. All the other Southeast Asian regions in Vietnam, Philippines, also South Asia, the Pakistan and Bangladesh, showing good growth. Of course, we have a strong contribution for LATAM. I have mentioned this previously, I have never seen 2 years -- 2 bad years, took bad consecutive years in LATAM. The business is coming back strongly. We grew laundry double digit. The ore is coming back. The FIFA activation in LATAM has been excellent and our bitbusiness and food base continuing strong there.

So we see resilience. We see the turnover weighted market volume growth at around 1.5%, the growth at which Unilever is exposed. So if you look at our volume growth, really significantly above that means that we are gaining share in many of the categories. Of course, we have some issues, particularly condiments in U.S. that has been a red flag for us. We have been losing some share there, particularly in the premium segment, but we are addressing that in the short term. So we are confident. The markets remain relatively soft, as I mentioned, 1.5% volume growth, but our performance has been consistent. This is not a strong quarter in isolation.

Our next question comes from Nicolai at Bank of America. Go ahead, Nicolai.

I have 2 questions, please. The first one is on destocking from retailers in the U.S. You haven't mentioned that at all, and we hear many of your peers talk about it. Maybe could you tell us why you think that happens to your peers and not to you would be quite useful to understand. And the second question is on your oral care business. performance is probably a bit weaker than the rest of the business. And I haven't heard you talk a lot about your old care business overall in recent quarters. We can see from some of your peers, there's huge growth in the category potentially. But if I look at the performance over the last few years, you seem to be in $1 of share overall. So do you think there's enough focus from the organization on this business?

Thank you, Nicolas. Regarding talking in U.S. really, it's not -- we have seen something, but it's not material at company level, really. We have seen a bit more destocking in foods than in HPC. But really, we didn't wanted to call it out because it's not material, and these kind of things can go one way or the other. But we have not seen significant difference between selling and sellout. There is a bit of destocking, particularly in foods, but is, as I mentioned, not really material.

I feel your second question is about Oral Care, if I'm wrong, we have been growing low single digits in Oral Care in the first half. We are not happy with the performance in that category. We come from -- we came from a couple of years that really we are very, very strong, particularly in Pepsodent and Close Up, particularly in Asia, where our...

Please go ahead, Warren.

Warren here at Barclays. I've got 2 questions on the housekeeping. The housekeeping, Fernando, is there any update on where we are at on the McCormick deal? Anything to say on timing or any other comments about savings would be great. Then my 2 questions are, firstly, on the U.S., can you maybe dive a little bit deeper into what's happening category-by-category. It looks Liquid I.V.'s reaccelerated, but U.S. hairs also accelerating, of course, doing well. I often hear it's mainly Liquid I.V., but it does look quite broad based. So I love to hear your kind of view subcategory and outlook for the U.S. business specifically, how are shares trending and how you're thinking about the U.S. consumer?

And then the second one is on margins with Srini. Can you talk a little bit about the H2 moving part of any? I heard you saying the absolute gross margin will be the same in H2. But what do you expect for BMI and overheads in H2? And any updated view on NMI given the Middle East conflict?

Thank you, Warren, and I will take the U.S. question and Srini will talk about margins in the McCormick product, which is really good. In the U.S., as you know, we have delivered 4% volume growth in North America in the last 3 years and during the first half of 2026, despite some softening in Wellbeing. And I believe that this outperformance in the U.S. that has been a very consistent one, reflects the profound information we have done to our portfolio. and the huge focus that we have put in a strengthening relations with our key retailers showing them our ability to grow market.

During the first half, the growth was broad based. We have a strong growth in the other and in skin cleansing in hair in prestige. Particularly in British, we delivered close to 12% growth in the first half. In Hair Care, more than 8% with Hair Care at global level more than 9%. So it has been a strong performance. Of course, the FIFA event, the World Cup has some impact in our detente and skin cleansing performance. I would like to highlight also that against often, we have regained market leadership in U.S. after 2 years. As you remember, we have some issues in the premium segment in the last couple of years, but we have been sorting out that and we are very pleased with regaining market leadership in that very important category in the biggest market globally.

Liquid I.V. returned to double-digit growth in quarter 2 after lapping a very strong comparator in the first quarter. There were some benefits from shipment phasing given that Amazon Prime Day this year materialized in quarter 2 and last year was in quarter 3. But we continue to see solid market growth in the powder hydration market. We are back to competitive share gains in Amazon in Walmart in the grocery channel when it comes to powder hydration. We have some issues in the club channel that is around 30% of our revenue where we have lost some space to private label.

And then I believe that the disappointing element of our performance in quarter 2 has been in foods, in which our Condiment business has suffered some share losses, particularly due to the development of the mayonnaise premium segment around alternative oil formulation, particularly of the oil ones, and also some poor return of our promotional program during the quarter. So there is a clear action plan now in place, including the launch of Hellmann's avocado line. It is hitting the market now. We are gaining significant points of distribution in the U.S. in Foods. This is already materializing some key retailers. And we're investing in new price architecture, particularly in the squeeze format that has been under a bit of pressure.

So we see the quarter 2 performance in foods as an outlier in what has been a consistent outperformance in the sector, but we are very confident in the right deductions that we have put in place, and we expect the second half to be better. So in summary, very good performance in Care deranking in Prestige, improving in Wellbeing even if we expect some pressure in the short term. And in Foods, disappointing performance in but we see that as an allied we expect what the second half to be better. Srini?

Yes. Warren. On the McCormick side, we continue to make good progress. As we have said, more than 100 people are actually working from either side towards integration. You've already seen that last week announced that the secondary listing is going to be based in U.K. You would have also seen the leadership announcements, which is actually important for us because we have 4 members from a Unilever side who are going to be on the top table of the combined company. both from the point of view of running the P&L also from key functional areas with again a strong or really being in Netherlands. Obviously, there are some good milestones coming up in terms of SEC filings, carve-out accounts. All of that is actually progressing on track.

We're also pleased that we're making good progress when it comes to some of the tax-related discussions and regulatory whatever has worked so far is broad on track, and therefore, that gives us the confidence to say that we are here on course really getting this merger finalized. Coming to commodity pricing and margins. I think good to start by anchoring is to voice at the end of first quarter. At that stage, we had indicated to the commodity inflation for the year. It was likely to be in the range of about $750 million to $900 million, and this was about 350 to 500 ml above an assumptions.

At that stage, we also said that the pricing in half 2 is likely to be higher than half 1 and 4x better in half 2. As we sit here today, the outlook remains broadly unchanged. In the first half, we had an inflation impact of about EUR 100 million, which is landed into the P&L. Also looking ahead, we expect about EUR 550 million impact. This is a total inflation on a like-for-like basis, which includes commodities, controlled costs, all elements to it. So we expect about EUR 550 million 2nd half, which means that the full year outcome is approximately EUR 850 million. As you would appreciate, there's been a lot of movement in some of the commodities in the last few days. here for the ranges that we are working with is somewhere could be between 800 to 900, but a center point really being 850.

Important to again highlight here that a lot of the inflation is concentrated in home care, and 70% M&As from our emerging markets. And the basket that we talk about, it's crude, it's veg oils, palm, SBO packaging materials and parts of LAB and also parts of energy costs. Our approach has been always balanced and disciplined. In half 1, we also had some benefit of the covers. We have taken calibrated pricing, leveraging pack price architecture, formulation, flexibility, productivity programs and tight cost control.

India is also a good example with large home care footprint, where do you start to see that there's been a good balance between price and volume in the half. So from a logical perspective, the pricing at 0.6% was slightly -- Fernando already touched upon some of the elements and the press release also give some more color to it.

Importantly, if I come back to gross margins, therefore, how does it all add up. Important to highlight that on a sequential basis, our gross margins have actually improved. While on a year-on-year basis, they are lower. But if you were to actually compare half 2 of last year to half 1 of this year, we have made a step-up. It's also important to highlight that we did benefit from volume leverage because that, again, is a source of gross margin for us.

However, we had adverse mix. We had adverse mix because of higher contribution from home care. While Home Care makes it up on its own margin at a on percentage basis, but at a gross margin level, obviously, there are differentials will exist between the categories. It's also important to highlight that in half one. the highest inflation impact was in Home Care. Pricing was calibrated, and therefore, the gross margin drag also came from home care. Pricing is now landing. It started to land in quarter 2, and you'll see more of that landing in second half. Along with that, we will pull all the drivers in the value chain. And therefore, the combination of what we had spoken about earlier, gives us the confidence to say that we'll have gross margins at similar levels. of first half, which is we will take the 46.8% levels.

Our commitment to investing behind brands remains unchanged and we've said this multiple times to the days of underinvesting in the business are over for us. And the normative levels that we've called out on brand and marketing investment is 15% to 16%. In the half, it had it slightly higher at about 16.1%. That's also led from innovations and prefiled activations.

On overheads, you see that it's been a fundamental shift in philosophy. We have seen a big step-up in terms of productivity. We completely landed the productivity program in the first half, and we'll continue to maintain the discipline. So the combination of aging pricing, volumes, mix, healthy levels of investments actually gives us the confidence to really guide for a modest margin expansion for the full year.

The next question comes from Olivier at Goldman Sachs.

Just 2 questions, please. First, in the U.S., Dove and Baseline are both growing very strongly. You mentioned the premium innovation. I was just wondering how much room do you think you have for -- to further premiumize those 2 brands, which historically have been operating in the mainstream segment. And secondly, you mentioned in the press release, I think, some tax reform in Brazil in which could first of all, thanks for flagging this ahead. Could you tell us if it will affect a specific category? And what's the magnitude of it? Is it a bit like GST in India and could it affect Q3 initially?

Srini will take on the tax question in Brazil, Olivier. Let me talk a bit about an Vaseline in the U.S. And globally, I feel that battling some of our most important brands, growing double digit and other, Dove 9% and baseline growing double digit. Dove in the U.S., very, very strong performance. It's 40% of our personal car revenue is really growing very, very strongly in the U.S. battling a strong performance in U.S., but also in emerging markets, with very solid performance in skin care. So these are 2 of our most important brands, really with a stellar performance. 2 of the 15 power brands that grew double digit in the second quarter of the year. So the growth is broad-based growth our portfolio.

In terms of premiumization, there is a limit. We believe that, that probably has a limit in the kind of $20 territory, something similar for baseline probably a bit lower in the U.S. So we will not take the brands to places where we believe that the brands don't have the authority to play. But we continue to see mization opportunities in the eateries in which the brands compete. Tax?

See, the Brazil tax reform is actually -- it's really something which is reshaping the tax system and not changing what I would believe as the fundamental economics of the market. What is the key change. Brazil is actually moving into -- moving from about 5 existing spaces to a dual VAT system. It starts in 20 when we enter the first one where the federal taxes become common under something called CBS, which removes some of the elements such as called packages and the likes. The reform is also designed around the principle of revenue neutrality. Therefore, over a period of time, there should not be a fundamental change to the economics of the business.

However, what could this mean? This could be some movements in the lines of the P&L? Higher VAT rates will mean that we have to -- that will be reduced or reported revenue realizations. However, we will get the benefit of taxes, input taxes, which earlier were not ratable. Now you can start to take credit of it, which basically reduces the cost. So as a consequence of this reported revenue will be lower. Cost will be lower, which means that there will be an adverse impact on USG, there will be a positive impact on margins. While the overall profitability of the business will remain unchanged.

But again, this is subject to the final tax rates being notified by the Brazilian regulatory authorities, which is expected to happen in the next few months. The point that we are highlighting from a quarter 4, while all of this change will happen effective first January, this could actually potentially lead to some market disruptions in quarter 4. We don't expect anything from a quarter 3-point of view. And why is that likely to happen? Because it's really going to come from how customers are going to view this change in transition and classically over big tax reform agenda items, given that regulation sometimes tends to be nebulous, customers will reduce some of the stocking pattern.

There is also some lack of clarity or visibility as regards to the stock, which will be sitting with the customers, while when they sell, it will go at higher whether they will get some of the input credits or not. So there are a few of these moving parts because of which we expect there could be some bit of destocking in quarter 4. While we have factored some of that into our full year guide, we will get better clarity on this as the regulation emerges. Only the last point, because it's important to recognize that this is not like a GST kind of reform in India, where the overall incidence of the taxes came down and which gave more money into the hands of the consumers.

This is more a revenue-neutral mechanism by the government to simplify so we expect the unit economics and broadly to remain unchanged. And last part, there is likely to be impact on the HPC side of the business. Foods is relatively not impacted by these changes given the tax structure.

Next question comes from David Hayes at Jefferies. Go ahead, David.

2 for me. Just firstly on LATAM steel. Pricing was obviously flat in the quarter despite the hyperinflation or contributions in the region. So clearly, some sort of price reset going on there, which I know you called out was going on since the beginning of the year. So the question is, is that done now? Should we expect pricing to step up quite notably in the second half? And where you have reset prices, have you seen competition following down? Or is that something you're now watching as you go into the second half?

And then secondly, just in terms of the second half volumes, I'm trying to get a gauge here between third and fourth quarter. So I guess, if I play back to your volumes are running at about 3% over a long period of time. if we took the average of the second quarter and the third quarter, so relatively flat volumes in the third quarter. average 3. Is that the sort of thing we should be thinking in terms of the pre-buy, the benefit of the World Cup, et cetera, on volumes in the second quarter ?

Thank you, David. Well, let me start with the second question. We don't see any significant difference between selling and sell out. Of course, that means that there is no prebuy. Why would we allow retailers to prebuy at a lower price? That doesn't make a lot of sense. So basically, you don't -- you should really not consider that there is any significant one-off in the results we have had -- what is important is we are not carried away by a quarterly result. We look at long-term trends. The relevant trends of this business is that we have grown 2.7% UEG growth in the last 10 quarters and 3% in the last year. We will not give guidance in the quarter 3 and quarter 4, but Srini can give more color on the split of that.

On Latin America, our performance in Latin America is really accelerating. We delivered close to 9% growth in the second quarter. And this took the up to close to 8% growth with 6% in volume. LATAM is one of our Unilever strongest business. And as I mentioned before, we have -- we have never had 2 weak years in a row. We have corrected some of the own goals that we scored last year, and we are very pleased with the on performance that we have had in the first half. We have seen the impact of the decisive actions that we have taken in both laundry and the rents to restore competitiveness, particularly in Brazil, and we continue keeping good momentum in Beauty and Food in laundry, in particular, we delivered our digit volume growth in Brazil.

And there are 2 main reasons for that, a very successful introduction of our Wonder was innovation in the liquids segment, the 1 that in U.K., you see as parcel in the case of Brazil and romo and also the impact of the pricing correction actions that we took in the first half of last year to restore competitiveness in the Power segment. This is already lapping we expect a real acceleration of pricing in laundry in the second half.

In deos, that is another very important category for Unilever in Brazil. We are seeing month after month recovery of the aerosol format that is crucial to boost market growth. The action that we have put in place in the category rebalancing our investment, increasing the one in aerosol relative to the one in contract applicator format is working. And of course, we also benefit from what has been an excellent activation around the World Cup. So we expect deos to gain further momentum in Latin America and being a solid contributor to growth in the second half of the year.

Performance in the rest of Latin America is strong. Argentina grew volumes mid-single digit despite what is a tough market there, makes it also improve. And in other important markets like Chile and Central America, particularly our bid and personal care business has a lot of momentum. Second half, anything else, Srini?

There's a couple of elements just to get it out of the way. On a couple of times that's come on the first half performance. I think Fernando has made it very clear that most of it has really got to do with the underlying momentum rather than one-off factors. Having said that, Fernando also mentioned briefly in his comments that we did have a bit of a phasing benefit from an Amazon Prime event. We just thought we quantify it. It starts up between $25 million to $30 million, which at a group level will mean about 20 basis points for the quarter. So that's really something which is a phase in which has come in. Ideally, it would have been a prior have happened in quarter 3. Now it's come into quarter 2.

Now coming back to the questions related to volumes. Therefore, we've always said, listen, always anchor our business in terms of when you think about multiple years, 2 year CAGRs, MAT trends, that's more reflective of, let's say, the underlying strength of the business. And if you see in that context, Fernando has explained that even in half 1, we are 2.7%, if you look at the running rate it's 3. What changes in half 2? Obviously, we start with a base which is higher. In half 1 of last year, we had about 1% volume, which stands up to 2% in half 2. That's an important element a lot.

Second element is that we'll also have pricing, which is going to start landing. It's already started in quarter 2. We should expect some bit of volume sensitivities, and I think it's healthy. That's really the way we manage the business on its totality of volume price competitiveness. I think that's the second element. Third, it's also important to understand that some of the vectors of growth or some of the geographies of growth will change to actually see you will start to see a very strong base we had in U.S. and Indonesia. Equally, you'll start to see that some of the base that we have in India and Brazil will be actually soft.

So multiple moving parts. So rather than getting to a very specific quarter to quarter 3 elements to it. The best way to really start thinking about our business is on a running basis to CAGR. And therefore, the volume guide that we have given to the full year at 3%, I think, is more reflective of the performance.

I feel just to highlight again, the diversification of our portfolio, particularly in HPC, in terms of geographic category segments, price points give us resilience. We see that as a significant competitive advantage and give us a lot of confidence to really deliver the numbers that we have given in the upgraded guidance.

The next question comes from Jeff Stent at BNP.

Just one question. I think you said earlier there was no significant one-offs in the results. This is with FIFA, the biggest activation program in the history of the company. So and try to just ease that though. And I'm wondering if you could maybe give us a sense of what you think the FIFA activation added in terms of growth and I'm just kind of thinking forward to next year when at some point, we're going to talk about cycling and all of this. So any color or any quantification you can give on the FIFA activation in aggregate would be great.

Thank you, Jeff. Well, we are very pleased with the our GAP execution. We have activated more 35 runs across 120 markets, more than 50,000 creators doing content for Unilever brands simultaneously. And we believe that this is a proof of what nil creating in terms of a new social first model of reach an engagement for our brands at a scale that I personally believe very few companies can match. On top of that, we have had extraordinary execution in store across practically all the geographies of Unilever in unprecedented magnitude. So this should have some impact in our sellout, of course, the FIFA World Cup finished on the 19th of July. So we don't have yet the results to really validate what has happened there.

Even in some indication, for example, regaining market leadership in the rand U.S. gives a sense that this has been working. But of course, we don't do an event like FIFA for a 2 months we do this to increase the awareness and differentiation of our brands through the immersion of these brands in a massive cultural event like the World Cup. We believe that there will be a residual effect of this activity in terms of the strengthening of our brands. As I mentioned before, as I have mentioned before, we have close to 60% of our revenue, strengthening brand equity, what we call a misread superiority and we believe that we will see as a result of FIFA activation, particularly for Personal Care business, a significant ability in the image of our brands, and this should result in an improvement in competitiveness in the long run.

Maybe just to add color to 2 points on this. When you really look at the 2-year CAGR and the 3-year CAGRs, it actually then starts to reflect the momentum of our business in Personal Care, whether you see it from a deodorant point of view or when you see skin cleansing, that's also reflected in our gaming back leadership in the U.S. and retrans. And skin cleansing, Fernando has already spoken about the performance of Dove and how it's really strengthened.

The other angle to also see is when you really look at the first half of the performance. What we've really called off as a true one-off is really the Amazon Prime effect. Given our supply resilience, given the fact that we have the financial strength from a balance sheet given that we have the formulation flexibility R&D, it is quite possible that we have gained at the expense of some of the regionals and the locals in home care, notably in different parts of the world. But that's actually genuine demand and supply dynamics enabled by what I would really call as a very resilient and agile supply chain.

So that's where it also helps us because when you start gaining consumers in an era like this, we tend to really market development and the way we really run our business hold on to some of the consumers. So it's important to really distinguish between what is really a phasing impact versus fundamentally servicing the demand requirement, which actually then starts to enable us to grow well and grow competitively.

Our next question comes from Jeremy at HSBC. Go ahead, Jeremy.

So a couple from me. First one is, would you be able to give us a bit more color on the volume performance, in particular, if you took the different divisions, how you distinguish between the kind of absolute units and tied and the mix that you're getting across the different divisions? And then secondly, perhaps you could elaborate on the point about some of the local competition the extent to which they were supply constrained. Is that something you see persisting over the balance of the year? Or do you think that some of those constraints are now kind of lifting and some of those peers are now coming back into the market a little bit more?

Well, let me take on the local competition and Srini will give more color in the volume mix split. We have a very resilient supply chain. Our absolute priority has been supply security, given the developments in the Middle East. And we have done that in the first half. Probably this has promoted some kind of competitive advantage versus local players that have suffer in terms of customer service, particularly in Asia. We have no visibility in terms of security supply for the next 4 to 6 months, particularly in the category that is more affected. That is laundry power. So there has been some kind of advantages that we have benefited. But consumers that you take the propensity of them to stay in great brands like the 1 we have, we believe that there is a high probity of that. Volume and mix?

So from an external perspective, Jeremy, you're conscious that we call it as UVG. UVG for spent always been a combination of volumes and mix. And it's our intention never to really split the 2. That's how we have really reported the results. But if I were to reflect half 1 performance, obviously, we've had volume growth, which have been ahead of mix. Normally, we'll get a UVG benefit, which is more than volumes. But just given the strong performance from home care across the markets, personal care and across various segments. In this half, if I were to really give a qualitative comment, it would be that our volume growth has been ahead of our UVG. That's also the mix comment that I made.

Again, volumes in UVG have been fairly strong and consistent across the HPC categories. It reflects in terms of both of the growth or the volume-led growth over 7%. Obviously, our volumes have been lower in foods, and I think that's also fairly visible. And is really notably coming from a U.S. performance, which Fernando has clearly explained as to what is really driving it. Just putting a geography angle to it, volume growth have continued to be very strong in emerging markets. volume growth have also remained quite strong and above market when it comes to North America. The only other place where they have been tepid, again to reasons explain has been Europe.

Our next question comes from Guillaume at UBS.

First question for me is on price elasticity. Because it seems that when you push promo activities, price corrective measures, it does really pay off, and we got some very strong evidence of that in the second quarter. And then looking at your guidance for the second half, I mean, it does suggest that volumes could very quickly normalize as you raise prices. So my question is, are elasticities increasing at the moment in your categories, I mean, maybe with a more price-conscious, less brand loyal consumer -- or are you simply being a bit conservative when it comes to your guidance for volume growth development in the back half? And I guess related to that, as you further premiumize your portfolio, should we see declining elasticities basically in your business?

And then my second question is very quickly if you could unpack your performance in skin care because the business grew low single digits, I think, in the first half despite baseline being very strong, continued momentum, acceleration in prestige wondering what is weighing on your growth in skin care at the moment? And do you anticipate you'll be able to address this drag in the coming quarters?

Thank you, Guillame. Let me start with Hiker and then I go into pricing and elasticity. We have very strong performance in Vaseline. We have very strong performance in prestige in the lives of Tatcha or Paula's Choice improving. So the issues in skincare for us is some decline in some of our Asian legacy brands, particularly Fair & Lovely in India and Ponds in Southeast Asia. We are working very hard to build a new portfolio of brands that are more future fit, and this is what we are doing with our prestige portfolio and with baselines care. But it's very clear that there are some brands that in a market that is premiumizing very fast, like the Asia market, brands like Fair & Lovely an ponds have some efficiencies that we need to fix.

In terms of pricing, well, in previous earnings calls, we have been very clear that we were going to manage the business in the context of a very volatile environment, focusing on volume growth, precompetitive and disciplined management of every single line of the P&L. And this is what we have done managing costs through formulation flexibility, promotional optimization, tighter management of overheads and being cautious on pricing until having more clarity in terms of supply security and commodity cost environment.

Pricing has been a bit soft in the first half at 0.6%, and this is the result of the levered actions that we have taken like India laundry liquid, and Brazil power relative price correction last year, some increase promotional activity in FIFA activation. And in the case of Foods, taking a bit longer in the negotiation of European retailers due to the need of calibrating the impact of the Middle East conflict in cost. In terms of elasticity, let me say first that we have now around 90% of our revenue in the relative pricing that we want to stay. That was not the case 3 or 2 years ago, in which that level was in the territory of 50% to 60%.

Today, we have 90% of our revenue in the relative pricing versus competition that we want our brands to be. The other 10% is evenly split during areas in which we are a bit above strategic pricing and areas where there is -- we are slightly below strategic pricing. Regarding elasticity, at this stage, it's difficult to predict elasticity in the future when you have had so much cumulative inflation since covet. So the reaction we have seen in our pricing corrections in places like India under liquids or laundry powers in Brazil has been strong. The same in some particular corrections that we have done in Hair Care. So it's true that elasticity seems to be significant when we adjust the pricing to what it should be in terms of a strategic price index.

Going forward, our portfolio is premiumizing. We tend to see lower elasticity in the most premium areas of our portfolio. And real in second half, I don't want to really, at this stage, comment a lot. We have taken a cautious approach here, ensuring that in our guidance, we consider a logical volume slowdown when we put pricing up. Remember also that our sequential inflation in second half will be in the territory of EUR 500 million or so. This gives you an idea of what is the kind of pricing that we need to keep our margin sequentially improving as we have done in the first half versus the second half next year, you will do your months, I will not do it for you, but you can model that easily.

Our next question comes from Tom Sykes at Deutsche Bank. Go ahead, Tom.

Yes. Just firstly, on India, is there at all a risk that margins need to be adjusted downwards a bit in order to stimulate longer-term higher growth in India. Are you at all in emerging markets seeing competition from Chinese producers. Chinese exports of Beauty & Personal Care very strong? Is that something at all across your emerging markets you're seeing? And then finally, on gross margin and the A&P. Have you got a benefit on search costs from the switch to LLMs? And is that something that is likely to continue, but we see that in higher trade spend rather than coming through the A&P line, please?

Thank you, Tom. Let me start by the LLM. I mentioned this in our previous earnings call. I feel the development of search and LLM play in favor of big brands. We are now activating LLM rankings in more than 20 markets for more than 20 brands. This is something which we are putting a lot of focus to ensure that we are at the forefront of how people discover brands in the future. Not significant changes in the cost of media at this stage, but this is something that is changing very, very fast. So I cannot predict the future in terms of that.

I will -- let me cover also in emerging markets, Chinese exports in Home Care. We have not seen significant Chinese exports in Home Care. We have seen the development of some Chinese players where some new channels emerge, like TikTok Shop, particularly in Southeast Asia. In skin care, we have seen a couple of brands really making some inroads in Southeast Asian markets like Indonesia but particularly in face care, not in our segments of our portfolio. India?

So the India model is really one which is related to growth, volume, premiumization and through that really, really driving the profit expansion. Even if you really look at the guide, which comes from Hindustan Unilever Limited, they have said that they want to keep the EBITDA margins at the current level, and that's the right approach. Classically, if you see, India benefits from really having a portfolio which straddles the pyramid, whether it's across the price points, benefit segments, channels and therefore, that gives them the levers to manage this.

So fundamentally coming back, it's not a question of not being price competitive. So it's really a question of getting the right volume mix premiumization through that, really generating the profits and investing back into the business. From our perspective, we ideally want to see India as a high single-digit growth market. And if we can have bottom line growth slightly ahead of top line, I think that it's really a virtuous circle, which then serves the business in India as well as the group very well.

Yes. Let me highlight again, we will invest in India to protect the leadership position we have. We really believe that the next decade is a decade of India. We enjoy a privileged position there, and we believe that it will be a key contributor to the growth history of India.

Our final question comes from Ed Lewis at Rothschild. Go ahead, Ed.

A couple of ones from me. Just one, the Unilever markets, you've been pretty positive about the change there. And I just sort of as we look at this quarter, just to understand how much having that structure in place now that helps you navigate the volatile environment. And then just also related to that, just looking at the sales channels. How much is that a function of improved performance we're seeing? Is that -- are you much more relevant now sort of in the right channels than where you were before? And is that really what we're seeing in places like Asia and especially China in the Beauty business with the improvement you're seeing there?

Thank you, Ed. Well, very solid performance in 1-year liver market once again. We are running a very clear strategy in these markets, simplifying our portfolio. driving very, very strongly beauty and personal care, particularly that basin our U.S. portfolio, solidifying what are strong loan deposition and diverting the ones in which we believe that there is not sustainable position in the future as we have done recently with Colombia and Ecuador. The reasons has been running with a lot of discipline with a strong overhead discipline.

This is a part of the business that was dilutive to our profitability, and it has become last year accretive. So we are very happy with the development of UL, the 1-year Unilever markets, and we continue seeing presence in these markets with a much more focused portfolio than in the past, a key contributor to a growth history of Unilever in the future.

In terms of channel exposure, of course, there is a significant change in our portfolio with the growth of Wellbeing, with the growth of Prestige with the premiumization that we have achieved also in our core. This gives us much more exposure to premium channels like online. We have had mid-teens growth in e-commerce last year in the most important market of U.S. and we continue delivering in line with that. So there is always some issues that you have to sort out. As I mentioned before, we have some issues in the club channel in U.S., particularly in the Wellbeing. But overall, we see that our portfolio has given us a good exposure.

And you know there is growth in every single channel. One of the key drivers of the growth that we are seeing in India, our improvement in general train now. So this is a challenge that was not growing for us, but now is growing in the mid- to high single digit. That basically shows that if you look, if you hand for the growth, you will find the growth in different channels, in different segments of the market.

I believe that's the last question, Jemma. And with that, let me close with a couple of thoughts. We have delivered a strong volume-led first half and an accelerating 1 with the best volume quarter at Unilever in over 15 years. Importantly, this performance is not a one-off. It reflects, as I mentioned before, good sustained performance with an average 3% volume growth over the last 4 quarters or if you go longer, 2.7% over the last 10 quarters.

As we move into the second half, the price growth will accelerate. We will keep managing the business with discipline, protecting the competitiveness of both our pricing and our brand investment, and emphasizing the drivers of demand with a higher return in niche market. This is what we call desire scale working in practice. Alongside strong performance, we continue to transform our portfolio with the combination of food and McCormick progressing well. And we are really on track to make deliver a focused pure-play HPC company.

The environment remains uncertain, but the strength of this first half give us confidence in our updated outlook. We will deliver USG of 4% to 6% for the year with around 3% in volume. Second half growth of 4% to 5%, led by pricing and the most improvement in underlying operating margin versus the 20% that we delivered last year. With that, thank you for your time. Thank you very much. Bye-bye.

Okay. Good morning, everybody. We move on to our next session and absolutely delighted to be able to introduce Unilever's CEO, Fernando Fernandez; and Unilever CFO, Srinivas Phatak, for our next slot. Over to Fernando and Srini.

Thank you. Thank you, Tom. Thanks a lot. Thank you for having us. It's a real pleasure to be in Deutsche Bank conference. A lot of change in Unilever in the last few years in the last 3 to 4 years, 8 out of 10 new Board members, 9 out of 11 leadership changes in the top executive team, including myself, including Srini. Significant changes in our culture; with a clear shift into more performance, more accountability, clear incentives linked to performance; significant changes in the way we engage with our consumers, we reach them, we persuade them, significant changes in our marketing philosophy, and of course, very profound transformation in our portfolio becoming after the announcement a couple of months ago for the separation of our food business and the integration into McCormick, a pure-play HPC business.

But transformation has not came at the expense of delivery. We have demonstrated that we can separate significant business like our billion ice cream business and at the same time, accelerate top line, accelerate margin expansion. And this is what we will prove again in the moment in which we separate Foods. The work is underway, is under significant progress, and Srini will mention some of that.

The new HPC business is a pure play. We will be a $39 billion business in home care, personal care, beauty and wellbeing with very, very strong positions, #2 B2C company globally, #1 home care market -- home care company in emerging markets. And this is a company with superior propositions in terms of geography, footprint, category footprint, segment footprint and channel footprint. And we are doing all these changes from a position of strength.

Our business has been outperforming the market in the last 3 years. This is not an HPC business that is in need of a turnaround. It has been growing more than 5% top line in the last 3 years, it has been growing volume at 2.5%. So it's a business with momentum. And what we will show in the next few minutes is what we are doing in our marketing, what we are doing with agentic, what we are doing with our science, how we are really accelerating our performance and how we will keep ourselves very disciplined when it comes to capital allocation.

Srini?

Thanks, Fernando. So what I'll try and do is first touch upon some of the performance elements to this, and then we will cover the transformation, which I'll cover the parts relating to the food separation, and Fernando will actually talk us through in terms of the pure-play HPC business.

So good to start with really where we started in the quarter 1 results. Actually, if you see it was a good set of numbers. We've talked about 3.8% being our underlying sales growth, driven by strong volume growth, 2.9%. We have been consistent saying that, look, it's really the underlying volume growth, which is a combination of volumes and premium mix, which is actually the differentiator in our industry and in our segments, has come through quite strongly.

What's important to highlight is it's not just about a quarter. If you actually look at the 9 quarters performance, our underlying volume growth has been upwards of 2.4%. Two important data points, if I were to compare it. If I were to look at the market, give or take, has been at about 2.1%. And if I actually look at our peer group average in this sense, has been less than 1%. That actually throws up a very interesting insight. If you really see that if the peer group is 1, that means a lot of growth is actually coming in from some of the smaller indie brands. We've become a unique and a differentiated company, a large organization, which has actually been able to deliver this set of volume growth, which is well ahead of the market.

We've talked about power brands, and you see that very clearly, close to 80% of our business has been growing strong and actually, we've delivered more than 4% of volume growth. So there's 80% of our business where we are putting all the incremental dollars of investment, people, R&D, BMI, and that's actually leading to significant market outperformance.

This actually gives us the confidence to really then reconfirm our outlook. And that's what we have said that we look to grow this year in the range of 4% to 6% at the bottom end, but clearly, with a volume growth or UVG growth of upwards of 2%. And then we'll come to the margins. And therefore, what gives us this confidence. First and important to then say, in addition to whatever I have said, our market shares are continuing to be stable to improving. Our unmissable brand superiority scores, which is actually a composite metric of our 2021 metrics is improving sequentially. So more of our brands are actually in the right space in terms of improving their attributes, the holistic attributes, and we are actually in a stable to gaining market share perspective.

Along with that, we continue to see very strong performance from emerging markets. 62% of our business has been emerging markets. We have seen actually growth upwards of 5.7% with volumes of upwards of 2.5% to 3% on a consistent basis. Our HPC business, actually, if I were to give your context, even in the quarter 1 has grown over 4.3%. So emerging markets doing well. Our HPC business doing quite strongly. Our North America business growing over 2%, continuing to outperform the market.

Yes, there are inflationary pressures, and we have talked about them somewhere in the range of about $750 million to $900 million. That's actually about $350 million to $500 million higher than where we started the year. But we understand this and we get this because most of this -- half of this inflation is really in home care business and 70% of the home care business is really in emerging markets.

Here, we have opportunities to play the full piano in terms of pricing in addition to what we do with formulations, what we do with operational efficiencies, that positions us well. We understand these markets. We know how -- what it really takes to price and manage well when it comes to local competition, when it comes to multinational competition. So we are actually doing it in a very sensible manner, calibrated pricing, keeping the right value equation for the consumers, pricing frequently while we manage tightly all of the levers.

Is it easy? No, but we have never signed up for an easy job. So the fact of the matter is, yes, there is an inflation pressure. We believe we will handle it and handle it sensibly from a consumer perspective. And therefore, we reconfirm the view that we will actually drive a modest margin improvement for the year.

Important to really touch upon some elements. I think Fernando started it well. Our transformation is starting from a position of strength. And this is not a one-off transition or a transformation. We have done a multiyear transformation. We have actually spent a long time in the last few years focusing towards an HPC business. And you saw that with the portfolio transformation, which happened in terms of ice creams and then Foods. We've also done a significant transformation when it comes to our U.S. business. So all of this actually then starts to position us well.

Let me take upfront the topic related to the Foods separation, and then Fernando will touch upon the HPC company. This is clearly a strategic separation with serious value creation opportunity, right? When you really look at from an HPC perspective, we are a pure-play HPC business. 90% of the business is actually in market-leading positions 1 and 2. And this business, as I said, in the last 3 years has actually grown upwards of 5.3% with volumes of 2.5%. So it's not a story of where we start off saying HPC needs to grow into a certain trajectory. We are in a trajectory which is upwards of 5%. And the opportunity is really to sustain that and sustain that and improve the margins and the profitability.

When it comes to Foods, this is actually a global flavor powerhouse. There is serious revenue potential, and I talk about it. But more importantly, if you step back, this actually gives us an opportunity to create a pure-play foods company, which is in flavors, condiments, herbs and spices. In many ways, this is actually a positive leverage for us because this is GLP insulated, if at all. Protein requires more flavor. And actually, this combination brings flavor to food, and therefore, it's actually a bit of a tailwind for us rather than a headwind, and that's very unique in a foods context in the current market.

And clearly, there are synergies both from a growth perspective as well as cost. And we have given an indication. We believe that there is at least $600 million of cost synergies and growth which is going to come through across the portfolio, both in terms of U.S. markets, food services and international operations.

Therefore, there are some few important questions to really address. Good to say, why McCormick? Because there is a lot more of complementarity. There is no overlap. which, again, great because we then can accelerate growth from food services, from emerging markets, GLP tailwinds and structurally well positioned. This means that strategically, while both the Foods businesses have been actually outperforming versus a relative peer set, the combination gives us an opportunity to actually take the growth trajectory to 3% to 5% and a business which starts with operating margins of 21%.

More importantly, these are businesses with gross margins in the mid-40s and actually invest anywhere between 8% to 10% in terms of D&I. There isn't any other Foods pure-play business, which is close to these levels of investment. And therefore, this actually then starts to unlock the growth opportunity. And therefore, that's why we call this as a growth-led separation.

Why now? Obviously, it was an inbound offer with very attractive synergies, as I've spoken about strategic rationale and valuation. And this also actually gave us an opportunity to do it with the most efficient structure. And that's why we really went about and now.

Clearly, there were questions really about some of the uses of proceeds. We will get about $15.7 billion. Obviously, we'll pay down debt because there will be lower operating profits and we need to pay down the debt. There is cost of separation. We will address that and tax. We also reconfirmed with the additional monies available that we are doing a buyback and therefore, given a clear view of buyback about '26 to '29 for about $6 billion. We do believe that there could be a slightly other -- we could have more cash available to us should all these parameters work out well, and we'll deal with that in a responsible manner in due course once we reconfirm all the elements to this.

And the last element is also about a pure-play HPC business. It actually gives us a lot more focus and a focused HPC business is a better business. While we take out about -- what we take out in terms of turnover is about 25%. The complexity in the business because of the SKU geography market channel comes down much higher. It's almost 1.5x that, which therefore means that it actually then starts to position us extremely well.

And the last element to reconfirm is really say, listen, we don't see any dis-synergies coming from the separation. I think the example we continue to use that, listen, just because you sell more Dove, you're not likely to sell mayo. And the other important element is that 80% of the Foods business has its organization, which was end-to-end well set up and a full commercial organization. So there are aspects which we will handle well. There are stranded costs, and we'll be for an HPC company, and we are committed to handling those stranded costs and managing them. We have demonstrated it when we've done it in the case of ice creams.

The last piece, important to highlight, it's a combination. Both the teams are working with dedicated workforce today. There are more than 200 people, 100 each from either side who are focused in terms of all the activities related to separation and integration. We carry a lot of experience and expertise from our perspective, having done ice creams recently, but before that having done tea and having done spreads. We are actually having 40 to 50 people out of the 100 are actually people who have had the experience of doing this from an ice creams perspective. So it's a very well-structured team.

We put 2 senior leaders, very senior leaders. Andrew Foust, actually used to run the North America business, the biggest business, given that there is also establishment integration. From our side, Ritesh, who is the Head of M&A and the former CFO of HUL India business is actually leading this. And you clearly see there are 4 work streams that we are working through.

Important milestones because what we want to give all of you is periodically a clear update in terms of the progress. We expect to announce the secondary listing by July. That's on track. By September, McCormick is likely to confirm the operating model, the leadership team and give better visibility to synergies, both growth and cost. And we work through the rest of the schedule in terms of the SEC filings and the shareholder word.

One last comment. Because of the complementarity and very little overlap, antitrust is a timing issue, but it's not an uncertainty issue. We have a reasonable amount of confidence and we are working it well. Some of it would take time to just get through some of the markets where you need to make these filings, and that's the reason where we are really giving an indication of middle of next year, but it continues to be our endeavor to really try and do this faster and sooner and do it as well, if not better when it came to an ice cream separation.

And then on that note, I'll hand over to Fernando.

It has been a long journey for Unilever to get to the portfolio we wanted. Disposal, express disposal, separation of ice cream in 2024 yet and recently, the separation of Foods and integration with McCormick. But we are now inaugurating a period of stability of our portfolio as a pure-play HPC company. And why is this important? Because the consumer needs in HPC are converging. There are massive lifestyle shifts that are fundamentally making consumer needs converging between body care, personal care, beauty and home care with wellness at its center.

There are shared foundations in these categories. The R&D is fundamentally structured around surfactants, science and technology. This fundamentally lead to a common manufacturing stream and with very similar logistics. There are very clear synergies in terms of distribution. Home Care, Personal Care and Beauty are all omnichannel distribution models with an increasing role for e-commerce. And in all these categories, these are high cycle, high innovation cycle categories in which scientific proof is very, very important, in which there is a structural growth and there is a structural premiumization and in which our model of design at scale fits perfectly well.

We will be a scaled HPC player, will be EUR 39 billion revenue. We will be the third largest HPC company. Volume growth of more than 2%, gross margin more than 48%, brand investment at 18%, giving us a lot of flexibility and operating margin at 19%, more than 19%. So it's a scale business. It's simpler. As Srini mentioned, we are separating 21% of our revenue, but we are separating more than 32% of the category geography sales Unilever was operating. This is a significant impact in the time senior leadership is allocating to smaller geographies or to new key strategic geographies in the company.

This is a category with superior advantage categories and superior growth footprint when it comes to geographies, channels, segments in which we operate. We will have a business in practically 3 thirds, Home Care, Personal Care and Beauty. We have 38% in developed markets and 62% in emerging markets. And we continue seeing our superior presence in emerging markets as a key competitive advantage. There are superior population growth there.

There is a very different situation in emerging markets to one of 15 or 20 years ago. Only 7% of the global population live today in double-digit inflation. That's a very different. Imagine the geopolitical tensions of today, what would have been the impact in Latin American currencies 10 years ago. Brazilian real, Argentinian peso are all strengthening these times. This is a very, very different situation in emerging markets, and we believe this will consolidate this advantage coming forward in the future with a much less negative currency effect that we have had in the past.

We have the second largest DTC business, as I mentioned before, the #1 home care business in emerging markets. We will have 22% of our business in the United States, building a portfolio of the future that will make them travel internationally. This is where we are concentrating the allocation of capital, building a portfolio of premium brands that can travel because American culture travels and because premium successful big brands in U.S. can travel globally as we have demonstrated that already.

And we have an incredible exposure to India, 16% of our revenue, where we have 55% share in health care, 80% share in facial moisturizers, 45% share in laundry, 80% share in lifestyle nutrition, 70% share in dish wash and you can count on in the country that will be the large exponential growth opportunity for the next decade.

In conference like this one and in many interactions with investors in one-to-one for the last 2 years, I have been saying very, very clearly that we were targeting more than 2/3 of our business in DTC. And this is what we have achieved with this separation, 67% of our revenue in Beauty, Wellbeing and Personal Care. As I mentioned before, 38% in U.S. and India. We expect this to go to 40%, 45% in the next few years through superior organic growth in these countries above the average of the company and through all the allocation of capital to bolt-on M&A that we will do, particularly in the U.S.

We have more exposure to premium. We have more exposure to e-commerce. We have a business that will have a stronger volume growth from 1.9% to 2.5%, 60 basis points more than when including foods with better gross margin, 120 basis points and with higher investment level at 18%. So it's a higher quality growth model.

And very, very, very important. This is a very different Unilever to the past. For many, many years, many of you have told us how slow we were, how complex we were. Now our portfolio is concentrated in 25 power brands that are driving our outperformance. These 25 power brands represent 78% of our revenue. And in the last 3 years, they have been growing 4.2% in volume and they have been growing 7.1% in top line.

And this is a combination of market-leading brands likes of Dove or Sunsilk or Dirt is Good, our OMO, or Persil, Vaseline, Rexona in which our obsession is to keep them contemporary. It's about elevating their quality and it's about premiumizing them. And who would have said that Vaseline would be growing 12% in volume for the last 3 years. It took us 153 years to get to EUR 1 billion revenue, and we have added EUR 400 million in the last 3 years. This is the fastest-growing skin care brand in the globe and it's called Vaseline, the famous petroleum jelly.

And we have a very good combination with digitally native disruptive brands, the likes of Liquid I.V., OLLY, K18, Hourglass, Nutrafol. These are brands that we are building in the U.S., we are achieving critical mass in this market, and we are internationalizing. 40% of our Prestige business is already international. Our Liquid I.V., our well-being brands are starting to really expand globally. We have already OLLY making close to EUR 80 million of revenue in China. So step by step, we are internationalizing these brands. We got late into the Chinese party. We will not get late into the Indian party. We have now a portfolio of super premium brands that will travel into India at the right time when the markets develop.

As Srini mentioned, this is not a turnaround story. This is a business that has been outperforming the market. It's a proven superior outperformance. We have been growing in the last 3 years. Our HPC business has been growing 5.4% versus our blended HPC average turnover weighted at 4.6%. We have been growing volume 2.5% with 0.3% to the rest of the competitors. And this difference in volume is very important because this is a metric that we care the most. Unilever has been very, very inconsistent in the past in the metrics we follow but now we are following volume growth as our #1 metric.

We will defend our units. We will defend our tonnages. Last year, a competitor reduced the prices of laundry in India 17%. It took us 15 minutes to match. And our business is growing double digit in India. Our gross margin expansion has been 290 basis points in the last 3 years. Our underlying operating margin expansion of 170 basis points, significantly ahead of the sector also. And it has been broad-based. Our medium-term UVG ambition is about 2% HPC is growing 2.5% in the last 3 years. Beauty & Wellbeing and Personal Care is 3.2% U.S. and India 3.8%; our power brands, 4.2%. So there is clear performance in any single cut that you have of our HPC business.

And there is importantly margin headroom. Our key competitors in the space tend to operate with 22%, 23% of operating margin. We operate with 19%. And we see 5 fundamental levers to expand our operating margin in the future. The first one, the most important is the strengthening of our brands in order to increase our relative pricing. 60% of our turnover is growing equity attributes. And this is the best way to move pricing ahead of market. You don't move pricing ahead of markets when your brands weaken or when they remain parity. But you can move relative pricing, you can move the mix up when your equities are strengthening.

Volume growth is very, very important because the next unit deliver margins, deliver gross margin at more than 60%. That's the kind of marginal contribution that we have in our business. We will continue expanding our premiumization opportunities. We'll continue expanding our premiumization strategy. We have significant premiumization opportunities. A few years ago, the maximum price you could find U.S. in the U.S. was $7. Now you can find U.S. at $20. We have a significant portion of our portfolio at 2 to 2.5x the pricing that we were operating 3, 4 years ago. And this is fundamentally the consequence of strengthening our equity.

And very, very importantly, we are allocating a much significant fraction of our capital expenditure to savings initiatives. 10 years ago, we were operating with around 30% of our CapEx into margin expansion initiatives. Now 55% of our CapEx goes into expanding margin. When you have 3- to 4-year payback in your CapEx, that fundamentally implies a significant expansion of your gross margin every year. And we have done significant interventions in the value chain of key materials, call it surfactants, call it fragrances, call it chemicals. All this is helping us to really leverage our position in very concentrated industries. And this is the reason why our procurement is beating market inflation for around 1% every single year.

Desired scale is the mantra we follow in the company. It's about elevating the quality of our brands. It's elevating desirability of a portfolio of scale. And our marketing model is what we call SASSY brands. It's a bit of a cheesy name, but it's very simple and it aligns our troops. And to every single country I go, it's very simple to measure what we are doing. SASSY is about Science, Aesthetics, Sensorials, Said by Others and Youth spirited brands.

SASSY fundamentally guide our product development strategy, more science, more clinical proof products that really make a difference, but really address in a much better way than we have done in the past with much better aesthetics, with much better sensory and said by others and youth spirited is fundamentally what guides our model of rich engagement with and persuasion of consumers.

And we deploy that what we call a very strong frontline machine in which execution is improving in every single market. The 2 largest physical retailers of U.S. have awarded Unilever Supplier of the Year for 2025 in the last month. That's not by chance. That's by design. That's a significant change in our portfolio and it's a significant expansion of the capabilities in the most important market in which we operate.

This is a video that basically shows what we are doing in terms of product development, our science, our aesthetics, sensorials, are coming together in some of our key products.

[Presentation]

I'll have Dirt is Good as an example. It's much more difficult to wash in 15 minutes than to was in 2 hours. In 2 hours, the wash is done by the machine. In 15 minutes, it's done by your science. 15-minute wash increase science requirements, increase entry barriers. It's already a $250 million platform for us. We're investing heavily in R&D. This is a new center that we announced last week. It will be in New Haven. It's basically a Yale ecosystem. That's one of the big center for biology and chemistry development in the world. We are putting $300 million in this site that will be a key site for our innovation going forward.

AI is dramatically accelerating how we are doing innovation and breakthrough innovation. We have more than 150,000 proprietary scientific documents connected in Unilever today. We have more than 25 million data that are consumer data plus lab data that we are connecting. In seconds, we can make more than 10,000 interactions, virtual experiments in our labs. And this is resulting in much more stronger claims, much stronger innovation. This is 5 years ago, 80% of the action in our labs was physical. Today, 80% of our actions in our labs are digital. Our time frame for innovation was 2 to 3 years, now it's 9 to 12 months. The time frames are changing dramatically.

And this is basically resulting in what we call advantaged discovery and design. We have more than 15,000 active patents today. Our aesthetics have improved dramatically. 60% of our packaging are now showing superiority versus competition. 65% of our fragrances after the big investment we have done in in-house fragrance house has been improving our fragrance dramatically, and we have more than 65% of our fragrances today showing superior results versus competition.

Our innovation is bigger. We have stronger claims. This is leading with a stronger brand equities, 60% of our revenue is growing brand equities. 80% of our products are showing product superiority in a holistic way, measured in a holistic way and the size of our innovation has doubled in the last 3 years.

I want to show basically 2 examples of that. One is Dove Hair and the other is Cif Infinite Clean. For many, many years, we were challenged if a brand that was born in soap like that could travel into a higher, higher category like hair. That hair today, with the last relaunch of Intensive Repair is growing at 11%. It's a $1.2 billion turnover business. It has been growing 11% in 2025 and it's accelerating in 2026. It's already close to 20% of the revenue of total Dove. It's 20% share in India. It's growing massively in U.S. It has significant shares in all emerging markets. So this is basically an example of when you put your best science in some of your best brands, you can really elevate the brand dramatically.

Cif, this is -- is a probiotic range. The secret here is that it keeps cleaning when you stop cleaning. It keeps cleaning when you stop cleaning. And you can see also aesthetics very different what you usually see in household cleaners or in home cleaners. This is when I said before that consumer needs are converging. This is an example of that. This is a home care product that looks like a personal care or a beauty product. And Cif is growing 10%. It has been declared one of the most innovative brands in all the awards that are usually done in the industry and a home care brand growing at more than 10%. And this is a home care brand that is fundamentally exposed to developed markets. This is not emerging market growth. This is European growth. This is when you basically put together best mix in a great brand.

All this fundamentally supported by what I believe is a very improved frontline machine. This is what we are doing with the FIFA activation during the World Cup. So it's just -- you see here some of the example of executions in U.S., in U.K., in Brazil, in Africa, et cetera. Just huge, huge activity, 4x more creators than 1 year ago for our Personal Care business, more than 50,000 creators allocated to the FIFA activity, an immense amount of content feeding -- flooding the feeds. Every Instagram, every reels is now flooded by Unilever brands in order to make this activity unmissable in culture. In a category like deodorants in which frequency of purchase is relatively low, 3 to 4x a year. This gives us a huge opportunity.

And this is fundamentally an example or this is an activity that is helping us to further develop our agentic capabilities. Agentic is all about search, proof and persuption. Market leadership doesn't give necessarily an advantage when it comes to discovery in LLMs. You have to be intentional about what you to do there to ensure that your content is discovered in AI. AI plays in favor of scientific proof, patents, claims, publishing, clinical proof, ratings. This plays in favor of big brands.

And this is part of our program when it comes to LLM proof and persuasion how to convert from discovery and proof into buying is fundamentally linked to your relationship with retailers. We have now 26 brands in the U.S. using Amazon sponsored programs. They fundamentally are integral to the path to purchase of the consumers in Amazon. We have now more than 50 brands in 20 geographies in which we are tracking our presence in LLM versus competition. That can only be done by big companies with big clinical support and with big budgets.

With that, Srini?

So I'll walk you through quickly our value creation model. In some ways, it's actually consistent. We have spoken about the importance of the volume growth, both from a units perspective, premiumization and value chain expansion. And clearly, what we are going after is a top third shareholder returns and hard currency returns. I think that's something which is fundamental, and we've been consistent in terms of how we have been calling that out for the past couple of -- a few quarters and years.

This is actually a good summary chart in terms of how we think about it. Our approach is disciplined and our approach is focused. We continue to invest behind our brand and marketing investments. You saw the chart. We do about 18% in an HPC business, 16% in its totality, including Foods. We invest somewhere between 3%, 3.5% in CapEx. We invest close to 1.5% to 2% in R&D. So there is about 23%, 24% of our capital, which actually is going towards what we call is furthering growth. And Fernando has already spoken about the capital expenditure.

Our approach to bolt-on acquisitions is extremely disciplined. We continue to spend about $1.5 billion each year. And I will talk you through a bit in terms of the bolt-on strategy and how it is working for us. We are again reconfirming that this is a portfolio destination portfolio that we want to run. There is no plan for any transformative acquisition, and we want to be absolutely unambiguous about that.

We continue to give about 60% of our payouts. So we've continued to maintain a very healthy balance between dividends and share buyback. And in the last 5 years, we've actually returned more than $30 billion of capital to the shareholders, which also shows a consistency in how we deliver.

I think this is an important one. What we really have is a very disciplined playbook for bolt-on acquisitions with higher thresholds in terms of returns. Clearly, we only look at anything to do with beauty and personal care. It has to be U.S. and India. It has to be premium and differentiated. And that really becomes an important priority that actually guides what we do in terms of how we think about it. Therefore, the attributes become very intuitive and logical. It has to be more science and technology, clinical, fitting with our capabilities, digitally native brands and obviously, brands which are in superior and in a fast-growing stage, that's when we actually come in and we can scale.

We are not necessarily people who build from scratch. We are actually extremely good at taking brands which have come to a certain level and scaling them up, given our strength of our understanding of consumers, channels, markets and actually also the international expansion. So that in a manner starts to play out exactly what we do in terms of the bolt-ons. This is an important one and how has life changed for us.

I think sometimes there are some misconceptions in terms of how our bolt-on acquisitions have been performing given what happened prior to 2019. If you really look at our track record from 2019 onwards, we've actually done 14 acquisitions. It is half of what we did in the year prior, right? So clearly, it's a lot more focused using the criteria that I described in the prior page. More importantly, 80% of our acquisitions are actually delivering on or above the business case.

That, again, if you really look at the track record from an M&A perspective with any benchmarks, it's actually quite impressive. And some of them, as you are all aware, have gone multifold. And therefore, the last one actually brings it to life. We are getting the turnover to grow about 2.5x in 2.5 years. That's, again, a very unique way to thinking about it. These are not brands which are growing over a 5-year, 7-year horizon. In about, we've got from the time we have acquired, they hit a 2.5x their size and approximately average period being 2.5 years.

And you've heard examples of Liquid I.V., Nutrifol and -- sorry, and OLLY. But what I want to talk to you actually is about a recent example, which is really about K18, a fantastic brand, which we actually got in early 2024. It's been growing upwards of 30%. It's driven by fantastic innovations, for example, the breakthrough science Lain molecule repair mask, which is actually the #1 hair mask in Amazon in the U.S. And it's also got many category leading-edge proprietary technologies, including the successful K18 peptide. This is, again, a great brand. This is again something we are super excited about, and we believe is actually very well poised to capture the premium hair market and actually continue to grow and actually be one of a big, big contributor for our delivery.

This also gives you a bit more examples of some of the recent acquisitions that we have done. Minimalist, really playing in the face and hair segments in India, a very strong premium brand to really capture the India premium opportunity and has got potential to really go into the other Asian markets. Dr. Squatch is actually a very contemporary take to men in terms of really giving personal care benefits, again, a fast-growing business. We're quite excited. We got this in last year. And the most recent one really has been in the super green segment, which is Gruns as a brand. We are happy to confirm that yesterday, we actually completed this acquisition. This is again a business which is in a super high-growth momentum and actually addresses a very important need in terms of peoples, vitamins and supplements.

So in an essence, what you really see is it's a sharper portfolio. As Fernando said, we are clearly in the space of both performing and transforming. And it's a higher quality model which is delivering. And the excitement really comes us for our ability to sustain this momentum and shape Unilever into a business which continues to deliver the top third returns.

On that count, if you have any time, we can take questions or Fernando, any comments from you?

Okay. Thank you. We have a minute left. So maybe if I could just ask the perform and transform mantra that you have. It sounds like no excuses for underperformance, I wouldn't want to walk in with bad news but you are pushing the business perhaps harder than it has been before at the time of quite significant change. How are you managing that process? And does it feel like it's being pushed hard or not?

I feel Unilever has been perceived as a slow and complex for a lot of -- for a long, very long period of time. And now some people say, are you changing too fast. But we were not prepared -- neither the Board nor the leadership team was prepared to kick the can down the road and leave the issues to be sorted out later. I feel we have demonstrated with our separation of ice cream that we can make a very complex separation at the same time, accelerate our performance, both in top line and bottom line, and we will prove the same when we do it with Foods.

We are very confident on that. I feel the cultural change in Unilever is profound. It's just the shift into performance and accountability is very, very significant. And we are not paid to do easy things or to do few things. Great companies perform and transform simultaneously. And some people say, are you under the risk of change fatigue? I'm not paid to be lazy and our people is not paid to be lazy. So we will do whatever has to be done to ensure we make Unilever a consistent outperformer for the years to come. I believe we have proven that in the last 3 years, and we will continue proving it.

Okay. Well, thank you very much for very clear and a good point to finish on. So Fernando and Srini, thank you very much indeed for your time.

Thank you.

Good morning, and thank you for joining us for Unilever's First Quarter Trading Statement for 2026. I'm joined today by Srini Phatak, our Chief Financial Officer. In a moment, Srini will take you through the details of the quarter. I will also come back to say a few words on the recent announcement regarding our Foods business and why we believe this is the right move for Foods for Unilever and ultimately for our shareholders that will unlock significant value. But first, let me set out what I see as the key elements of our performance in the first quarter.

We made a good start to the year. Growth was solid and importantly, in line with the strategic priorities we have set for the business. We delivered underlying sales growth of 3.8%, driven by a strong volume growth of 2.9% in the quarter. Growth was broad-based across categories, with a particularly strong quarter in Home Care, with volumes up 6.2%, driven by a strong innovation plan and good volumes in our two largest Home Care markets, India and Brazil. Our power brands, which represent around 78% of turnover continued to lead the way, growing 5% in the quarter with volumes up 4%, reflecting the benefits of our high-quality innovation and focused investment behind these brands. Emerging markets performed well with a further step-up in volume growth to 4.2%.

We saw strong performances in markets such as India, Turkey and Vietnam. At the same time, those markets where we have taken decisive actions to improve competitiveness, Indonesia, China, Brazil, all continue to make good progress. Developed markets remain resilient in a challenging environment. North America delivered volumes of 2.2%, led by Personal Care and Beauty despite strong comparators. Europe remains more subdued, reflecting the softer backdrop.

We also continue to make good progress against our strategic priorities, strengthening desire at the scale across our portfolio and improving the quality of our execution. And I will come back to say more on this later. But first, over to Srini to take you through the results in more detail.

Thank you, Fernando. Let me start with our growth profile in the quarter. We delivered 3.8% underlying sales growth with volume at 2.9% and pricing at 0.9%, maintaining a strong volume-led growth profile. On a 2-year basis, our volume growth remains robust at 2% CAGR, reflecting the improving quality and consistency of our growth.

Looking at our performance on a quarterly basis. We have delivered average volume growth of 2.5% over the last 9 quarters, demonstrating the resilience and repeatability of our model. This consistency reflects the progress we are making to elevate our brands and execute flawlessly in our markets through desire at scale. Growth continues to be driven by our power brands, which grew 5%, with 4% coming from volume. These brands represent 78% of our turnover and remain our primary growth engine. The rest of our portfolio grew at a lower rate due to a few specific factors.

In Foods, commodity deflation widen on our tea brands in India. In Beauty & Personal Care, we are prioritizing investments behind brands with strong momentum while reducing support for the [ tail ] brands. Pricing in the quarter was 0.9%. This reflects the carryover impact of price reductions in Home Care, notably in Brazil and in liquids in India. De-deflation in India and the increased in-store activation and shelf investment in Personal Care linked to our FIFA World Cup activations. Importantly, our competitive position remains stable in both value and volume terms. As we look ahead and given the commodity cost environment, we expect pricing to play a bigger role as the year progresses, particularly in the second half.

Beauty & Wellbeing delivered 3.6% underlying sales growth with 1.9% from volume and 1.6% from price driven by a solid performance across the Beauty portfolio. Hair delivered high single-digit growth led by double-digit growth in Dove Hair and K18 with premium innovations such as Dove UV repair and [ Glow ] bringing advanced protection against UV damage. We also saw improving performance in Sunsilk and Clear with growth becoming more balanced across markets. Skin grew low single digit with strong growth in Vaseline, supported by the [indiscernible] range. This was complemented by the continued momentum in Dermalogica and [indiscernible], partially offset by a weaker performance in local brands. Wellbeing declined low single digits, reflecting a very strong quarter 1 comparator of over 23%. [indiscernible] delivered double-digit growth supported by digital commerce momentum and distribution gains. We expect performance to improve from quarter 2 driven by Liquid I.V. and Nutrafol as the campaigns drive multiple usage occasions and attract new consumers gain traction.

Personal Care delivered 3.7% underlying sales growth with 1.1% from volume and 2.5% from price, with volume showing sequential improvement. Dove continued to lead growth, delivering double-digit growth in deodorants and high single-digit growth in skin cleansing. At a category level, deodorants and skin cleansing both delivered mid-single-digit growth, supported by a strong performance in North America. In deodorants, growth was broad-based with sequential improvement in Rexona and Axe, including early signs of recovery in Brazil. Skin cleansing growth was supported by the continued rollout of premium innovations such as Dove Serum Oils body wash, with strong performance in emerging markets. Oral Care was flat, with growth in Asia Pacific Africa offset by softer performance in Europe.

We are excited by our FIFA World Cup 2026 platform, activations and the campaign. These will scale in the coming quarters and amplify the growth momentum, particularly in the deodorants. Home Care delivered 6.1% underlying sales growth with 6.2% from volume and price being broadly flat, reflecting the strong volume-led growth by emerging markets. Brazil delivered double-digit volume growth, while India delivered high single-digit volume growth with double-digit growth in liquids and record market share in powders.

At a category level, fabric cleaning and fabric enhancers, both delivered mid-single-digit growth, led by our premium portfolio. In fabric cleaning, we delivered double-digit growth in liquids, supported by the rollout of new Wonder Wash variants alongside a return to growth in powders. Wonder Wash is now available in 41 countries. Fabric enhancers continued to benefit from the strength of comfort.

Home & Hygiene also delivered mid-single-digit growth, with Cif continuing to perform strongly, and this was supported by the launch of Cif Infinite clean anti-bac. Looking ahead, given commodity pressures, we expect more balance between volume and price in the coming quarters.

Foods delivered underlying sales growth of 2.2% to 2.4% from volume and price being slightly negative reflecting volume-led growth across both retail and foodservice. Hellmann's delivered mid-single-digit volume growth, supported by the continued success of the premium flavor-led innovations and strong execution across markets. Performance was particularly strong in Brazil, supported by the NBA campaign and in the U.K. with the launch of the new ranch range. Cooking aids delivered low single-digit growth with strong performance in Asia Pacific Africa partly offset by softer conditions in developed markets, notably Europe. Unilever Food Solutions also grew low single digit, supported by improving trends in away-from-home consumption, particularly in China, its largest market. We'll continue to step up innovation and sharpen execution to sustain and strengthen our competitive growth.

Emerging markets delivered strong broad-based growth with improving momentum across key markets. Asia Pacific Africa delivered 5.9% underlying sales growth with 5% from volume, reflecting broad-based performance and improving competitiveness across markets. Over the last 3 quarters, on an average, we have delivered volume-led growth of around 6%. India accelerated to 7% with 6% volume growth, continuing the improving momentum seen over recent quarters. Growth was broad-based with Home Care and Beauty & Wellbeing performing strongly and solid delivery across the rest of the portfolio. Importantly, this is not driven by a single category or any short-term factors. It reflects the progress we are making on sharper portfolio choices, fewer bigger growth bets and improved execution across channels with higher growth segments and premium parts of the portfolio, contributing disproportionately to this performance.

We're also seeing continued progress in the newer channels and demand drivers, including e-commerce and modern trade, which are growing ahead of the core business and supporting the overall mix. In China, we delivered another quarter of mid-single-digit growth, in what remains a highly competitive market environment with differentiated growth across channels. Performance was driven by Beauty & Wellbeing and Personal Care and supported by premium innovations, improved go-to-market execution and continued progress in social and digital channels.

We are seeing improving competitiveness, particularly in our power brands. Indonesia delivered solid growth of 4%, which reflects a clear improvement in the trajectory of the business following the reset. We're now seeing a return to more sustainable growth levels, supported by improved execution across channels, stronger innovation pipelines and better activation in both traditional and modern trade. Importantly, market shares have now stabilized with around half the business now gaining share, reflecting progress from the actions taken, although there is still more to do to fully restore competitiveness. We're also seeing strong growth in the newer channels, including Health and Beauty and E-commerce, which are growing ahead of the core business and contributing well to the overall momentum.

The Middle East represents around 2% of our turnover and our operations in the region remained intact in quarter 1 with no material disruption to supply. Our priority remains the safety of our teams working in the region. More broadly, we have built a highly localized and flexible supply chain which together with the inventory covers, has enabled us to manage the situation effectively to date. We continue to monitor and take proactive actions in what remains a volatile environment.

Turning to Latin America. We delivered 6.2% underlying sales growth with solid volume growth of 2.6% alongside 3.5% pricing, reflecting a clear improvement in the momentum across the region. This was supported by strong volume performance, Brazil Laundry, following the corrective pricing actions and in Mexico Personal Care, driven by operational improvements.

Beauty & Wellbeing delivered double-digit growth and good performance across key markets. Developed markets delivered a mixed performance in the quarter. North America delivered resilient performance in soft market with 2.1% growth driven by 2.2% volume, while price was slightly negative. This reflects the strength of our execution and the competitiveness of our portfolio with continued momentum in Power Brands. Growth was led by Personal Care, which delivered mid-single-digit growth with strong volume momentum in deodorants and skin cleansing underpinned by the continued strength in Dove and our premium innovations. In Beauty & Wellbeing, volume-led growth in skin care and hair care was offset by Wellbeing, which declined against a very strong prior year comparator. In Foods, performance was flat overall, with Hellmann's continuing to deliver good volume-led growth.

In Europe, underlying sales declined 0.9%, with a 1.2% decline in volume and a 0.3% growth from price. Performance reflects a soft market environment across categories with consumer demand remaining subdued. Within that, premium innovation supported growth in categories such as laundry, deodorants and condiments. Our largest category, cooking rates declined in low single digit in line with market conditions.

Turnover for the quarter was EUR 12.6 billion, down 3.3% year-on-year. Underlying growth of 3.8% was more than offset by currency headwinds with FX reducing the reported turnover by 7.7%. Given that currency devaluation was more pronounced in the second half of 2025, the base effect should ease as the year progresses. And based on the April spot rates, we expect the full year currency impact on the turnover to be lower at around minus 3%. Portfolio changes contributed to a net positive 0.9% with acquisitions adding 1.4%, reflecting the strong performances of Dr. Squatch, [ Wild and minimalist ] and this was partly offset by a 0.5% impact from disposals, primarily relating to Foods and the Tea business in Indonesia.

Our full year outlook remains unchanged. We expect underlying sales growth for the full year 2026 to be at the bottom end of our multiyear guidance range of 4% to 6% with at least 2% underlying volume growth for the full year. On margin, we expect a modest improvement versus last year with broadly similar absolute margin levels between the first and second halves. The margins are supported by volume growth, mix improvement, continued savings and benefits from our productivity program which continues to run ahead of the schedule and has already delivered EUR 750 million by the end of quarter 1. We will maintain competitive and healthy levels of brand investment.

Given the current environment, there are a number of moving parts, particularly around input cost, pricing and market conditions, and we'll continue to manage these with discipline. On capital returns, today, we have initiated a EUR 1.5 billion share buyback and we expect to complete the program towards the end of first half. We remain committed to sustained attractive and growing dividends. Our medium-term leverage target remains around 2x. We expect to be below 2x immediately following the separation of Foods.

With that, over to you, Fernando.

Thank you, Srini. Let me come back now to the broader steps we are taking to build a simpler, sharper, faster Unilever. At the highest level, there are 3 things we are doing and they are very much interconnected. First, elevating our brands to outperform markets in volume growth; second, stepping up operational excellence across all our geographies; and third, taking decisive portfolio actions to unlock value. Let me start with the first, desire at scale.

This is the model we are using to elevate the quality, relevance and the reach of our brands. And it is without question, the single biggest driver of the improvement we are seeing in the [indiscernible] brand superiority scores of our portfolio and in the volume growth rate of our power brands. Desire at scale is built around a very clear simple framework, what we call [indiscernible] brands. It is about brands that are rooted in superior science with top notch aesthetics and visibility and with truly compelling [ sensorials ], brands that are talk about recommended by many, too many and that are culturally relevant. Simple, clear, effective.

You can see this very clearly in brands like Dove and Baseline. Dove is now close to a EUR 7 billion brand, and it has delivered more than 6% growth for 14 consecutive quarters. Over the last 5 years, it has added around EUR 2 billion of incremental turnover, and that is coming from a step change in product superiority, combined with a completely different model of consumer engagement with more than 100,000 creators actively working with the brand. Or take Vaseline, a 150-year-old brand that we have fundamentally transformed. It has been delivering double-digit growth over the last 5 years. And by combining superior science with cultural relevance, it is now building real momentum with younger consumers. For example, delivering more than 100% growth in TikTok shop in Southeast Asia, a demonstration of Vaseline's strengths in social commerce at scale.

The second element is operational excellence because desire at scale only works if it is supported by flawless execution. This is about how we create categories and how we're executing the market together with our customers, understanding consumers better, activating brilliantly and executing perfectly in store, both offline and online. Again, we have a growing number of great examples, [indiscernible] and Wonder Wash, an innovation anchor in superior science already at around EUR 200 million of annualized turnover. By redefining the category to [indiscernible] cycles, Wonder Wash is strengthening our position in the fast-growing liquid segment of laundry and scaling up at speed. For Hellman's [indiscernible] that is now in 35 markets and has already reached EUR 100 million of annualized turnover. Different brands, different categories, different geographies, all benefiting from a common marketing philosophy rooted in what consumers expect and demand of brands today, brands that are creative and dynamic reflation of the present and not a higher representation of the past.

Let me turn now to the third element, the portfolio. Here, we are taking decisive action to unlock value through the separation of Foods and its combination with McCormick. And we are doing this from a position of strength, fully aligned with the strategy we have been executing. The transaction we have announced creates two businesses with improved growth profiles. First, a simpler and more focused Unilever, a pure-play HPC business, a business with a very coherent portfolio where around 90% of the turnover is in #1 or #2 positions and with a proven ability to deliver top-tier volume growth and top-tier return on invested capital. Given relative valuation and relative in-market performance to business, a scaled global flavor powerhouse with iconic brands and leading positions in attractive segments of Foods market and with significant revenue growth potential. There is a clear strategic fit between Unilever Foods and McCormick centered around complementary geographical footprints, a stronger presence in retail, a scale business across food service channels and leading science and research and development capabilities focus exclusively on flavor. It is for all these reasons, I am referring to this as a growth-led separation of our Foods business, one that will give shareholders the same level of exposure to foods, but with much higher quality and more optionality than they have today. We know that this is a significant change and that it has to be delivered flawlessly. We are confident that it will.

We have proven experience in separations, most recently with ice cream. Our experience confirms our ability to separate the business of scale while delivering top line growth, volume and margin progression and the transitional service agreements will ensure continuity while providing the time needed to remove stranded costs before they impact the P&L. We already have dedicated teams in place working closely and collaboratively alongside McCormick who themselves have a strong integration track record. All work streams to separate Foods from Unilever and integrated business into McCormick are now in motion. We are moving fast.

With that, let me briefly sum up after what has been a positive start to 2026 for Unilever. It was a quarter in which we once again demonstrated our ability to both perform and transform. Performance comes in the shape of superior volume-led growth, our single biggest priority driven by our power brands and by one of the most distinctive Unilever assets is a strength in emerging markets. Underpinning this positive start to the year, it is a further step-up in operational discipline, something which becomes even more important in light of the current heightened macroeconomic uncertainties. We will manage the business in a more volatile cost environment, focusing on volume growth, price competitiveness and disciplined management of every single line of the P&L. We will emphasize the drivers of demand that have the highest return in the current context.

We are confident in our delivery and we are reasserting our full year outlook for 2026. We have taken a decisive action to transform our future portfolio, and we have done it from a position of strength and driven by a growth mindset. Our organization today is stronger. Our portfolio is sharper. Our priorities are clearer and desire at scale is breathing new life into our power brands and our whole marketing. We are now capitalizing on these developments with much more discipline in market execution. And whatever we have made decisive interventions like Indonesia, China or more recently, Brazil, positive results are showing up.

To go through these changes in more depth, we look forward to hosting Capital Markets Day on fourth of November when we will go deeper into how we will capitalize on our new sharper, fully focused Home and Personal Care pure play, one that is aligned to higher-growth categories faster-growing geographies, more premium segments and a superior route to market.

For now, thank you for listening. We look forward to taking your questions.

[Operator Instructions]

Our first question comes from Warren at Barclays.

So I've got one housekeeping. Just to clarify, did you say that North America would accelerate from here. So -- it was a bit quick, so if you can just clarify that. And then my two questions are, firstly, Fernando, on emerging markets, are you able to talk about how you feel about the 4 big engines of Brazil, India, China and Indonesia as we look into Q2 and the second half? Any signs of a slowdown also in Southeast Asia? Just so the EM outlook from here, you've obviously got easy comps in some places like Lat Am?

And then secondly, Srini, on the margin guidance with higher oil, are you able to give us an NMI number? And how much scope do you have to push productivity savings and/or pricing to make sure that you are indeed able to deliver the margin guide despite higher oil?

Cool. Thank you, Warren. I will cover the geographical part and Srini will cover the growth one. But let me start saying that we are pleased with our good start to the year, 3.8% USG; 2.9% in volume; power brands at 4% USG; Dove, our largest brand at 7% USG, and we have seen also a strong start to quarter 2 despite all the uncertainties that are very obvious to everyone in terms of geopolitical and macroconomic environment. So momentum continues in the business.

Regarding emerging markets, I mentioned this many, many times, but our strength in emerging markets is definitely a long-term competitive advantage, given the exposure [ you give ] us to better population growth rate, wealth margin expansion. We know this gap versus developed markets are reducing versus the past, but it remains significant. And the resilience of our portfolio in emerging markets is a particular advantage when you have to drive the business in conditions of significant volatility.

Regarding the specific regions you mentioned, in Latin America, our performance is accelerating. We delivered more than 6% and [indiscernible] sales growth in the quarter. Food [indiscernible] keep performing strongly as they did in 2025, but we are also starting to see the impact of the decisive actions we have taken in both Laundry and the deodorants particularly in Brazil. In Brazil, we delivered double-digit growth in Laundry. Two reasons for that. The successful introduction of Wonder Wash and the Liquids segment, but also the return we are seeing the correction in pricing that we have done to restore competitiveness in the Powder segment that is the largest in the laundry categories. In Deo, we are seeing momentum there. The [ sole ] format is recovering. This is crucial to our market growth and also to boost our competitiveness. We are in early stages of that recovery. We see this will accelerating quarter 2 with the fifth activation that we'll have. And with the setup of the new [ planograms ] that we have done in partnership with our retailers.

India. Srini can cover in more detail, but a strong broad-based performance, 9% growth in Home Care, 8% in beauty, 5% both in Personal Care and Foods. Srini can cover a bit more on that. China returned to mid-single-digit growth. We are very pleased with the improvements in food service, particularly in China. We are seeing the out-of-home channeling in China picking up, and that's very important for our most important food service business. That is the one in China. And Indonesia, run rates continue improving in the fifth consecutive quarter with run rates improving. We delivered 4% growth that is much more sustainable. Of course, we have had in the second half of last year, very low comparators there but performance is good.

In U.S., as you know, we have delivered 4% volume growth in North America in the last 3 years. It has been a very consistent performance despite tough markets, probably has been one of the best performances in the sector, and we believe this performance is a reflection of the profound transformation we have done to our portfolio. And we have seen also a significant improvement in our relationship with customers. I have mentioned before, that in the [ Advantage ] survey, we have run #1 in [indiscernible] Foods, #3 in beauty. But recently, we have received the consumable Supplier of the Year award and the Excellence in Assortment award from the largest U.S. retailer. This is another evidence that our partnership with retailers in the U.S. are really going from a strength to strength. Quarter 1 was softer at 2.1% USG, all came from volume performance in Personal Care was strong, great performance in Dove, Hair and [indiscernible] but the quarter was affected by weak performance in Foods and Wellbeing. Wellbeing had very, very strong comparators, more than 20% in the same quarter last year, more than 40% in Liquid IV. But we remain very, very confident of the structural growth potential of the Wellbeing verticals, and we see Wellbeing firmly back into growth in U.S. in quarter 2. There are a couple of brands that we need to fix in U.S., particularly [ Nexus ] and [indiscernible] in Hair Care, but we see our performance in UX accelerating from quarter 2 onwards. Srini?

I'll cover it in two parts. First, I'll talk a bit about India, then I'll go on to commodity inflation and how we're going to manage that. I think the point Fernando made is the right one. The quality of performance in India has been of a very high order. It's just not the headline number, but it's across the breath of our performance, which is broad-based. Giving you some color, let's say, when we look at it from a Home Care perspective, while growth was at 9%, what is really impressive is that in Liquids, we have grown double digit. That's really leading the market development. And in Powders, we've actually hit record shares. That's on that.

If I really talk about, let's say, Beauty & Wellbeing, the strong momentum in Hair continues, and we are making very clear choices and investments between quick commerce, e-commerce and broader omnichannel. The pricing actions, along with the [ GST ] have started to spur growth in this. Even the new age brands such as [ minimalist ] are performing quite well in the market, and that's giving us a lot of confidence in this segment. Personal Care, growth was at 5% but strong step-up in the premium segment, which is including Dove [indiscernible]. And for example, in the market development opportunities that as body washes, we have actually gained about 400 basis points of share, which again starts to step up well into the future.

And last element, when you think from a Foods perspective, we've also seen a bit of an uptick, actually, an improvement in [indiscernible] with all the actions we have taken. While there is some deflation in tea, but overall, from a volume and a value perspective, the Foods business is looking good.

This is all aligned to the strategic progress that we made across the 4 pillars of segmenting consumers, making our brands desirable, accelerating the frontline capabilities and making fewer and bigger bets. Just to add a couple of elements. We have put in a new organization to really address our quick commerce and e-commerce and omnichannel capability. That is functioning well. From a general trade perspective, we have increased the outlet coverage by about 200,000 outlets, which takes us to about [ EUR 2.3 million ]. And the India operating model is actually enabling us to drive execution and agility.

It's also important to highlight one element from an India context. While there is inflation, and there will be both from an imported crude as well as currency, it's important to highlight that classically in a category such as Home Care, this actually works in our favor. We have the portfolio to cater to the different price points through brands. But more importantly, a lot of the local players get constrained both from a supply perspective as well as cash. So you have the unique opportunity and the ability to actually manage the right price and volume equation in India and continue to keep the growth momentum going. So therefore, from a broad demand outlook perspective, India is looking good, and we are quite confident in terms of our ability to continue to keep the growth momentum.

Now coming to the question on costs and commodity. I will take a little bit of time to explain this. I do appreciate that it's on everyone's mind. First and foremost, we want to reiterate that there is no change to the Unilever value creation model. Our model is built on volume-led growth, premiumization and mix driving gross margins to invest behind our brands and keeping a very tight discipline in terms of the cost. While you all know, we have made significant progress in the past few years in terms of our gross margin expansion upwards of 400 basis points. We've also increased our investments behind our brands from about 13% to 16%, and we have continued to drive a model which works for us on a multiyear basis. If I just give a bit of a context to 2025. Again, it's important to see, last year, we had a reasonable amount of commodity inflation, but a significant pressure coming from currencies. From an EPS or on an earnings perspective, the currency drag last year was as high as 8.8%. When you contrast it to this year, given the commodity outlook, we will expect commodity inflation to be higher. But from a currency perspective, this year, we definitely see that it's going to be much better even when you see when we've called out in the earnings call, we expect that the impact of ForEx on our top line should be more normalized to 3%. And if you contrast it to last year, that was 6%. So the key essence of the message here is while we will see inflation from a commodity, currency at an aggregate will really be from the information we have favorable for us.

Now coming to the inflation. Of course, the Middle East crisis has created uncertainties and has made the outlook a bit challenging. Inflation for us is just not one number. While there is crude and everyone really anchors around crude, it is complex because there are many crude-linked derivatives. There is ForEx. There are elements of supply chain costs, wage inflation and others. So at a commodity level, there are elements which then start to play out differently. Our expectation for the full year inflation is in the range of about EUR 750 million to EUR 900 million. This is the total inflation. This is just not material inflation, but also the nonmaterial cost including logistics and our factory operations. If you were to put it into context, this will be about EUR 350 million to EUR 500 million higher than our prior expectations when we began the year.

Our working assumption for all these costs is really crude at around EUR 100. While we are all looking at a spot crude, which is today's context of EUR 124 or yesterday as EUR 110.

It's also important to highlight that when you really look at the futures, quarter 3 futures are still at [ 100 ] and quarter 4 futures are at about [ 90 ]. On a balance, therefore, what we have done is to really take [ 100 ] as a working assumption in our guide. And on that basis, we have said that we will continue to deliver a modest margin expansion.

A couple of other elements to highlight in this case because that becomes very important. When we really see it from a category perspective, when you see Beauty & Wellbeing and Personal Care, the aggregate levels of inflation that we see in 2026 are not materially different to what we experienced in the prior year. And in the prior year, we have managed both the volume and the pricing extremely well in these two business groups. The place where we will see heightened inflation, actually 50% of the total net inflation for us is coming through in Home Care. And 70% of that is actually focused around the emerging markets. We are deploying the full range of mitigation opportunities, competitive buying, commodity covers, formulation flexibility, packaging interventions, SKU focus and productivity across the value chain and a complete and a very tight control over the discretionary costs.

At this level of inflation, we do recognize, while we will drive all of this, it will not be possible, it may not be possible for us to just cover it from the cost actions. So we will take pricing. Pricing will be needed in selected markets and categories, notably Home Care. It will be calibrated and it will be done in a competitive manner. Our priority will be to really protect the consumer value while also taking care of our financial model.

On this point, again, it's good to repeat that in emerging markets, given the strength of our portfolio, our ability to be judicious in the way we manage pricing. We will have levers to manage it in a sensible manner is a good point.

Just last two points to complete the picture on this. On brand investments, we will continue to invest behind our brands at competitive levels to sustain the growth momentum. And we always said that our competitive spends will be classically in the range of 15% to 16%. And therefore, we are not going back to an era of underinvesting, but we will ensure that the spend is deployed effectively and in the right channels.

From an overhead perspective, you have seen that we have already delivered EUR 750 million, so almost EUR 80 million incremental savings in quarter 1. We are more than confident that we will complete the EUR 800 million program in the next quarter. And given the various series of measures that we have taken to manage costs, we will drive this harder and deliver higher savings. So in essence, in this range of EUR 750 million to EUR 900 million, we are comfortable to say that we can manage competitive growth, deliver on our guide of 4% to 6% and drive modest margin expansion.

Our next question comes from Celine at JPMorgan.

Yes. So my first question is on the balance of growth for the year. So you reiterated your guidance to be at the low end of 4% to 6%, and I understand that price mix will be more balanced in Home Care as we go through the year. Can you talk about -- first of all, that volume will be above 2% for the year. And when we look at your two category, Beauty and Personal Care, volume was below, in fact, at 2%. What should we fairly expect that this will be in the range of 2% each for the year? And what should drive that acceleration in the second half?

And then my second question is coming back on maybe Wellbeing. You said it was down low single digits. Is it possible to understand how was it U.S. versus the rest of the world? What's happening in the rest of the world in terms of your white space opportunity? And in the U.S., if you could go a bit deeper in understanding Nutrafol and Liquid IV performance and the go forward?

Yes, we are confident in delivering our 2% volume growth. If you look at the last 9 quarters, '24, '25 and quarter 1 '26, our average volume growth has been 2.5% and we had a good start to the year with 2.9% in the first quarter. And as I mentioned before, we have a good start of the quarter 2. I feel like a point to say just this is the result of [indiscernible] that are strengthening. More than 60% of our revenue is increasing what we call a [ missable ] brand superiority score. We have a great innovation plan, one of the best that we have had in years, hitting the market now and we have one of the strongest activation platforms in years with the personal sponsorship of FIFA. So this give us real confidence that we will deliver volume growth for the year about 2%. Turnover weighted market volume growth is in the territory of 1%. So this clear shows outperformance of the markets when it comes to value growth to volume growth. We expect pricing to accelerate along the year. So we expect the H1, our growth to be led by volume. We expect better balance between volume and price in the second half of the year.

When it comes to Beauty & Wellbeing, basically, we delivered 3.6% in quarter 1. Our Beauty business performed really strongly but we're being both dilutive for the first time since we entered the category and we had a great quarter in Hair Care with high single-digit growth, and we have a great quarter in Prestige, where we grew 10%, strong results across every single [indiscernible] prestige in skin, in hair and in color cosmetics, particularly at the highest end of pricing, brands like [indiscernible] and K18 really performing very, very well.

Regarding Wellbeing, we declined 2%. Our Wellbeing business continue being fundamentally anchor in the U.S. So the international business grew nicely, but it doesn't change the overall numbers of Wellbeing. [indiscernible] grew 18% in the quarter but we have some issues in Liquid I.V. and Nutrafol we have to sort out. In Liquid I.V., we lap a comparator of more than 40% growth last year. There was a different phasing in the shipments prior to the summer season in U.S. We continue seeing solid growth in the power hydration market, but our share has been a bit under pressure due to a new wave of market entrants that have reduced our share of assortment in the category. We have seen this many, many times before since we acquired Liquid I.V. in 2020, hundreds of new brands entering the category, but very few can sustain velocity after some period of time. Liquid I.V. is 4x the size of the second player in the category. We are reinforcing our plans to regain share, and we are very, very confident that we'll have a strong quarter 2 for Liquid I.V.

In the case of Nutrafol, the brand continues having exceptional levels of retention. I have never seen anything like that in any brand [indiscernible] in my career. But we need to address the issue of a significant increase in the cost of acquiring new customers. We have seen particularly telehealth platforms in the U.S., significantly investing in the cross-selling of GLP-1 injectables and [ hair fall ] products, most of them with significant negative side effects. We are addressing this. We are highlighting the clinical superiority and the no side effects of Nutrafol. And we expect, in the case of Nutrafol, the results to become better in the second half of the year. The brand was flattish in quarter 1.

Our next question comes from Nicolas at Bank of America.

Two questions for me, please. The first one is coming back on the pricing element. Are you pricing enough in Asia Pac, Africa, [indiscernible] pricing is around 1% and the FX is down 10%. Do you think that kind of gap is sustainable? Or do you expect that to close in the future?

And then just -- if you could talk a bit about Dr. Squatch, we've seen a lot of slowdown in scanner data. So if you could just update us on whether you think that brand is still on track to achieve their business case?

Let me start by Dr. Squatch and then Srini will cover pricing. A good performance overall of Dr. Squatch. We have seen significant growth in Body shower and in deodorants in particular. We see some slowdown in the total cost bar segment. But we expect Dr. Squatch will be part of our underlying sales growth from September, if I'm not wrong and we expect double-digit growth in Dr. Squatch going forward. So we have been delisting some items that we didn't think were fundamental for the brand going forward. This is affecting some of the share reading. But in the core of Dr. Squatch, the performance is strong, and we see this as a strong contributor to our growth from September onwards in the U.S. market. Srini?

So from a pricing perspective, what you will see is that it's important to say you will start to see a step-up in the pricing. Quarter 1 low pricing also gets explained by what's happening in a few of our categories. For example, if you see, in the case of India, we had deflation in tea and therefore, that has played out. That does not impact the value creation in the model there. In the last year, we've also taken pricing corrections in our liquids part of the portfolio, which actually anniversarize in quarter 1. So in that sense, what you see in the quarter 1 is the lowest point of it, we've already initiated price increases, and that's coming through, right, from quarter 1 to quarter 2. We'll start to see the benefit going forward.

In case of Home Care at a broader level, it also impacts some of the -- I'm also giving you a broader question on pricing. This also reflects some of the actions we took in Brazil and Latin America, which actually will then start to anniversarize again in a matter of one more quarter. So broadly speaking, from a pricing perspective, what you see is a reflection of the fag end of some of the actions which we have taken in the prior year and which have given us benefits.

Going forward, we are pricing up on a sensible in a competitive manner [ to while ] cover commodity when it comes to the commodity-linked categories and linked to innovations in Beauty & Wellbeing. And therefore, you will start to see a such step up on pricing right from quarter 2 and as Fernando has alluded to see, you will see a better mix of it, and it will improve progressively as we go into half 2.

Let me add something because I feel I have mentioned this before, but I want to repeat it to be clear. The times of being competitive in Unilever in any driver of demand are gone. And we will manage the business in a more volatile cost environment, focusing on volume growth on price competitiveness and a disciplined management of every single line of our P&L. We will emphasize the drivers of demand that have the highest return in the current context and ensure competitiveness in both pricing and brand marketing investment with the assumption that Srini has made in terms of the oil price that we see and the impact that we have in cost inflation. Despite this, we continue to see the possibility of increasing our operating margin in modest terms as we have highlighted in our guidance.

Our next question comes from Jeff at BNP.

Okay. Two questions, if I may. When you move into more inflationary environment, historically, like-for-likes have always started to accelerate. So why are you still guiding to the bottom end of the 4% to 6%? Because obviously, the inflationary backdrop is rather different to what it was at the start of the year when you initially set the guide. That's the first question.

And the second question is we've held one of your notable peers talking about some suspicion that there may have been a degree of retailer stocking ahead of expected price increases. I'm just wondering if you've seen any evidence of that, particularly in the emerging markets business.

Thank you, Jeff. I will cover the second part and Srini can cover the inflationary environment and the guidance. No, we have not seen any significant stocking. There have been a few countries, the Easter phasing has been different, but at the same time, as I mentioned before, in the case of Liquid I.V., particularly in the U.S., our phasing has [indiscernible] into quarter 2. So in terms of retailers stocking in anticipation of price increases, we have not seen anything of material impact at all. So nothing in that space. On inflation pricing?

So I think two important points, Jeff. Obviously, we are going to ensure competitiveness both volume and price and for the dynamics that I've explained that, look, both from a Beauty point of view and Personal Care point of view, the inflation levels are in the ballpark of what we handled last year. So when we take these into account, Yes, it actually gives us the confidence to say that we will be able to deliver our 2% volume as well as the 4% to 6% top line. However, what we're also conscious and cognizant is that the levels of inflation which are coming through, and it's just not learned on a sector alone. What we are likely to see that there could be a potential larger impact on consumer and consumer sentiment. And the way inflation is going to land given the dynamics, it could also be different in different parts of the world. So we will require to have some more visibility in terms of how consumer demand is playing out. We need to have some more visibility in terms of how some of the buying patterns are playing out. Therefore, it will be prudent for us to actually come back and revisit the guide at half. So at this stage, what we have, therefore, set on a prudent basis is to ensure that we give confidence to the markets that we still will deliver our 4% to 6%, and we will come back with a better read in a quarter's time. and then we could actually have a conversation on the full year.

And I would like to reinforce in the last earnings call, I mentioned that we firmly believe that in the long run, our combined [indiscernible] footprint offer around 2% market volume growth and around 2% to 3% pricing. At that time, you told me that the 2% pricing look very far. Situation has changed now. But this is what we have seen in the last decade or so. We expect the same to play out in the long run. And as most of the impact in pricing this year will be in the second half. So we are cautious at these stations. As Srini mentioned, we will revise this when it comes second quarter results.

Our next question comes from James at RBC.

You're presenting your updated remuneration policy to the AGM in a couple of weeks' time, what's the thinking behind the annual bonus and performance share plan kicking in for sales growth well below your 4% to 6% guidance?

Yes, we are presenting the remuneration policy in the next AGM, that is the 13th of May. There is a clear intention to become competitive with global companies in that space when it comes to remuneration. And when it comes to the targets that we put at the beginning of the year for our annual bonus is reflected the market conditions and reflecting what top TSR performance implied. As we mentioned before, the situation now has changed in terms of what is a potential inflationary context in which we are working. And you know -- but we present the targets on an annual basis, and we will change that if the next year the conditions are different for the [indiscernible] and for the [indiscernible] bonus.

So maybe just one additional element to add on that. The key is really the long-term incentives and actually, a couple of the measures and the long-term incentives are completely Actually, bulk of the remuneration there is linked to shareholder return and outperformance. So 30% of the weighting in the long-term incentive continues to be on TSR. Therefore, that takes into account any of these changes. Second, if you actually, again, look at it from a return on invested capital, that's again a long-term measure, which is, again, linked to competitive outperformance. So in some ways, I don't believe that, that materially changes. We are -- anything that is coming in the remuneration policy is linked to shareholder return.

Our next question comes from Olivier at Goldman Sachs.

Two questions. First, you mentioned previously that 50% of inflation is in Home Care. Can you perhaps comment on the magnitude of the price increase in Home Care you would need to take to offset the current input cost inflation that you're seeing? And regarding other divisions like Personal Care as well, should we expect a price increase?

And then Secondly, it might be a little bit of a technical one, but I noticed that the share buyback is still EUR 1.5 billion the same amount, but it's going to be done by July 6. That's going to be done another the next 45 working days, last year, it was done same amount, but it was more like 70-plus working days. So any rationale for this increase in speed?

Well, share buyback acceleration is very clear that the markets have suffered in terms of valuation, and we are very confident in the future valuation of the company, given our performance. We really believe that the Unilever that we are shaping, as we mentioned when we announced the McCormick transaction is one that has been bottom quartile in valuation with top quartile performance. So this is a good moment to make share buybacks. And it's a good moment to make sure buybacks in an accelerated way.

Regarding Middle East conflict, I would like to highlight a couple of things. First of all, Middle East represents for us around 2% of the revenue. And until now, we have not seen any material impact in consumption level or disruptions in the operations. Of course, the closure of the Hormuz Straight may have potential implications in terms of availability of petrochemical materials. But this can be an opportunity for us because we have a very resilient supply chain, a multipolar supply chain with multiple sources of materials. And this resilience can imply a competitive advantage. We see growth opportunity in laundry powders because we see local players, particularly in India and Southeast Asia been affected in terms of availability of materials.

Srini, do you want to comment on the inflation in Home Care?

Just a couple of things. It is Home Care and a lot of that of the total inflation, 70% is in emerging markets, which, therefore, is an opportunity for us to actually be able to take up prices. Having said that, in line with our own experience and best practices and to ensure our competitiveness. We will lead pricing where we are leaders. We will follow where we are not. The price increases we will take will always be calibrated. There will be frequent price increases, but in small doses. That ensures that we get the right balance of giving value to the consumer while protecting our model. This could also mean that there could be a bit of a lag between when commodity starts to hit when pricing starts to come in. Now these are the elements which we'll have to continue to monitor and validate and therefore, we will fine-tune. That's also the reason we talked about all the other measures, which start becoming important for us to manage the P&L from formulation to logistics to the manufacturing costs. And that's the only reason, at this stage, yes, we should expect pricing to be higher, but it's not going to be a one-to-one correlation. And for that reason, we will not be able to give you a specific guide today. We could have a better conversation in 3 months' time when we have better clarity of the environment and overall consumer demand.

And Olivier, I would like to highlight something that Srini mentioned in the beginning of the call because the situation is different in different markets. The very, very differently to previous global crisis we have seen. We are seeing emerging market currencies holding relatively well. If you take a market like Brazil for the moment, we have seen an appreciation of the currency that is higher than the increase in material costs that we are having. So I feel the situation is very different for different Home Care business depending on the geographies in which we are operating.

Our next question comes from Callum at Bernstein.

Just start coming back to Home Care, please. 6% volume growth is obviously quite remarkable. Really in your commentary, it seems like it's quite broad-based across fabric cleaning enhancers and hygiene but maybe you could just add some color for us, please, on what are the drivers of that 6%? How much is market growth versus your share gain? What are your share gains being driven by? And are there any one-off factors in the plus 6% that we should be cognizant of?

And then my second is actually unusually coming back to remuneration. You had some very interesting commentary and examples in the annual report about your ability or probably, I should say, inability to attract talent, especially in the U.S., where it seems like your compensation is just not market competitive. So my question is, how are you and the Board just thinking about this, given the strategic focus on growth in the U.S. market? And could there be pressure on margins if you need to structurally improve your compensation packages?

Regarding Home Care, our comparator was relatively low in Home Care, but I feel what is important to highlight that on a 2-year basis, we have been delivering consistently volume growth in Home Care above 3% and this is a combination of a solid performance in fabric cleaning, and I would say, a stellar performance in Home and hygiene and fabric enhancers. I feel [indiscernible] grew this quarter around 15% [indiscernible] high single digit. As Srini mentioned, in the case of India, we achieved the highest ever share in laundry powders. We are increasing our position in liquids strongly. We have had double-digit volume growth in Brazil, in fabric cleaning, in Vietnam, in Arabia, in Turkey, high single-digit growth in Argentina. So there is a broad-based very, very strong growth. And I believe it's a combination of really restoring our pricing competitiveness in powder and at the same time, accelerating the market development of liquids with a special role to Wonder Wash that is already more than EUR 200 million in annualized sales and is already present in 41 countries. So overall broad base, good performance in Home Care. We see momentum in the business and we see momentum in the 3 pillars of Home Care in fabric cleaning, in [ home ] and hygiene and in fabric enhancers. Probably the one that is a bit lower, that is growing at around 5%, is dishwash that is more exposed to Southeast Asia, and that's a grow -- the category in which we have seen a bit less dynamics.

In terms of remuneration, it's true. As you know, we have been looking at appointing some top leaders in the organization from that side. This is a very different Unilever in which the combination of born and bred talent and talent inflow from the outside is much more balanced than in the past. We are increasing our exposure to the U.S., and we are allocating significant capital into the U.S. And it's very, very important that we are able to compete with American companies when it comes to remuneration. We don't believe that this has an impact at the global level in terms of our cost base. But we need to really increase the ceiling of remuneration in the company to be able to ensure that we can attract top-notch American talent because at this stage and for many, many years, we have been lacking kind of leadership at the top of the organization coming from North America, and this has to change in the future.

Maybe one small clarification on the question related to any one-offs in Home Care and otherwise. At an aggregate Unilever, there is nothing specifically to be called out. Could there be some small pockets of people buying in? Possible. Did we have some adverse impact because of Eid timing? Slightly possible. So therefore, there are always some small ins and outs in a few places. But when we look at it in an aggregate, there is nothing that we would really call out has been something to point out from a quarter perspective.

And I believe it's important also to highlight that our distributor covers are one of the minimums we have in history. So basically, this is showing the efficiency of our model, our operational discipline and also the care we are taking in ensuring that the working capital of the value chain is properly managed.

Our next question comes from Karel at Kepler.

Two questions. The first one, I know you already discussed market shares for a couple of individual markets and regions. But on an aggregate level, what have your market shares done over the last quarter?

And then the other question is a follow-up on Latin America. You discussed Brazil. But what's the trajectory going forward? Because it's been quite volatile in '25 but things seems to be getting better. So what should we anticipate for Lat am as a region going forward?

Market share has been stable in the last few readings for us after significant gains that we have had around the first 3 quarters of 2025. Srini can give more color on that.

Regarding Latin America, as I mentioned before, we have delivered 6% growth in the quarter. We already in 2025, we're having excellent performance in Foods and [indiscernible], but we have some issues in laundry and deodorants particularly in Brazil. This has been corrected. We see momentum in the business. The actions we have taken in deals are at that early stage. So we probably will see further acceleration in our Personal Care performance in Latin America. That is very important because deodorants, in particular, Latin America is a big contributor to the growth of the total Personal Care business. So a lot of confidence in our development in Latin America going forward. I would say, in Americas overall, because we expect also North America to be better from quarter 2 onwards. So optimistic about the market share. So Srini any?

So 3 simple messages, both from a value as well as a volume share perspective, we are relatively stable. I think that's actually quite encouraging just given the context of where we are. It also is ensuring that we are in the right space, both in terms of volume and our pricing in the market.

Point number two, we have seen some positive acceleration coming through in India, and that's understandable given the quality of the performance, which has come. I think that positions us well.

The other element to highlight is, again, when we see the last 4 weeks read in North America, we have seen a strong comeback in some of our categories, most notably in Personal Care. That again positions us well. So just a bit more color to the comment. But at an aggregate, shares are stable both on value and volume terms.

And remember that we cover around 2/3 of our revenue in market share reading and if you look at our 2.9% volume growth and you compare with markets growing around 1%, it's very clear that we are outperforming the market there.

Our next question comes from David at Jefferies.

So two for me. Just firstly, on Thailand, I know not a big market, but we picked up that you lowered prices coming into April and apparently a reaction to the struggles on energy prices for the consumer. I think you specifically made that point. So I just wonder whether is that something that you're having to do in other Asian markets? And is that something you're doing proactively? Or is there an element of government pressure in that market or other markets to be seem to be kind of helping consumers with a tougher environment?

And the second question, just came back to the Home Care dynamics. Pricing obviously been very low for the last 9 quarters, up 1% or even negative for some of those quarters. So just to explain the dynamics there, is that the input costs were deflationary and that's what was allowing that pricing? Or is it a competitive intensity dynamic? And then related to that and some of the moving parts you talked about? Will Home Care margins, you think, be up this year? Or is that an area where you have to sacrifice profitability given where the input costs lie and you make it up in other divisions?

Let me cover a couple of things and then the Home Care margins, Srini can take it. Thailand is a very special situation. Thailand has entered into a conflict with Cambodia. Around 10% to 15% of the volumes of the Thailand market were flowing to Cambodia. That has been closed. Fundamentally, this has made some players in the market to really react with significant promotional investment. And we have reacted to really ensure that our competitiveness was strong. So basically, it's a very, very peculiar situation. We have seen some international players, in particular, reducing prices significantly. And as I mentioned before, being uncompetitive in Unilever is not an option anymore, and we have reacted to that.

In the case of Home Care, yes, the context of -- it has been deflationary for around, I would say, 1.5 years. This is, of course, changing now, and we see [ prices ] in Home Care accelerating. We have been enjoying very, very solid gross margins in Home Care and our operating margin has been increasing strongly. But you want to add some color on that?

So the additional color to that is that it's absolutely right that there has been deflationary with crude sitting at about [ 60 ], which had actually started tapering off from the mid-70s and therefore, that's reflected in pricing. The other element, these are the corrections which we actually put in the first half of last year. That's when we addressed some of the places where we were not competitive or we had to react to ensure we were competitive, notably Brazil and India. We took those corrective actions. In all the markets that we operate today, we are on strategic pricing in home care. That positions us extremely well. And the way we've really articulated in terms of taking judicial space or calibrated pricing will position us well.

Coming back to your question on overall home care margins, it will be our first endeavor to ensure that each business group really delivers on its financial model. But given the magnitude of some of the commodity inflation and the lead lag between pricing and commodity. If we need to really support Home Care and make it up in some other business groups and categories and sales in the short term, we will do it, but that's something that we will do in a sensible manner without impacting the competitiveness of any of the single sales.

And remember, David also Home Care is a category that is very sensitive to volume. And we see opportunities coming from the constraints supplied in the global market. Our supply chain is multipolar, is very resilient. We are seeing some shortage in some local players, particularly in India and Southeast Asia that can support our volumes, and it will make easier the passing of pricing in the future.

Our next question comes from Jeremy at HSBC.

A couple for me. First one is perhaps you could talk a little bit about what you're seeing from a kind of consumer standpoint in some of the emerging markets, which of paper would be more affected by the higher oil price here, particularly some of those around Southeast Asia where there's been anything you've noticed in terms of how consumers are behaving their consumption patterns or whether there isn't really a lot of evidence so far?

And the second one is just on your margins. You talked about the margin being kind of like balanced in absolute terms between the first and second half, which on paper would mean that the margin expansion you deliver for 2026 would be coming basically all in the second half. So given that's when the commodity pressure would hit more, could you talk about what some of the other things you've got going in your favor in the second half to make sure that you land margin numbers that you currently expect?

Yes. Jeremy, Emerging markets, we have not seen any material changes in market volume growth at this stage. As I mentioned, we have been growing very nicely in places like Vietnam, Pakistan and [indiscernible] Arabia, India, Philippines, probably the exception to that is Thailand where, as I mentioned in David's questions, there has been a pricing issue that we have to sort out. But overall, not material impact in consumption at this stage coming from the higher fuel prices that are starting to materialize in these countries.

China, importantly for us, we have seen improvements in China since mid-2025. We are solidly now operating at around 5% growth. And as I mentioned before, particularly our food service business that is important in the context of China, we have seen some improvements in the out-of-home channel there that is supporting the growth of the food service business. Margin?

So on the margins, I think there's a bit of a confusion in the marketplace in terms of whether you talk about the absolute margins on the bps. From a full year perspective, we had delivered margins of 20%. If you look at the prior two years, there was a bit of a lot more volatility and seasonality between half 1 and half 2 with ice creams moving away. We were in the space of saying that, look, we are likely to have that steady margin profile from a first half and second half point of view. From a first half perspective, we are trending well given all the actions that we have taken, given the volume-led growth and our gross margin progression. So we should see improvement at least or at least first half are maintaining last year's margins or a slight improvement. That's what we're aiming for. Second half, we have discussed some of the cost challenges and some of the actions that we are taking. At this stage, we believe that we will have all the mitigants in place to cater to that and therefore, the overall approach. Best at this stage would be to really focus on how we want to navigate the environment, the situation and deliver the model on a full year basis and we could actually have a proper conversation with half 1 results with a better outlook on the full year.

Our next question comes from Sarah at Morgan Stanley.

Yes. Just following on from that sort of shape of the margin. Should we expect a significant skew in terms of marketing investment as a percentage of revenues between H1 and H2, given the FIFA stuff?

No, we feel very comfortable with the investment that we are having in the market now. We believe that we can operate between 15% and 16% in terms of brand marketing investment. We have increased around 300 basis points, our investment behind the brands in the last 3 years. And also we feel comfortable with that kind of level. We measure that, of course, on a monthly basis. We -- our share of voice, both in the digital space and in the old media space is solid. And as I mentioned before, we will keep our competitiveness as a key metric of success for us, ensuring that the enablers of demand, both in terms of pricing and undermarket investments are solid. So don't expect significant changes in the level of investment that we should have in the two halves.

So just again, a little more color, especially in the developing markets and what we have seen historically, and I'm not saying that it plays out exactly. When these kind of levels of inflation do play out, people do -- as an industry, as a category, people do make calibration between pricing and investments to ensure that they give the right value to the consumers. What effectively that means that the media hit could come off significantly. Our endeavor is to ensure that we invest adequately behind our brands. We do everything to support our innovations. But we will actually keep a lens if the media heat does come off, we will ensure that we are deploying our resources effectively and not really wasting some of the media money.

I feel it's important that history shows that when there is significant commodity inflation there tends to be immediate inflation. So we will look at particularly in emerging markets. So that's something that we are looking in detail and our procurement team is very active in that space.

Our next question comes from Tom at Deutsche Bank.

Just on the U.S., first of all, the share data in Nielsen suggests that you're losing share of the Amazon channel. And I just -- and that channel seems to be growing the fastest in HPC in Personal Care [indiscernible] are very strong on Amazon. From your perspective, do you think your holding share on that channel, which seems to disproportionately be growing? And then on pricing, on Amazon, and it's not annual contracts, as I understand. And so in theory, you could put up pricing pretty quickly there. Do you believe your pricing power or elasticity is the same on Amazon as it would be on other channels? And a final one, just on a follow-up on the media. Is there any element in your increase of use of influencers and KOLs, et cetera, that there is an in-built flexibility on what you pay them depending on volumes. And so therefore, that would naturally come down a bit if volumes in, say, EMs came down, please?

Yes. The last question is influencer cost, it's a variable cost. Pricing, of course, it has a component of volume there. Regarding pricing in Amazon, we don't see fundamental difference between our pricing ability in the Amazon channel and the off-line channel. As you know, they are closely linked because you have to ensure that there are no pricing conflict of growth channels. So we don't see any fundamental issues there. Do you want to talk about shares?

What we really follow, Tom, is Circana has been more representative of some of the share trends, whether it is in Amazon or broader e-commerce, e-commerce, therefore, progressively in the last 12, 18 months, we have validated the database, and that is what we actually look at. The reads that we see on that continue to show much better. So there is a divergence which is happening between the two data sources. But at an aggregate, we are not seeing some of the elements that you have spoken about, but happy to engage with you offline to go into further details.

We are just -- I don't have the latest number, but our growth in Amazon has been in the high teens for 2025. I need to check exactly what was in quarter 1, I don't have that data here.

Our next question comes from Guillaume.

Two questions for me, please. First one is on Europe. Kind of second consecutive quarter now that both USG and UVG are a bit soft. So wondering if it's mostly down to lower category growth or if you're also seeing some maybe challenges in terms of your market share development in an environment that seems to be highly promotional. So maybe if you can unpack this performance for us. And I guess, looking ahead, do you expect similar trends in Europe? Or are you hopeful you can go back to positive USG and UVG in the next quarter?

And then my second question is on Foods. I appreciate it's really early days. But Fernando, I'm wondering how the business has been reacting following the announcement of the deal with McCormick and between now and the completion of the deal, I mean how to ensure that food doesn't get distracted too much by the carve out. I'm sure for some employees, some job uncertainty. So I guess, what will be the focus for Foods in the next 4 to 5 quarters?

Well, Europe, indeed has -- the market has been subdued. We have had very good share progress in Home Care and Personal Care in the last 9 to 10 quarters. Foods has been a bit more difficult, it's 40% of our revenue there. And we have seen some increase in promotional pressure in foods and that has pulled some negative impact on pricing that is affecting us. While we expect our performance in Europe to improve along the year. We are really banking in a very strong quarter 2 in Personal Care with all the FIFA activation that in Europe will be very, very significant. We are starting to roll out some of our most successful [indiscernible] brands into Europe. So we don't expect Europe to become a key engine of growth in the future, but we expect a slight recovery despite the fact that the impact of energy prices in Europe can be significant in terms of consumer purchasing power and confidence. So a slight improvement expected in Europe going forward.

Regarding foods, we have, of course, been very active communicating the transaction internally to our employees. I was recently in Ireland having a downhole with all our employees there in the central foods team and talking to the Whole foods team across the growth. I believe there is some real excitement about the potential that the McCormick transaction offer for our people. It was very clear that Foods was not a key priority in terms of portfolio development within Unilever but Knorr will be the #1 brand in the large McCormick and Hellmann's will be the #2 brand in the large McCormick. So the concept of building a real global flavor powerhouse with significant revenue synergies in what I call a growth separation of foods I believe it's resonated with our people. Of course, there is some anxiety and we are working very aligned with McCormick to ensure that we -- short-term time frames in every single work stream. We are working very collaboratively with the McCormick leadership team. Separation work streams are all in motion. And the integration plan with McCormick has been managed in conjunction between the two companies. And this week, the McCormick leadership team is here in Europe, we have been talking to them. They have been presented to some of you, I believe, also. And we are very, very happy with the products that we are doing, and the intention is to shorter timings as much as we can.

Our final question comes from Ed at Rothschild.

A couple of ones. Just looking at the Asia Pac and LatAm. You referenced Beauty & Wellbeing strong performance in LatAm, also Beauty & Wellbeing driving growth in China. Just trying to understand what part of the Beauty & Wellbeing is growing there? Is it the more premium side of the business? Is it largely [ online line ]? Just to sort of understand how you're positioned there?

And then as we think about a period of more macro uncertainty, how should we think about the One Unilever market in that context? Do you feel more confident about being able to navigate potential uncertainty or macro uncertainty given the way you now run those One Unilever markets?

Yes. Thank you, Ed. Yes, performance in Beauty & Wellbeing in emerging markets has been strong. As I mentioned before, our Hair business grew high single digits at total level, and that was driven by a strong performance in emerging markets. India grew 8%. I feel in Latin America, Beauty & Wellbeing was, I believe in double-digit growth. We are seeing a strong growth also in Middle East and in Southeast Asia. So I feel the performance has been strong. We have an excellent performance of Dove Hair. Dove Hair is growing 15%. It initiated with the relaunch in the U.S. that is performing extremely well. But now this relaunches roll out across all our geographies. Vaseline is growing very, very strongly, close to 10% and Sunsilk growing 8% in Beauty & Wellbeing. So if you look at the top 3 brands of our Beauty & Wellbeing business, Dove Hair, 15%, Vaseline 9%, if I'm not wrong, and Sunsilk, 8&. So performance is strong. It's strong in different price points, particularly in the upper mass to premium segment. But also, as I mentioned before, our Prestige business in the U.S. also doing very, very well. So Overall, good performance in Beauty & Wellbeing, particularly in emerging markets.

Regarding One Unilever markets, we are very happy with the performance there. It has been one of our fastest-growing cluster last year. Performance in quarter 1 continues being strong. We are running in One Unilever markets, a much more tighter portfolio usually in every market in what we call One Unilever that are [ market '25 ] onwards. We run a portfolio between 6 and 8 brands. And in the quarter 1, we delivered about 2% volume once again. So we believe that it will be, as I mentioned before, opportunities for us in these markets when there are supply constraints in the market, there are two things that happen, a resilient supply chain, like one of Unilever can build some competitive advantage to drive more volume. And second, the ability to pass pricing is higher.

Thank you very much.

Good. I would like to close with a couple of messages. The first one is that we started the year, as I mentioned, with a strong volume growth, and our confidence in delivering about 2% volume growth for the year is reinforced by the fact that we are having a strong start to quarter 2 with practically April finish now. Pricing will definitely accelerate along the year. The majority of our cost inflation is in Home Care and is in emerging markets. and the frequency of pricing and the ability to pass pricing in these regions is higher. The cost environment is volatile, but we will manage the business with clear focus on volume and ensuring competitiveness in both price and BMI. And as I mentioned before, we will emphasize the driver of demand with the higher return depending on the environment. We are really making good progress regarding the food separation. Of course, there are elements that are not completely in our control, like the antitrust clearance, the timing of the antitrust clearance and the timing of the SEC approval. But all the work streams are in motion. We are working as one team with the McCormick leadership team, and we expect to really accelerate the timing of separation and integration. And we are affirming our guidance. We continue expecting our top line to grow within the range of 4% to 6%, most probably at the bottom end of that range. And we expect despite the increase in commodity inflation that we expect hitting our P&L in the second half of the year to deliver more [ it's ] operating margin. We will use every single level of the P&L from formulation flexibility to productivity, to hiring freeze to tighter overhead management to ensure that we are able to deliver the most operating margin expansion that is in our guidance.

With that, thank you very much.

Hello, everybody. I'm Warren Ackerman, Head of EU Staples at Barclays. I'm delighted to be with Fernando today. Fernando, I think it's about a year since we sat down together. It feels like an eternity with the volatility in geopolitics, although I'm sure the ceasefire last night will be welcome. It's also been equally busy for you guys with the Magnum spin completed and the McCormick Food proposal.

So what I want to try and do today is to split our conversation into 3 parts. The first part is to better understand the proposed transaction. Secondly, a little bit about some of the technical details because it's quite a complex deal. And thirdly, to get a little bit behind your vision longer term as a pure-play HPC company.

So with that, I'm going to go straight into it. So the first question, Fernando, is I've been covering Unilever a long time. In fact, I was even there when Unilever bought Best Foods back in 2000. I remember the deal, $25 billion deal, which brought in Hellmann's and Knorr. 2.5 decades later, we're going full circle with the exit of Foods. You've just done the Magnum disposal. There's massive volatility in geopolitics. So can I start really with the elephant in the room and just ask why now?

Well, first of all, thank you for having me. And indeed, I think many things happened in the last year. And we're focusing what we can control, and I'm really satisfied with the fact that I feel -- I believe we have really improve the fundamentals of the business when it comes to product innovation, consumer engagement, execution and that has resulted in outperformance both in our food business and in our HPC business, as you know.

So I feel we are announcing this transaction from a position of strength, and this is very important for us. This is not a transaction that is defined by the need of producing a turnaround. This is a transaction that is absolutely aligned with the strategic path in which Unilever is. And I'm glad also that the question is changing from why not into why now? Because the question I used to received more was why not?

This is a transaction that was originated by an inbound proposal that came from one of the companies that we respect most in Foods, a company that has a significant complementarity with our Foods portfolio. And we have strike a deal in which we believe is an attractive valuation. It basically allow us to separate Foods in multiples that are similar to Unilever multiples and to the multiples of the highest value food business that are listed.

And it's fundamentally what I call a growth-led separation of Foods. I feel that while I'm obsessed with volume growth as a key metric, and this is fundamentally about improving the volume growth potential of both the HPC pure play that Unilever will be and the combined McCormick Unilever Foods business. And I really believe that this is absolutely possible. In the case of HPC, we are ending in a Unilever that is much simpler with a clear -- with a category setup that is really common in categories that share a fast innovation cycle with a clear share set of capabilities.

And these are categories in which we have already been performing. This is not the need of turning around the business. If you look at our HPC business in the last 3 years, our compound annual growth rate was 5.4%. Our volume growth was 2.5%, and this is clearly above the market. And when it comes to foods, we are combining here 2 businesses resulting in a $20 billion revenue for the new McCormick in a very focused way with clear leadership positions from herbs and spices to stock cubes, from mayonnaise to mustard to hot sauces, across retail and food service, across developed markets and emerging markets.

So we really believe that we are building here 2 very focused business with significant growth potential, clearly superior to the one that the sector has.

But the reception from the market hasn't been the best. I think your shares are down 9%. Some investors are questioning the value creation. Some people have said to me, wouldn't a clean break be better. And there are other investors out there that are a bit worried about owning shares in a company, McCormick that they maybe don't know very well. It's going to be quite highly levered. So what can you say to those investors to reassure them that this is the right deal at the right time?

Yes. I never blame markets. So markets are imperfect in the short term. But in the long term, they reward companies with good fundamentals and consistent delivery. So what I have to do here and what Unilever has to do here is to ensure that we deliver consistently across time. Regarding the deal, it's just -- I feel McCormick is a very special foods company. And I know European investors don't know that company very well. I feel we have both the McCormick team and the Unilever team has a role here in explaining what McCormick is.

It is a clear leader in a very focused vertical like flavor that is one of the few verticals in foods that is -- that see GLP as a structural tailwind and not a headwind in a vertical that is not exposed to growing private label presence. So it's a company that has a history of acquiring brands, integrating them properly and growing them. And probably the best example of that is the acquisition of the Reckitt Benckiser brands, food brands in the past in which they have done an excellent job.

Regarding leverage, the new McCormick will be a $20 billion business with a gross margin in the mid-40s with starting operating margin of 21%. And the possibility of deleveraging from 4x to 3x in 2 to 3 years is absolutely a reach without compromising the heavy investment behind the brands that both Unilever Foods and McCormick have done in the last few years. That is a clear differentiation with the food industry and without compromising what has been historically a very attractive dividend payout.

Okay. I mean maybe touching a bit more on McCormick. I mean the valuation of food companies is quite challenged. I mean you've kind of touched on it a little bit. But why is McCormick different to other U.S. food companies? And why is Unilever the right partner for the business? I'm just trying to understand like the upside for Unilever shareholders when they eventually become McCormick shareholders.

The food industry is full of companies with poor growth exposure, uninvested brands and structural headwinds. And I think McCormick is very different and the combination between McCormick and Unilever Foods will be very different because flavor is one of the few verticals in which there is a structural growth. More consumption of protein means -- has a significant correlation with flavor growth because protein consumption goes up, you have to flavor it.

Flavor condiments is one of the categories that is growing across all the different generations, particularly with Gen Z generation. So the first point that is distinctive about McCormick is they play in a category vertical that is seriously attractive and superior to most of the food industry. It's a very focused company. It will be very large, $20 billion revenue, one of the top 5 food companies in the consumer goods sector.

And it will have a gross margin profile that is what I used to call edible personal care when I was talking about Unilever Foods is a common feature with McCormick. So this is a company in which if you look at the combined Unilever Foods and McCormick last year grew 2.4% and it's very clear that there are synergies here. There are definitely cost synergies that are real. We have estimated that in $600 million. There are revenue -- potential revenue synergies that are sizable, and I will mention some of that.

And there is a growth margin structure that allows significant investment behind the brands to accelerate that growth. And what are the potential revenue synergies that we see. I think in the McCormick brand expansion using the international infrastructure of Unilever Food business. Think in the expansion of Hellmann's in front of house in the U.S. using the McCormick foodservice structure, think in the product range of McCormick supporting the Knorr Foods expansion into foodservice in international markets, think in brands like Cholula or Maille, the kind of geographical expansion they have being brands that are in perfect spot of the premium space in foods.

So we see significant potential revenue growth there. And for me, the algorithm that McCormick has established of 3% to 5% top line growth with 23% to 25% operating margin is absolutely reachable in 3 to 5 years' time. And if Unilever shareholders decide to keep owning that, this will create a lot of value for them.

But I think it's important also to highlight that we are giving Unilever shareholders, we are not giving them more exposure to Foods. We are giving them a better exposure to Foods. We are making our Unilever Foods brands being part of a new company in which they will be an absolute priority. We will make them part of a company with the significant revenue and cost synergy opportunities. We are giving them optionality because they can continue owning foods, they can reduce exposure to foods if they want, and they can eliminate their exposure to foods if they want.

And this is very different to the current situation in which when foods is part of Unilever, you don't have that choice. And finally, we are giving them an HPC business that is outperforming the market and at the same time, has a 20% to 25% value discount versus peers. So I see upside on that. So we see 3 potential elements of value creation for our shareholders in this transaction.

But in terms of the margins, are you giving the business that's well invested? Because clearly, if I look at the Foods margins over the last couple of years, they've really moved up quite sharply to 22.5%. Is it -- is there still potential growth from that level?

Well, the Unilever Foods brand and marketing investment is 10% of revenue. I believe there is not a single company in the sector with that kind of level of investment. And if you look at the McCormick retail business, the brand marketing investment of the McCormick brand business, I believe it's in 8%. So you are talking here of a combined 9% to 10% -- 9% to 9.5% brand marketing investment. I believe probably the largest food company in the world is struggling to get into 9%.

I think the average is about 5%.

The average is 5%. And if you compare the new McCormick with the American food sector, the level of investment in brands is 2x. These are brands with momentum -- these are 2 businesses with momentum. These are 2 businesses that have been investing significantly behind their brands. These are businesses that are having competitive gains. So this is not a much built from a position of weakness. This is a much built from a position of strength.

And you said there's no dissynergies, Fernando, separating out food and HPC. And I think the stranded overheads are only EUR 400 million to EUR 500 million, which actually was quite a bit lower than I was expecting. Can you explain why that is? Because I think there are some people out there that think you would lose more scale because foods is effectively -- it's 1/4 of your business.

Yes. Well, let me start by stating the obvious here. The revenue and cost synergy between McCormick and Unilever Foods are higher than the revenue and cost synergy between Unilever Foods and Unilever HPC. This has complete industry logic. To your question of scale, we will have a business in the U.S. The remaining Unilever business will be $8 billion in U.S. will be $6 billion in Europe, will be $6 billion in Latin America, will be $7 billion in India and will be $12 billion in Asia, excluding India plus Africa.

This is the size of many global companies in HPC. So this is a business that doesn't have any issue of scale. Do I expect to sell less Dove in U.S. because we have separated Hellmann's to sell less Sunsilk in Philippines because we separated Knorr or to sell less OMO in Brazil because we have separated Hellmann's, definitely not. So basically, we don't see any kind of revenue synergies here.

When it comes to stranded costs, it's true we have identified around EUR 400 million to EUR 500 million of stranded costs. I understand that you have expected some more, but I think you have to understand also that when we did the separation of Ice cream, the separation of Foods was in our strategic thinking, and we did some of the heavy lifting there.

And Foods now is a business that close to 80% of the revenue of Foods is run as a stand-alone organization. Our foodservice business is a completely separate organization. In the top 24 markets in which we operate, Foods has different sales force. The manufacturing regulatory R&D structure of Foods is completely separate. So I feel this is a business that is easier to separate than it used to be in the past. And I feel this is something that, of course, we have some work to do, particularly in the smaller Unilever markets.

But even in these markets, many of these geographies operate through a distributor-led model. So we believe that we have a path to make this separation happen. I think what is important about the stranded cost is the separation of Ice Cream for us has been a significant experience. We know where the pain points are. We know how to really attack them early. We know the kind of governance and guardrails that we have to put in place. And I feel one of the reasons in which -- while we separate Ice Cream, we improve every single line of the P&L of Unilever because we increased the top line, we increased volume growth, we increased margin and we reduce the structural cost of the business because we were able to mitigate stranded costs before they hit the P&L. And this is the blueprint that we will repeat in this case.

But in terms of timing, Fernando, like 1 week feels like a long time at the moment, and this deal is going to take 12 months to 15 months to get done. And I think investors are sometimes a bit concerned about it's going to be complex. It's going to be uncertain. And is there going to be restructuring fatigue because you're still going to own the food business until that time. And what learnings can you bring from the Ice Cream demerger experience? You mentioned it that maybe it can actually help you accelerate this and get this done more quickly?

Well, Warren, I feel Unilever has been criticized for many, many years, and I feel it has been a very fair criticism that we were too complex and too slow. And it seems now the issue is that we are becoming simpler and sharper too fast. But it is what it is. And it's just -- we have to go through a regulatory process and through antitrust process with the competition authorities. And this is the main issue when it comes to separation, despite the fact that here, we don't see significant antitrust issues because I feel the beauty of the combination of Unilever Foods and McCormick is that there is a lot of complementarity.

There is a lot of adjacencies, but there is very limited overlap. And that basically reduces the antitrust issues in the vast majority of geographies, particularly in Western Europe where the process tend to be slower. So we have taken here a cautious approach. We have communicated to the market that it will take between 12 and 15 months. Of course, both McCormick and Unilever is interested to making this as fast as possible because I have met many investors in the last 10 days or so. And when we explained this transaction and when we discussed this transaction with them, nobody challenged the strategic merit.

Nobody challenged that this has been a very attractive valuation, separating Foods at a value that is in line with Unilever and with highest value food companies, but they are concerned about the short-term risk. They are concerned about the impact of separation in disrupting Unilever momentum, and they are concerned about the effort that McCormick will have to do to integrate a business that is 2x their size. So we are very conscious of that. The McCormick leadership is conscious of that. Plans are in place.

And when we give exposure to Universal shareholders and between Unilever 10% stake and Unilever shareholders owning 55% of McCormick, it is our responsibility to ensure that we support McCormick in that integration, and we will do it, and we will do it well.

What kind of time frame or kind of milestones should we look for between now and mid-2027 in terms of what's going to happen when?

Well, of course, we have to operationally separate our Food business. And as I mentioned before, a significant part of the heavy lifting has been done. We have to carve out financials for our Food business. And we have to go through the regulatory process and through the antitrust process. As I mentioned before, we don't see significant antitrust issues. So we believe that this process can be faster, but it's better to have a conservative planning assumption.

Project management teams are still in place from...

Yes, of course. We have a team now that has experience of carving out Ice Cream. Some of them has work goals in the disposal of tea and spreads before. This is a team that has a blueprint, has governance process in place, and we will repeat what we have done in Ice Cream, which, as I mentioned before, I feel we demonstrated through the Ice Cream separation that we can perform and transform simultaneously, and this is what we will do again.

So I'll move to part 2 now to talk a little bit more about the deal mechanics and some of the kind of moving pieces because it is quite complex. One of the questions coming in is about the EUR 14 billion of the cash component of the transaction, it actually was a bit higher than what I was expecting. Can you explain to investors the use of that cash in terms of costs and tax? And then what's left over for share buybacks? Because I think some investors are struggling a little bit to understand the 2x net debt EBITDA and how that kind of work?

Yes. Well, it's true. We will receive -- this is a cash and stock deal, and we will receive $15.7 billion, that is around EUR 14 billion, as you mentioned. And there are 3 fundamental uses of that cash. First of all, we will reduce the debt level to 2x. That is what we believe is our target in the medium run. We will cover the tax and separation cost. And of course, after reducing the debt and after covering tax and separation cost, there is a surplus of cash that we will use to enhance the returns to the capital returns to our shareholders.

We have announced a EUR 6 billion share buyback for the '26, '29 period. Of course, we received the cash in day 1 and particularly the tax bill doesn't hit in day 1. So probably you will see that our debt level in the -- our leverage level in the year 1 probably will be slightly below 2x, and that gives us some flexibility. At this stage, I don't want to commit in how we will use this cash because, of course, the environment is very volatile these days. So these are the 3 fundamental usages of tax.

But let me also mention something that I believe is very, very important here that go beyond the uses of cash, and I believe it has been underappreciated by the market. The Unilever share of the capitalized synergies in McCormick cover the tax and separation cost. And this is very, very important because a pure spin would have not given you that because there were no synergies.

And also pure spin would have a tax bill that would have been significantly higher. So we have structured this in what we believe is an efficient tax structure, it's a Reverse Morris Trust, of course, this removes -- this makes the transaction in the U.S. to be tax-free. It's not the same in other geographies, but it really reduces significantly our exposure to tax, particularly considering that the Hellmann's IP sits in the U.S.

Well, I'm assuming tax of around about EUR 4 billion is my estimate, looking at what you pay for Best Foods and what you've got for the deal. And as you say, the RMT shields the U.S. tax. But on the non-U.S. tax, EUR 4 billion obviously is not insignificant, although the cash element of EUR 14 billion is higher, so that kind of offset. But can you kind of confirm that this is definitely the most tax-efficient way. If you did do a spin or if you sold the business, how much higher would the tax have been?

If we would have done a spin or if we would have made a disposal, the tax bill would be close to 2x that.

Okay. So it really is...

It's very sizable. I will not confirm your tax calculation. But I feel what is important for everyone that is listening to this is that we will have flexibility. We are very confident about our ability to deliver the share buyback that we have announced.

Can you explain a little bit about the transitional services arrangements with the TSAs because you've obviously got them running with Magnum and now you're going to have them running with McCormick as well. How do they work? What's the time frame? And how much of the stranded overheads, the EUR 400 million to EUR 500 million do you think they could offset? Could they offset all of them? Or would you need other savings?

Well, transitional service agreement has 2 fundamental value here. One is in the McCormick side because, as I mentioned before, our responsibility is to ensure that we help the McCormick company to be set up for success in an integration of a business that is close to 2x their size. So we will provide McCormick with TSAs across multiple areas from IT to distribution.

And we probably will do that for a couple of years until they can integrate the whole infrastructure into the large McCormick company. In our case, what the TSAs provide is a transitional headroom. They don't remove the stranded costs. The stranded cost has to be removed through a restructuring spending that we calculated will be around EUR 500 million in a 3-year period, above what is the normal course of restructuring that we want to position a 0.6% that is the norm of the industry, and it give us time, and I feel we have been very successful in the Ice Cream separation in mitigating stranded costs before it hit the P&L and transition service agreement play a good role on that. So these are the 2 fundamental values of the TSA.

And the other piece I want to talk about is cash flow because obviously, the Foods business was cash generative. You're going to lose that cash flow. Can you talk a little bit about what you see as the kind of ongoing cash conversion or the free cash flow of the HPC RemainCo? And maybe what kind of free cash flow we can expect to see going forward?

Well, let me start saying that you should analyze the cash flow here through a combined perspective because our shareholders will own Unilever and will own also a significant chunk of McCormick. So the cash flow of Foods will now be in a different place in which they will be exposed to. But your question is fundamental about the cash flow profile of the remaining Unilever HPC company. The Unilever HPC pure play will have a higher growth profile. And it will have a margin and a starting margin of around 19%, in which I believe there is more headroom for margin expansion that we used to have in the past.

And if you add to that a 9% negative working capital, if the growth comes in line with what we have been delivering in the last few years and what is our expectation, we expect the cash conversion kind of 100% as we have done in the past. So it's just -- it will be a great cash generation business with a lot of headroom both in top line and margin expansion and with one of the best working capital structure that you see in the industry.

Okay. And maybe one technical point. There isn't going to be a shareholder vote on this transaction. Any reason why?

Well, Unilever is incorporated in the U.K. is listed -- as a primary listing in the U.K. and we manage the company under the U.K. listing rules. In 2024, there has been some change in these rules. Since then, there has been close to a little bit more of 50 transactions of a similar nature to the ones that Unilever is doing now. And none of them has had a mandatory shareholder voting or voluntary shareholding voting.

The responsibility of this transaction lies with the Board of Unilever and the Board of Unilever has taken a decision that has been unanimous because it has been absolutely aligned with the strategic path that the company had and it is a decision that we believe as a Board that will create substantial value for the shareholders. So that's what we will do. We will not be an outlier, as I mentioned on this kind of 50 more transaction...

I think it's kind of important as well, right? You need to meet...

Yes, and what is important here is that the VAR in terms of explaining the deal to shareholders is high. And I have been spending a lot of time in the last 10 days, and I will be continue spending a lot of time to continue ensuring that our shareholders understand the strategic merit of the transaction and the valuation that we are getting here.

Fernando, Unilever have implemented a hiring freeze, I think, for 3 months. How should we think about that? Is it a response to the war and high cost?

Well, it's just, of course, the environment has changed a lot since the 27th of February until now. So basically, I feel it's an act of responsibility to ensure that you manage every single line of the P&L and that pricing is the last resort you go for. I feel in this kind of context with so much volatility, if there are cost increases, you have to manage prices sequentially and you have to ensure that you attack every single cost line. So that's one of the reasons.

And of course, we were working in this transaction. And I feel one of the key factors of success in the Ice Cream separation is that we use attrition and hiring freeze natural attrition and hiring freeze as a key element to manage our stranded costs before they hit the P&L. So this is -- these are the 2 reasons behind the hiring freeze.

I want to move on to the third part, Fernando, to talk a little bit about the vision of Unilever as a pure-play HPC company. But before I do that, maybe some context, can you maybe explain how you see the FMCG industry changing and why the premium for a quality portfolio is increasing and why you think the gap between the winners and losers is increasing?

Because I don't think everybody is crystal clear about how this portfolio move fits into that strategic context that we're seeing. I've done this sector of almost 30 years. I've never seen it moving faster. So I'd just be interested to understand your perspective on how the industry is moving and how we should see this transaction in that context.

Well, you're absolutely right. The level of -- the pace of change is incredibly these days. I think there is a fundamental shift in which -- in what kind of scale matter. And I feel in the past, the scale of manufacturing and distribution were very, very important. And I believe today, scale of R&D and brand scale is what really matters most.

So I'm interested in building a portfolio that has more tailwinds than headwinds that is really exposed to the fastest-growing channels, is exposed to premium sectors where most of the profit pool is being concentrated that is exposed to e-commerce -- fast-growing channels like e-commerce or premium segments. And I believe the time of average portfolio delivering solid returns are gone.

So it's just the way of reaching and engaging with consumers today is very, very different. I feel you have to really -- the visibility that the consumer have about offering is endless. And we need to really ensure that we continue elevating our brands. We continue shifting them into premium into the channels where there is more growth and fundamentally into categories of high involvement.

I really believe that a pure HPC play, it will increase our exposure to categories of high involvement. Of course, it will increase also our exposure to emerging markets in which there is more headroom for growth. So this is where I feel it is a way of looking at this transaction in terms of improving the growth profile.

There's a new rule book out there, isn't there?

Sorry?

There's a new rule book in FMCG. You've got to take more risk to get ahead of consumers, ahead of categories, trying to nudge the super tanker doesn't work anymore.

I feel market making is very, very important. Being courageous enough to shift your portfolio into areas where there is more growth is very, very important. As I say, in the past, the difference between winners and losers was very limited. But now you have segments that are growing 15% and you have segments that are declining 15%. Increasing every year your exposure to higher market volume growth is the most important decision that the leadership of an FMCG company has to do these days.

And you talked a bit about it before, but can you maybe just pinpoint the financial profile of the new HPC RemainCo in terms of organic growth and margins, maybe a little bit around the BMI and the categories and geographies because it is going to be quite a different makeup from what you've had before.

Well, let me start first for a bit the structure of the business from a category, geography, channel and segment profile. We will be a 67% Beauty & Personal Care business. Beauty & Wellbeing, Personal Care business. We will be 38% in our 2 anchor markets, U.S. and India, we'll be 62% in emerging markets, and we will increase our exposure to premium segments, and we will increase our exposure to e-commerce.

So I believe that all this is absolutely consistent with what I have been saying even since I became CFO of the company. So then in terms of the profile, it will be a EUR 39 billion company, as I mentioned before, with very sizable business in every single region from EUR 6 billion to EUR 12 billion. It will have a 48% gross margin. And remember that in Unilever, we consider logistics as part of that when you compare with our companies, this is equivalent to 53% gross margin.

And it will have a starting operating margin of 19%. That is, if you look at pure HPC players, they are more in the 21% to 23%. So we probably start this new stage of the journey of Unilever with more margin progression headroom that we used to have in the past.

But can you explain a little bit more about the synergies between the HPC categories? Because I don't think that's always fully appreciated, maybe touching on R&D, go-to-market and just how much more growth can you unlock?

I think the first point to say about the HPC industry is that there is a very specific feature there. It's a fast innovation cycle set of categories. And that fundamentally defines how do you market it, how do you innovate, how do you reach with consumer, how do you engage with them. It has one share of capabilities at travel because there is an underpinning science and technology that is common.

So when you look at surfactants as a fundamental ingredient in formulations going from laundry detergents into dishwash into a body shower or into a shampoo. When you look at the importance of fragrances antimalodor ingredients from deodorants into laundry, when you look at the importance of biotechnology, et cetera, et cetera, there is underpinning common science and technology. The manufacturing is similar and is done in sites that are integrated and the route to market is absolutely complementary.

So we see that as one share of capabilities. And very, very importantly, as you said before, the way in which the market is changing and the way consumer and we engage, our brands engage with consumers is changing dramatically. I believe these are all categories in which format aggradation in which premiumization are significant drivers of value and are categories in which there are significant level of investment that require a significant amount of creation of content.

And as I mentioned before, a very, very fast innovation cycle. So we see this as a potential significant simplification in the way we operate in the company.

So to come back on the margin point, you said you have a lot of headroom when your starting margin is 19%. Can you maybe, if you can, outline where you see that headroom on margins, maybe by category or by geography? I guess Home Care might be one area. But is there any structural reason why the gross margins longer term can't be the same or even better than some of your HPC peers?

You know that the most important metric I look in the business is volume growth. So -- and I will not give you now a guidance of what our margin will be in 2030 or whatever. What I'm saying is that we start with an operating margin of around 19% and most of the HPC pure-play companies are between 21% and 23% in that kind of range. So we see some headroom, okay?

And the fundamental driver to really improve our operating margin is improving our mix and ensure that we continue delivering volume growth. I have mentioned this before, but we have a 48% gross margin. But when you look at the next unit of volume, our marginal contribution now with this new setup is close to 60%. So for us, delivering significant superior volume growth is one fundamental driver of higher gross margin.

And the second is ensuring that we have a better mix. The more we grow in Beauty, the more we grow in Personal Care, the more that we grow in premium segments, the more that we can roll out some of the very powerful brands that we have built in North America in the last few years, the more our margin will go up, and we are very confident that we can make that. You call significant headroom, I call it headroom.

Yes. But maybe just coming back on Home Care because I guess Home Care is a bit different from Beauty & Wellbeing & Personal Care. It's got a different geographic footprint, different margin structure. How do you see the future for that division?

There is a clear correlation between format upgradation in Home Care and margin expansion. So when you have a business that is fundamentally laundry bars, your margins tend to be low, you go into powder, it's higher, you go into liquids, it's higher, you go into unit dosing, it's higher. And when you look at our Home Care business is fundamentally a very strong leader in emerging markets.

And in emerging markets, we continue to see a significant headroom for market upgradation and this should result in a significant margin improvement across time in our Home Care business. The important point is if I look in absolute value to the most important revenue growth opportunity that Unilever has is probably Laundry India. The market revenue per capita of Laundry in India is around $4 the market revenue per capita of laundry in Philippines, Thailand, Brazil is between $8 and $10.

The washing machine penetration in India 35%. The washing machine penetration in Brazil. Philippines, Thailand is 80%, 90%. So this is probably one of our biggest opportunities at the geographic category sell level. And if we deliver that, the impact in our total margin in Home Care will be very significant.

Okay. And once the deal completes, you're going to be left with 10 category verticals spanning from Hair Care, Skin Care, Deos to fabric. It actually reminds me of P&G a little bit a decade ago where they doubled down on everyday category usage where superiority drives repeat purchase and market share. And these categories, these 10 verticals, I think, have grown market volume at 2% in the last 3 years.

So it's actually quite interesting to make that parallel. How can you really leverage those 10? And what's your long-term sort of vision? When I look at, say, like deodorants, you don't have a big footprint in Asia at the moment. That would be one obvious one. But just to get a few ideas of how you kind of feel about it.

Yes, it's absolutely true. The market volume growth in these 10 verticals has been 2%. So basically, if we can outperform our ambition of being 2-plus percent is there. And I think it's important to say also that with 10 verticals, we are probably one of the more focused pure-play HPC companies. And this is important because when you are more focused, you can allocate talent to value better.

I'm interested in building a portfolio in categories where science matter, because where science matter, it gives you particularly to a company like Unilever with a very significant emerging market footprint, going into categories where science matter, it gives you a significant element of defense against local competitor in the value segment.

I have mentioned this to you many, many times in -- but I feel the example of Wonder Wash in Laundry is a very important one. Why I love Wonder Wash -- that by the way, is close to 300 million now. I love Wonder Wash because washing in 15 minutes is much more difficult than washing in 2 hours. When you need to wash -- when you wash in 2 hours, the machine does a lot of the heavy lifting. But when you wash in 15 minutes, the science has to do the heavy lifting.

We are rolling out Wonder Wash in every single market around the globe and in every place is a success. And that's a success that is where in patented technology with a very clear superior product that is also supported by a significant improve in aesthetics, in sensorials and in models of reach and engagement with consumers that are supported by what we call, shared by others, and young spirited brands.

So our SASSY model is what is behind Wonder Wash. And I feel we can deploy this in all these 10 verticals. This category share that kind of approach. And I'm very confident that we are having a model now, and we are starting to deploy this model with success in many of our brands.

Okay. And you said the desirability of scale is working. It's differentiated. You just gave the example of Wonder Wash, which is a great example. But what other proof points do you have that desirability of scale is working? And how easy is it to transfer that skill set across all of your power brands? We've seen on a couple, but not on the entirety of the portfolio.

Well, I feel it's good to look at the aggregated level. The new HPC, the new Unilever HPC pure play will have 25 brands that represent close to 80% of the revenue. So you are talking -- they are about close to EUR 30 billion. And these 25 brands have grown -- the compound annual growth rate of these 25 brands has been 7% in the last 3 years with 4% volume.

So things are working in many of our brands. Of course, there are usual suspects that are the ones I usually mentioned. I feel Dove is a $7 billion brand that has been growing 7%, 8% for us in the last few years, and I believe it's one of the blueprints for us in terms of repeatability. Vaseline, it took us 153 years to get to EUR 1 billion. But in the last 3 years, we have added close to EUR 500 million in revenue, growing close to 10% in volume in the last couple of years.

So there are some brands in which I believe that we have built this SASSY model better than in other ones. I'm always focused on accelerating the winners first. And I feel we have 6, 7, 8 brands that are in great momentum now. And I feel desire at scale is a clear marketing philosophy for the company and SASSY brands is a framework that has united the company in terms of what is important for us.

Science is important, improving the aesthetics of our brands, of our packaging of our -- how we present our brands, our visibility is important. Sensorials are important. Ensuring that our brands are recommended by other people is very, very important because I have mentioned this 1 year ago, and I know this has been a bit provocative, but I really believe that the marketing philosophy of broadcasting messages from the brands is gone.

And it's very important to ensure that your brands are contemporary and they keep young, they keep -- brands that look brands of today and not brands of the past. So this is uniting the company in terms of a marketing philosophy, and we believe that this is what we call desire at scale. It is working for us, and I feel the performance that we have had in the last 3 years show that.

But some investors think you're trying to create a mini L'Oreal. And I think about it more as the L'Oreal of health and well-being, maybe. So can you maybe kind of outline why you're distinctive? And perhaps can you explain your vision about the Prestige cosmetics and the health and well-being strategy?

Well there are several companies I admire. You mentioned in the last 5 minutes, you mentioned 2 of them. And I don't have any problem to recognize that I admire these companies. You know what, we have our own path. I believe we have a portfolio that is -- it's a broad-based portfolio with a good category exposure that give us resilience from a volume-led category like Home Care, where premiumization format upgradation is very, very important into categories of very high involvements that can be Prestige beauty or well-being.

And with a profile that is very distinctive, that is our presence in emerging markets that we like a lot because I believe that this give us a superior volume growth exposure because when you look at emerging markets, there is superior population growth, there is increasing number of households, there is an increase -- a significant increase in female level of participation, and there is much more headroom for wealth expansion.

So all these result in significant volume growth, mix and premiumization opportunity. So we like that, and I believe this is a distinctive feature that we have accentuated with this kind of change. And I think it's important also because people tend to look at the emerging markets with the eyes of the past. And I have to recognize that managing emerging markets is not easy. But tell me, how many countries now in emerging markets have inflation beyond 10%. You can count it with the fingers on the hand.

You give me a clue. 5?

Yes, around that. So basically, this is a very different set. Just look at what has happened in the last month or so. The currencies in emerging markets has sustained very well at the moment that in 20 years ago, this kind of situation would have destroyed them. So I believe emerging markets are more solid than they were before, and they have fundamentals of volume growth that are better, and we believe this is a distinctive feature for us.

I mean one area -- I mean, you touched on emerging markets. I mean that is going to be a distinctive feature because I think the weighting of Asia -- Asia plus Africa, I should say, goes from 44% to 48% and emerging markets overall are 62%. I mean that is very different to any other FMCG player. I mean maybe in the short term, it's a headwind. But in the long term, given what you've said, it's going to be a big tailwind. So how do you see it? What can it do for the kind of growth profile? And does it make it more difficult to manage hard currency earnings just because the weight of EM has just bigger?

Actually, I think the fundamentals of emerging market is -- emerging markets -- the fundamental of the economics of emerging market has improved. And you can never predict what will be the negative currency. But if I look at what were the fundamentals of these economies in the past, and what are the fundamentals of today, I believe that in the long run, I feel currency should be more stable in emerging markets than it has been in the past.

And as I mentioned before, superior population growth, increasing number of households, significant increase of female labor participation, superior world expansion opportunities. These kind of things matter in the categories in which we compete. There are significant format upgradation, significant premiumization opportunities. We like that. And this should cement the probability of Unilever deliver more than 2% volume growth. And I think it's important also to highlight the 38% in U.S. and India. U.S. has delivered for us in the last 4 years, 4% volume growth. So I don't believe there are many companies that have delivered 4% volume growth in the U.S.

And can I promise that we will deliver that forever? No. But do I believe that we have a portfolio footprint in the U.S. can be in the 3% territory? Yes, I believe. And the Indian economy is an economy that is growing 6%, 7%, 8%. And in that kind of context, thinking that India can deliver 5% volume growth is also something that is a reach. So if you take 3% in U.S., 5% in India, 40% of the revenue, you are talking at an average of, let's say, 3.8%, 4%, you're talking of 1.6% already there.

And then you have another 62% of the business to deliver the rest of the growth. So I'm very confident on this kind of 2-plus percent volume growth territory that we have as an ambition. And I believe it's very important for us to deliver that consistently quarter in, quarter out.

Maybe just following up on India, you mentioned it just now. I mean, Priya, who is now running the Indian business. Can you maybe sort of outline what her priorities are, where things are, obviously, macro aside in terms of the portfolio shape. You've done the Minimalist, you've done some other deals. But how do you see it kind of progressing around sort of premiumization?

Well, I feel that the number one priority of Priya in India is to ensure that the portfolio is future fit because the incredible portfolio that has brought us into the incredible position of leadership that we have today because we have 55% share in Hair Care. We have 45% share in Laundry. We have 80% share in Dishwash. We have 80% share in lifestyle nutrition, and I can continue counting in many, many categories.

So I feel we have in most of the categories, 3 to 5x the size of our second -- of our main competitor. So we have an incredible portfolio in India. And we have an incredible distribution system. We have -- we are very cost efficient in India in terms of our cost of producing goods, and we have an incredible access to talent. So I feel the fundamental challenge of Priya is ensuring that our portfolio is future fit and ensure that the execution is flawless as it has been in the past. I believe that we lost a bit our way for a couple of years. I feel we are improving now.

I'm very, very bullish about India and the contribution that will do to Unilever growth algorithm overall. It's just having close to 16%, 17% of your business in India, I believe it's a long-term competitive advantage maybe.

Yes, definitely. I want to come back on the SASSY model and marketing model because when we were sat here a year ago, I remember you telling me that you wanted an influencer in every ZIP code in India and Brazil and some 100 still in my head. So perhaps a year on, can you maybe update us where we are on that, if you've got any specific examples of where it's made a big difference. And I'm thinking about it also in the context of the FIFA World Cup upcoming where Unilever are, I think, for the first time, a major sponsor.

Well, influencers is a way of simplifying what I call other people recommendation. Some of them are influential, some of them are professionals that recommend our brands. But we have now close to 300,000 people recommending our brands. If you have like -- you have a look at that 2 years ago, we have around 10,000. We have 17,000 recommending Dove in the U.S. We have, I believe, 22,000 in Liquid I.V. in the U.S. We have 17,000 in India, and I can continue counting many, many examples.

So it has been a significant change in the infrastructure that we have for our model of reach and engagement with consumers. Is the efficiency of this investment has reached the peak? Definitely not. I feel we have increased the amount of investment behind this, but there is a lot that we have to do to ensure that we have the higher return of investment in that kind of money that we are putting behind that. And this is a kind of work in which I'm -- if you ask me, one of the things I'm much more interesting now is what are the variables that affect return of investment in a model like that today.

And these things change every single day, and I feel there will be even more changes with the emergence of large language model as a key driver of search in the future. But overall, I'm never happy, but I'm satisfied with the progress that we have done in this space. And I believe the improvement in our performance is a combination of significant higher level of investment because you remember 4 years ago, we used to invest 13.1% of revenue in brand marketing investment.

I call that being consciously uncompetitive, and that's a criminal act. Now we have 16.1%. When you remove Foods, that level is 18%. I feel we're investing competitively now, but we're also investing better in models of engagement and -- reach and engagement with consumers that are models of today and not models of the past.

And in terms of the World Cup, how are you activating?

It's huge. I really believe that event marketing will be very important in the future. And there are 2 areas in which we are investing more also beyond other people recommendation for our brands. One is in-store visibility because in a world in which media fragmentation is very high, I feel the importance of a store is higher.

And if you look at Advantage survey in the U.S. last year ranked us as the #2 company, #1 in Foods, #1 in Personal Care, #3 in Beauty. So investment in store is very important. And investment in events is very important. And FIFA this year is a very important event for us. It's the first time we do something of that size. And it's very important because sports is linked with movement and movement is very related with many of our categories like Skin Cleansing or Deos that are fundamental for us. We are very excited, and we believe it will be a key driver of growth for us this year.

And in terms of going forward, Fernando, I think about capital allocation, I think you're clearly on record saying no transformational acquisitions. Can you maybe kind of just elaborate a little bit on that because there is clearly a lot of consolidation going on. I mean, every day, there's more news flow or something on something happening. And why you think kind of your bolt-on strategy is a better use of capital?

Yes. There are very few transactions that increase the growth profile of the company. What I'm excited about this transaction with McCormick is that I believe that this transaction increased the volume growth potential of the Unilever Food business and the McCormick food business. Do I see similar transactions in other spaces like in HPC? I don't see it. And this is not a transaction that is done to generate flexibility to do another transaction.

Our capital allocation priorities remain the same. We will invest for organic growth and productivity. We will ensure that we have a dividend payout ratio of around 60% in our HPC pure-play business. We will do bolt-on acquisitions that we like in places like Beauty & Wellbeing, in Personal Care in U.S. and in India, in premium segments and with significant exposure to e-commerce. And if there is a surplus of capital, of course, we will return it to shareholders.

So there is no change in our capital allocation priorities. And many people is talking, okay, are these guys thinking in doing something in consumer health or anything like that? No, we are not thinking anything like that. We are focusing on growing our business organically and ensuring that we continue shifting our portfolio progressively into areas of super growth with bolt-on acquisitions, focus in the U.S., focus in India, focusing Beauty & Wellbeing, focus in Personal Care.

And on the Health & Wellbeing part of the portfolio, obviously, it's high growth and it's slowing a little bit recently, but it's quite narrow. So how are you thinking about kind of broadening it?

That's the beauty of that. I want strong leadership positions in narrow verticals instead of weak positions in wider verticals. And I believe I like having more than 40% share in powdered hydration. I like having close to 80% share in hair fall with Nutrafol. I like the kind of exposure that OLI has in areas like sleep, et cetera, et cetera.

So we will continue looking at assets in that space, but they have to be assets that are in super growth space that are very clearly defined in narrow verticals in which we can extract positions of leadership there. And you know that our business that have good exposure to digital has good exposure to e-commerce and that are easy to roll out globally because one of the reasons that we are doing this investment in the U.S. because U.S. is the only market that gives you 2 things.

It gives you critical mass and it gives you brands that can travel internationally. And I believe that strategically is very, very important for Unilever to build a new leg of the portfolio that can travel in the premium segment globally.

There's a lot of focus on Liquid I.V. and Nutrafol for obvious reasons, they're quite big, but you've also got K18, you've also got Dr. Squatch. How are you feeling about those 2?

We are excited. I feel K18 is having a great run. I feel Dr. Squatch is not counting yet in our underlying sales growth, but it's more than $500 million business, growing double digit there. And it's very exciting because it's absolutely complementary in terms of positioning to our other brands in Skin Cleansing and deodorants. It's a male grooming brand that I believe has a lot of potential and it has a lot of potential internationally also.

And you asked me before about Prestige Beauty. We see Prestige Beauty as a natural extension of our Skin Care and Hair Care strategy into mass, and give us exposure to price points in which we can deploy our best science, and we have fabulous brands there like Dermalogica, Hourglass, Murad, Tatcha, et cetera, et cetera, that there is a lot of growth headroom there.

But also the portfolio is still quite U.S. Is there still more room to internationalize?

Yes, of course. And you can blame me on that because I feel when China slowed down, we made a conscious decision of making a fortress of our U.S. position because when China slowed down, where companies were going to go. They were going to go to the U.S. and they were going to discover India.

So basically, we decided not to go too fast in the global rollout of these brands, but I believe now is the time, and we have a good portfolio with very good critical mass. Liquid I.V. is close to $1 million, Nutrafol is the same in the U.S. So I feel the brands are ready. Some brands are more complex in terms of regulatory barriers than other ones. But overall, we believe that we are building a new level of portfolio that has significant international...

And how do you think about those brands from a China portfolio point of view? Because I think previously, China, you were trying to be all things to all people. Now you're trying to be more selective. I mean, OLI has done very well, I know, in China. Is there now more potential for taking some of these brands into China? Or do you still need to be selective?

I feel selective growth is our approach, our strategic approach to China. I believe that I want to be narrow there. Again, I feel we have 5 brands there in which we are investing significantly, Dove, Vaseline, OLI, OMO between them. Of course, we need to build a premium portfolio in China, but there is always time. It's too late to be early in China for us, and it's too early to be late.

So I feel the 2 things are true, and it's a very important market. I feel we have improved our operations there significantly and expect a good performance this year in China, but it doesn't have the strategic importance for us as, for example, India has when you compare to the 1.4 billion population countries.

And maybe just conscious of time, Fernando, sort of just maybe wrapping up and sort of summarizing some of the points that you're making. And going back to the McCormick deal, I mean, some have argued that the deal was not compelling value for Unilever shareholders or is at least bad option. And you've kind of mentioned a lot of different points there. But how would you really sort of 1 or 2 sentences really push back on that?

This value is about unlocking volume growth. It's unlocking volume growth in our Food business because our Food brands will become absolute priority within McCormick in a company that has significant revenue and cost synergies. It's about volume growth in our HPC business because we will have a simpler business with very well-defined categories in which we will compete with a 1 share set of capabilities and in a business in which we are already outperforming the market and where there is a significant value discount, valuation discount versus peers of around 20%, 25%.

We are probably now top third or top quartile in terms of performance when it comes to top line growth, and we are bottom quartile in terms of valuation. I see that as an upside. I would not like to be bottom quartile in performance and top quartile in valuation. So I believe that this will unlock a lot of value for our shareholders in the long run. I feel coming back to Foods also, we are not increasing the exposure to foods of our shareholders. We are increasing the quality of their exposure to foods.

We are giving them optionality if they want to own foods, reduce exposure or not owning foods. And we are generating significant cost synergies that are proven already. And we believe that there are revenue synergies, potential revenue synergies that are sizable and in which the very healthy margin profile of that business will be able to be a significant enabler because it will allow significant investment behind the brands.

When you mentioned valuation, obviously, that's more the market's job than your job to run the company. But as you said, there is quite a big disconnect. I mean, is there kind of like a frustration that actually you are delivering that kind of top line growth, but the valuation is not reflecting it. What do you think is the bit that's misunderstood? What's the unlock? How long is it going to take?

Well, it's just -- I mentioned this before, I never blame markets. They are imperfect in the short term. But in the long term, they tend to reward companies with good fundamentals that deliver consistently. And the main issue of Unilever is that it has not delivered consistently. I mean we have had a couple of good years, but this is about quarter in, quarter out.

I'm absolutely obsessed to ensure that this company gets into a consistent path of 2-plus percent volume growth that leads to consistent earnings growth in hard currency across time. If we deliver that, the valuation discount will disappear with time. And we focus on what we can control. And what we can control is to make Unilever better every single day.

Final question, Fernando. If you had to sum up Unilever in sort of 3 words, what would you say? What are the 3 kind of -- what are the 3 kind of go forwards that you're thinking about that we, as investors and analysts should think about?

Well, that's tough, but I would say, sharper, forward-looking, competitive.

Super. Thank you, Fernando.

Thank you.

Good morning, and good afternoon, everyone, and thank you for joining us today. I'm Fernando, and I'm joined in the call by Srini. Today marks an important milestone in Unilever as we keep accelerating our strategy and sharpening our portfolio.

We are moving towards a pure-play HPC company focused on higher growth categories with a proven sector-leading growth profile. At the same time, we are unlocking value through a growth-led separation of foods, creating a scaled global flavor powerhouse together with McCormick, built on a strong strategic and cultural alignment.

This delivered 2 clear outcomes, a more focused Unilever and a new global leader in flavor. Let me double-click on this while I deliver 5 key messages. First, we are creating a EUR 39 billion HPC pure-play with leading positions in highly attractive categories, a stronger exposure to fast-growing geographies like the U.S. and India and greater participation in premium and digital channels.

From a category, segment, channel and geographical perspective, this is where faster growth and more attractive profit pools are. This is where our portfolio and capabilities give us a clear right to win. Second, a focused Home and Personal Care business can bring all company capabilities into one shared system from science-led innovation to demand creation to operations, improving global repeatability, speed and returns. Third, it strengthens our already superior growth profile.

We have already delivered superior volume growth versus our peers over the last 3 years as proven by our 2.5% underlying volume growth and our 5.4% compounded annual underlying sales growth in HPC during the last 3 years. With a sharper portfolio and better category and geographical mix, we are positioning ourselves to sustain that outperformance.

Fourth, it upgrades the quality of our financial model, a structurally higher gross margin, increased investment behind our brands and a more consistent volume-led growth profile, all supporting enhanced returns over time. And fifth, it unlocks [indiscernible] value through a growth-led separation of foods. By combining Unilever Foods with McCormick, we are creating a scaled global flavor powerhouse, bringing together a highly complementary portfolio in adjacent categories, iconic brands and emerging brands with breakthrough growth potential, complementary capabilities and an international distribution platform infrastructure that can accelerate growth.

So when you step back, the outcome is clear to a stronger, faster-growing business, each better aligned to their markets, their capabilities and their value creation models. Let me now turn to the foods combination and why this creates a truly scaled global flavor powerhouse. This is a combination that provides end-to-end leadership in the full spectrum of flavor and condiments from herbs and spices to beyond, from mayonnaise to [ master ] and hot sauces, both in retail and food service in developed markets and in key emerging markets, bringing together 2 industry-leading business with a strong momentum and complementary strengths.

The momentum is clear and the powerful of the portfolio also iconic brands such as McCormick, Knorr and Hellmann's alongside high-growth potential brands like [indiscernible] and Cholula. It is a rare combination in the foods industry, scale, focus and growth potential behind a set of brands that has been consistently well supported for years.

Importantly, this is also a business with a strong food service scale and upside across both top of the table and back of house, expanding reach and unlocking additional growth opportunities. Geographically, the combination brings together leadership in developed markets with a strong position in key emerging markets, creating a balanced and resilient footprint.

And underpinning all of this, a best-in-class R&D and cooling expertise, enabling continued innovation and meeting consumers' growing demand for flavor. Overall, I repeat, we are creating a business with scale, complementarity and a distinctive advantage profile, well positioned to deliver superior growth and value creation over time. Srini?

Thanks, Fernando. Let me start with the quality of the assets that we are creating. On a pro forma 2025 basis, the combined business would have $20 billion of sales and a 21% operating margin before synergies. This is a scaled global flavor player and one of the largest in the category.

Importantly, both McCormick and Unilever Foods have delivered both value and volume growth in 2025. So this combination starts with momentum and with opportunities to accelerate. Profitability of both the business is supported by strong gross margins.

In the case of the consumer business, whether it is for Unilever or for McCormick, this is in the mid-40s. Both Unilever and McCormick have made significant and continue to make significant investments between brands and marketing and which is also substantially higher than the foods peers.

This, therefore, gives us confidence in the quality and the resilience of the combined model. The Unilever Foods perimeter excludes India, as we've talked about, Lifestyle Nutrition and Lipton ready-to-drink. The McCormick financials include McCormick de Mexico. From this strong foundation, let me turn into how this translates into value for shareholders. For Unilever, the transaction unlocks value from 3 areas. First is from a valuation perspective. While there has been some conversation and discussion to really figure out what's the right valuation, given the context of where we operate, we have used really the 2025 EBITDA as the right measure and to really make comparable multiples. The transaction reflects an enterprise value of approximately $45 billion for the Unilever Foods business. This equates to a sales multiple of 3.6 and an implied EBITDA multiple above 13.8.

This is important to highlight that is in line with Unilever's current trading multiple and in line with the most attractive food company valuations. Therefore, the terms of the transaction assume similar multiples for Unilever Foods and McCormick. Second, we will receive $15.7 billion in cash and 65% of equity in the combined company. This provides both immediate value and a continued participation in the upside for the Unilever shareholders. The transaction is structured as a reverse Morris trust and is intended to be tax-free or tax efficient in the U.S. Third, from a synergies perspective, we will have about $600 million of annual run rate cost synergies net of investment.

These are across areas of procurement, manufacturing, logistics and SG&A with full value to be achieved by the end of year 3. Both the teams have worked together extensively and identified clear areas of opportunity. We are confident that in some of the areas such as procurement, we start to see savings coming through right from year 1 and without really requiring significant investments. In addition, we see revenue growth opportunities from complementary geography footprints, stronger labor capabilities and expanded food service. Around $100 million of incremental cost and revenue synergies will be actually be reinvested for growth.

So overall, therefore, the attractive valuation efficient structure and clear synergies combine immediate value with long-term upside. When I look at from a transaction implications for Unilever, Unilever, as I said, receives $15.7 billion in cash. And through distribution, Unilever shareholders will own 55% of the diluted combined company. McCormick shareholders will own 35% and Unilever itself will retain a 9.9% stake. The retained stake underscores our confidence in the strategic merits, integration plan and execution of the combined company.

It will be important to highlight that we are likely to have transitionary service agreements for about 2 to 3 years in key areas such as IT, such as services and including distribution and logistics in key markets. And therefore, our stake also has to be seen in the context of what I've just explained. The stake will be subject to a 1-year lock-in period. Thereafter, we intend to sell it down in an orderly and considered manner, and we expect any eventual disposal to be tax neutral.

We will have meaningful governance rights. Upon closing, Unilever will appoint 4 out of the 12 members of the combined Board and executives from both businesses will serve in key leadership roles. The international headquarters of the combined company will be based in the Netherlands. The center will be responsible for managing the global foodservice business, the combined EMEA business, the European supply chain and other key capabilities, including R&D, whereas Unilever holds some of the strongest capabilities in the food industry.

McCormick will continue with its New York listing and there will be a secondary listing in Europe, reflecting the global nature of the business and its shareholders. As a part of the larger flavored focused organization, employees from both the businesses will benefit from expanded career and developmental opportunities. It's also important to highlight that from a Unilever shareholders' perspective, the capitalized value of synergies in the combined company offsets Unilever's tax and separation costs.

The transaction is expected to close by mid-2027, subject to shareholder and regulatory approvals and other customary conditions, including the works council consultation. Our orderly and timely ice cream separation demonstrates the expertise that we have developed in executing separations and in establishing new operating models, and we will be using the same dedicated team to work on this transaction.

Therefore, when we see it from a perspective of the combined foods company, we are excited with the growth opportunity, which has this business in the 3% to 5% growth range with attractive profitability, which gets augmented with the synergies. India Foods remains within Unilever as a high-growth, locally focused business with strong market positions. Many of you will appreciate that the portfolio is different. It comprises of beverages, health food drinks and local brands and with leading positions and are value accretive in an Indian context.

But the main attraction for us is the creation of a leading focused HPC company, and I'll hand over back to Fernando to walk you through what this means.

Yes. Why we are excited about this new chapter in Unilever. This transaction creates a EUR 39 billion pure-play HPC company focused on 4 categories: beauty, well-being, personal care and home care, where we have strong positions and clear competitive advantages. These are attractive categories with faster growth, stronger innovation cycles and greater opportunities to build premium digital-first brands.

With this sharper focus, we bring our capabilities together into one system across science-led innovation, demand creation and operations, allowing us to move faster, scale what works and deliver more consistent performance. This is a more focused, more competitive and higher growth Unilever, well positioned to capture the opportunities ahead and create long-term value. And that comes through clearly in the quality of our financial profile. Based on pro forma full '25, we have a business with a strong consistent volume growth at around 2% with the ambition to continue outperforming the markets in which we compete.

At the same time, we see a structurally stronger gross margin profile with gross margins above 48%. That supports increased investment behind our brands above 18%, allowing us to continue driving innovation and strengthening our market positions and we maintain a disciplined operating margin above 19% with importantly, when compared with other focused HPC players, clear headroom to progress over time.

This is a business with stronger fundamentals combining growth, margin and investment to deliver more consistent and sustainable performance going forward. What you see in this chart is a much more focused business organized into 10 clear category verticals. These are large, structurally growing categories where we have strong brands and a clear right to win. That focus matters. It give us clarity, sharper prioritization and more disciplined execution at scale. These markets delivered more than 2% volume growth in the last 3 years. Our ambition is to grow ahead of that, consistently outperforming the categories in which we compete as we have done in the last 3 years. This is a simpler, more focused portfolio built for growth, easier to run and positioned to deliver sustained outperformance over time.

We now have the opportunity to accelerate our strategy. First, by continuing to invest behind our 7 key priorities that I have highlighted to you many, many times, more beauty, more well-being, more personal care, greater exposure to the U.S. and India and a continued shift towards premium and digital commerce. Home Care also plays a critical role with significant market-making market development opportunities in emerging markets being the category that opens the door with customers in all these regions. Second, we increased our exposure to the underlying drivers of growth, population expansion, urbanization, more households and rising incomes, particularly in faster-growing markets. Third, we bring our capabilities together into one system, a common integrated set of capabilities across science-led innovation, demand creation and operation, allowing us to move faster, scale what works and build design at scale. Fourth, a simpler portfolio, supported by our perfect store program will reduce execution bad wind demand into our leaders and enable us to drive for flawless execution.

And fifth, even without foods, we will maintain an excellent margin profile, giving us the capacity to continue investing strongly behind our brands. Now let me take you through the detail on the following slides. This is what sits behind the step-up in the quality of the business. It starts with the category, geographic segment and channel mix. We are increasing our exposure to [indiscernible] Personal Care around 67% of the turnover and to faster-growing markets such as the U.S. and India, which together represent close to 38%.

At the same time, we are becoming more premium and more digital. That mix shift drives a structurally stronger growth profile, supporting consistent volume-led growth above the markets in which we compete. It also drives margin. We see a clear uplift in gross margin to about 48%, reflecting the quality of these categories and the strength of our portfolio. And higher margins give flexibility and create the capacity to invest more behind our brands. This is a self-reinforcing model, better mix, stronger growth, higher margins and greater investment, which underpins a higher quality, more consistent earnings profile and ultimately stronger returns for shareholders. And importantly, this is not something we are aspiring to. It is something we have already been delivering. Over the last 3 years, we have consistently outperformed our HPC peer group.

We have delivered around 5.4% underlying sales growth ahead of peers, but the standout is volume, around 2.5%, materially above the market. That is a clear reflection of the strength of our brands, the quality of our innovation and the improvement and inconsistency in our execution. At the same time, we have expanded gross margin by close to 290 basis points and underlying operating margins by around 170 basis points, again, ahead of peers. What you see here is a balanced performance, growth, volumes and margins, all moving in the right direction. And we did that at the same time, we were separating ice cream. This shows that this is not a one-off. It is a model that is already working and one that we are now sharpening further.

Let me now link that performance to where we compete and why this portfolio is so attractive. This is a business built on leading positions in highly attractive home and personal care categories, Beauty & Wellbeing, Personal Care and Home Care, where we see a strong structural growth and clear opportunities to win.

Around 90% of our turnover sits in #1 or #2 positions at category geographical sell that scale and leadership matter. It drives visibility, pricing power and consistent performance. We are the second largest beauty and personal care company globally and the #1 in home care in key emerging markets, combining scale with strong positions in faster-growing regions. At the same time, we are building a high-quality, fast-growing well-being portfolio, adding another layer of structural growth to the business. This is not just a well-balanced portfolio. It is a portfolio of leading positions in advantaged categories with a stronger growth profile and a clear right to win. At the core of this portfolio are our power brands, which drive the majority of our growth and value and what a great portfolio of brands we have. 25 power brands make up around 78% of our revenue with volume growth of more than 4% in the last 3 years and underlying sales growth over 7%.

This portfolio combines market-leading brands such as Dove, [indiscernible], Rexona, Vaseline and Sunsilk among many others, brands that give us scale, strength and reliability across markets. Alongside this, we have a set of insertion disruptive brands that we have acquired and will continue to acquire brands that are digitally native that have already transformed parts of our business, particularly in the U.S. and that we are scaling internationally.

These brands make our portfolio more future fit, more exposed to premium segments and to faster-growing routes to market such as e-commerce. This combination is important because it allows us to deliver both scale and growth at the same time. And it sharpens how we invest with clear priorities, a stronger brand building and better leverage of innovation across the portfolio. We are also strengthening our footprint in faster-growing markets, now with around 62% of our business in emerging markets and with our [indiscernible] markets of U.S. and India representing close to 38% of the turnover.

At the same time, we are reducing our relative exposure to slower growth regions, sharpening the overall growth profile of the business. But more importantly, this is about aligning our company with the underlying drivers of growth. These markets benefit from population expansion, increasing the number of consumer center in our categories, expansion of female workforce, which drives higher participation as urbanization increases access and frequency of use, a growing number of households supports everyday demand while rising incomes enable premiumization and trading up.

This is a footprint that is better aligned to long-term growth where the structural tailwinds are strongest and where we already have the scale and capabilities to win. If our brands increase our exposure to premium segments and faster-growing route to market and our geographical footprint strengthens our exposure to faster-growing markets and structural drivers, this is what allow us to scale performance globally. At the heart of it, it is a one share demand creation model desire at scale, built on our framework of [indiscernible] brands, powerful science, irresistible aesthetics, elevated sensorials, brands that are set by others and young spirited.

This is how we consistently build demand across categories and markets, and this applies to our whole HPC business. And it is powered by a common set of capabilities, one scale R&D platform built on shared science and AI-led formulation with core science streams such as microbiomes, surfactants, fragrances, oleochemicals and strong packaging design capabilities and one integrated value chain from procurement through to manufacturing and distribution, driving efficiency and scale.

This is one system combining demand creation and capabilities, delivering global profitability, greater speed and enhanced returns. With that, let me hand over to Srini.

Thanks, Fernando. We have a clear and a disciplined plan to manage separation costs and deploy capital. First, on the stranded costs. We estimate gross stranded costs in the range of about EUR 400 million to EUR 500 million. We will mitigate this with an expected one-off restructuring cost of EUR 500 million to be incurred over a period of 2027 to 2029. It's important to again reiterate that we have clear transitional service agreements, which will be replaced with McCormick in many cases for 2 years and in some cases, more.

And these will encompass areas such as information technology, distribution, and therefore, this will provide us with a transition headroom. In many ways, we have clearly established commercial organizations. Over the past 2 years, we've also done a lot of advanced work with the ice cream separation. And therefore, we have built a very different muscle when it comes to really having a granular visibility of these costs and managing these costs and minimizing -- mitigating these costs.

So in an essence, we are confident that we will fully mitigate the stranded costs that we are projecting here. Excluding this one-off, we are maintaining restructuring at the rate of about 0.6% of turnover per annum. This is consistent with our ongoing productivity discipline. Therefore, the best way to think about the restructuring cost period of '27, '29 would be EUR 1.2 billion, out of which EUR 500 million is focused on mitigating the stranded cost from the separation.

On execution, the Foods business group is already operating as a commercially stand-alone organization, which materially reduces the execution risk. As a result, we do not expect any revenue synergy dis-synergies from the separations of the Foods business. We are conscious that in some of the smaller markets, we need to make some targeted investments to strengthen our go-to-market capabilities, and this is already included in our cost estimates. On cost allocation, we've talked -- on the capital allocation, we've talked about the 15.7 billion proceeds that we are likely to get from McCormick. This will be first used to pay down our debt from the current levels to about 2x net debt to EBITDA, which is really our stated goal. And then we will use the funds to really offset onetime separation and tax costs.

Thereafter, we will support investor returns. And you would have seen that we have announced a total -- we have announced a total 6 billion of share buyback, including the $1.5 billion, which was prior announced in 2026, and this will run for the period between '26 to 2029. This gives us enough flexibility from a capital perspective. And I'll also subsequently talk about the deployment and our approach to bolt-on M&A. So overall, this is a well-defined plan with clear costs, limited execution risk and disciplined use of capital.

You heard Fernando, and this actually sharpens our investment case for new Unilever. Our value creation model remains clear and disciplined. We reaffirm our commitment to delivering mid-single-digit underlying sales growth, effectively 4% to 6%, underpinned by at least 2% underlying volume growth and continued modest improvement in operating margin.

This combination of stronger growth, disciplined margin expansion and cash returns underpins our ambition to deliver top third shareholders' returns versus HPC Group. With the margin profile, return on invested capital and operating margins and the growth profile, this actually provides substantial and significant headroom for valuations to improve for a quality HPC business. When it comes to our capital allocation, our priorities remain unchanged and disciplined.

First, we will continue to invest behind our business. On a pro forma basis, our brand and marketing investments start at around 18%, and we will continue to increase them. Together with R&D and CapEx, we expect to invest around 23% of our revenue in each year in growth and productivity. More than 50% of the capital or CapEx will be directed towards productivity. Second, we remain focused on organic growth and selective bolt-on acquisitions, primarily in U.S. and India in premium segments, digitally native brands and d-commerce-led business models.

We will not pursue any large-scale or transformational M&A. Third, we'll continue to balance the growth investment with attractive shareholder returns through dividend payout ratio of 60%, alongside the approximate EUR 6 billion of buyback across '26 to 2029. With that, over to you, Fernando.

Thank you, Srini. Let me now close. This is a value-creating growth-led separation of Foods, creating a global flavor leader with significant opportunities to accelerate growth at industry-leading margins. And we are creating also a sharper, fully focused home and personal care pure-play, aligned to higher growth categories, faster-growing geographies, premium segments and a stronger route to market. This is a step change in quality, stronger growth, better margins, greater investment.

This is a structural upgrade of the portfolio and a higher quality model to deliver shareholder returns. This is the right step at the right time to build a simpler, sharper, higher growth Unilever. Thank you, and we are happy to take your questions.

[Operator Instructions]. Our first question comes from David Hayes at Jefferies.

David, we can't hear you.

Let's try and move to the second question. Our second question comes from Tom Sykes at Deutsche Bank.

First of all, on the cash proceeds and the cash costs, can you give any more clarity on the separation costs and the tax bill that you're going to be facing in please? -- and the timing on that. And then just on the -- is there any margin implication of the -- that wasn't 100% clear whether the stranded costs are coming out in one go or is that over time? And do you expect to be able to offset those stranded costs with other savings? Or is this slightly margin dilutive...

Tom, thank you for those 2 questions. First, on the cash proceeds, what we've explained is, that we will get [ EUR ] 15.7 billion of cash proceeds. This is likely to come in post closing. So that's what is going to happen sometimes post closing in 2027.

Obviously, we will be using that to really pay down our net debt because we have anchored ourselves around 2x net debt to EBITDA as a clear ratio. You will appreciate that some of the tax costs are subject to the work which we will need to complete over multiple jurisdictions and is subject to valuations. So therefore, at this stage, it will be premature to start making estimates because they will be broadly ranges.

We have some good grip and granularity, but we need to go through the process to crystallize it. The tax payouts are likely to be spread out over a couple of years because that's the nature of how the separation will happen and the timing differences. Point number two is even some of our separation costs that we will incur will also be spread over a period of a couple of years. So the clear hierarchy is really about pay down debt, ensure that we meet the tax liabilities and the separation costs. And we have already confirmed the share buyback program, which also then starts to give you a clear confidence in terms of how we are likely to deploy the funds. Could we see some more upside potential to the cash proceeds? Yes. If so, we will take the same disciplined approach to capital allocation the way we have been doing for the past many years. And that's why we have clearly said we are not calling out a transformational M&A.

I think in this context, that's the best way to summarize the receipt of cash and the deployment of cash. Now coming to the point related to standard costs, I want to be very clear. We are likely to see the impact of these costs will be spread over multiple years given we have transitionary service agreements, but there will be some elements which will come in over a period of 2 years. We will mitigate this cost, and we are not calling any margin dilution arising from these stranded costs. And that's the reason we have also called out a EUR 500 million restructuring one-off to really cater to addressing these costs.

Srini, I would like to add regarding stranded cost. During the last 4 years, we have put an organization in place that around our business groups with the main goal of improving our capabilities of innovation and execution to compete with the mostly pure plays in our different categories.

And I believe these capabilities has been created, embedded and our competitive results are proof of that. But also this organization has given us the flexibility of separating business at the right time in a logical time frame and without leaving behind a massive amount of stranded costs without the possibility of offsetting that.

You have been close to Unilever for many, many years, and I believe that you have seen that the separation of Ice cream has been very different in terms of outcome to our disposals of spreads or TV4. We separated Ice cream without affecting performance and at the same time, improving productivity in the business. So that's a proof that we have a very different level of discipline and a very different level of execution capacity when it comes to separating businesses.

Thanks, Tom. We will try and go back to David Hayes at Jefferies. David, can you hear us?

Can you hear me now? Yes, here we go. Sorry about that. Tom took all my good questions. But anyway, I should go with what's next. Two for me. Could we -- can I ask just in terms of the decision to separate food and HPC -- long time, Unilever has been asked that question and said that you need to keep those together in terms of going to retailers, especially, I guess, in emerging markets with distribution. So is there a change of dynamic that means this is now more viable than it was historically? I guess I picked up in the comments that you're saying food has been operating stand-alone.

Is that something that's been developed and changed in the last few years that makes this more straightforward to do? And I guess related to that, I think you said again that maybe in some of the smaller markets, you need to boost scale. Does that mean some of the deals focus in the midterm will be to do that part of it as well? And then my other question, just in terms of the deal with McCormick. Can you give us a sense of how long that's been in discussion? And then did you talk to other partners and then why McCormick was chosen as the best partner and maybe over some others that you could have considered on a similar basis?

Okay. I can take probably the latter and Srini will cover the scale or between the 2 of us. I will not give you details of how long this has been in the making. We have always admired McCormick, and there are very, very good reasons why McCormick has been for many, many years, one of the highest value company in the food sector. And their focus on flavor, they are deep R&D expertise, their proven track record of successfully integrating acquisitions and investing heavily to build the portfolio of iconic and high growth brand, I believe, is very, very strong.

This has been an inbound proposal from McCormick that we believe it came at the right time in order for us to accelerate our strategy in moving into a pure HPC play. But from a food perspective, we are creating here a global flavor powerhouse. We are bringing to the complementary geographic footprints, leading positions across both retail and food service, strong R&D innovation capabilities. And I believe what we are creating here is a very distinctive attractive profile within the foods industry with superior growth potential and a high-quality financial model.

So we really believe McCormick is the right home for our foods brands. We really believe that the synergies of our food business with McCormick today are significantly higher than the synergies of our food business with our HPC business. And -- this is all finding the right long-term for our food business, and we believe we will create a lot of value through this combination. And with the 65% of shareholding in that new combined company, our shareholders will get a significant upside from this transaction. Srini, on scale in the different markets?

So it's important to highlight, Dave, that 2 things have happened. Obviously, the industry and the industry dynamics have changed. But more importantly, Unilever has been preparing well for this really maintaining what we call as an end-to-end commercial organization across each of the business groups.

This is something that we have now worked for the last 2 years. We have clear end-to-end responsibilities, whether it is marketing, whether it is R&D, and most importantly, when it comes to go-to-market. To give you some examples, obviously, when you think about modern trade markets, it's fairly intuitive that the customer interaction and the category buyers are category and not really one Unilever -- people who, therefore, when we sell [ Mayo ] to someone is not the same category buyer to whom we really sell a [ dog ].

So that's an important distinction, and you will appreciate that well when it comes to the modern trade markets. Even in the general trade markets, there is very clear distinction and disaggregation when it comes to category dynamics. What we've also done is when we have looked at all our top 15 foods markets, even when we separate foods, there is enough scale in terms of foods and there is adequate and enough scale when it comes to HPC.

And with the segregation of the go-to-market resources, we are well positioned to actually service and cater without losing any flexibility. The point that I made about small markets is, yes, we have some One Unilever markets [indiscernible] it's not about a trade term or a trade deal.

Some of our small distributors today actually carry the combined portfolio and some of the scale and size basically meant that it gives them the right ROIs. This is the point that I made about we will look for consolidation of some of this infrastructure, which therefore makes it amenable for us for the remaining HPC company. And for such extent, we have factored in some of our costs into the elements that I talked about in terms of restructuring. So in essence, we are well positioned. And therefore, we are clearly stating that there are no dis-synergies from the separation and distribution of HPC or Foods.

Let me be clear on this. Do we believe that separating Hellmann's in the U.S. will reduce our size of [ DAF ]? No. Do we believe that the separation of Knorr in Philippines will reduce or will affect our sales of Sunsilk? No. Do we believe that our separation of Hellmann's in Brazil will affect our sales of [indiscernible] ? No. There are stranded costs that we will fully mitigate, but we don't see any impact in terms of revenue dissynergies.

Our next question comes from Warren at Barclays.

We cannot hear you, Warren.

Go ahead Warren. We'll move to our next question. So our next question comes from Celine at JPMorgan.

I hope you can hear me. Excellent. So my first question is coming back on the 2x leverage for Unilever core as it will be. Could you help us bridge that because I get to a much lower number. So if I think about EUR 23 billion net debt at the end of '26, given the -- around EUR 14 billion or less than EUR 14 billion you would get plus the 10% is the new company.

I find it difficult to see how you get to 2x. So if you could explain that. And my second question is on the -- you said no transformational M&A. And nevertheless, you're going to get a bit of a reduced balance sheet. So I just want to understand in a market that clearly seems to be consolidating and we've seen in beauty, there as well deals potentially in the making. Why -- I mean, whether you feel that would be the right strategy or whether you may be having the lower balance sheet may be curtailing potential opportunities?

Yes. I cover the M&A question, and Srini will cover the debt one. We are absolutely convinced of our strategy of bolt-on M&A. So we continue looking at assets that are in super growth stage that are digitally native that fundamentally provide superior growth, superior exceptional growth and that increase our exposure to markets like India, U.S. and to channels like e-commerce.

So there is no intention at all. This is not a transaction to create optionality for another transaction. This is a transaction to create focus in the company and build a pure-play HPC business in which bolt-on M&A, bolt-on acquisitions will continue to play an important role, but not more than that. So that's basically when it comes to acquisitions. Srini on net debt?

So Celine, happy to. But look, it's fairly straightforward. When I really look at my financial plan, our growth and margin expansion, clearly, the cash conversion of the HPC business continues to be quite high.

When I factor in my dividend payouts, share buyback and bolt-on M&A, the equation and the numbers start to come through quite straightforward. What I did call out was that, look, I'll get the proceeds in 2027, but some of the tax that I will pay will be spread over a couple of years. What will also happen is that what we will incur in terms of some of the restructuring numbers will also be spread over a couple of years.

When I model those numbers, clearly, you will end up seeing that we will be able to get to the net debt numbers that I've been talking about, while maintaining really a good cash conversion. So very happy to pick up offline if you have any specific questions, but I believe the model is relatively straightforward when you model some of the elements that I've said.

Yes. Probably we need a follow-up because I don't get there. And just to say your bolt-on M&A definition is what.

Well, we have a plan for around EUR 1.5 billion a year. 1 year could be 0, 1 year could be 3. But these are the kind of assets we are looking at.

Next question from Warren at Barclays. Warren, hopefully, we can hear you now, please go ahead. Warren, please go ahead. We'll try our next question, Jeff Stent at BNP. Jeff, please go ahead.

Can you hear me.

Yes, we can.

That's a shocker. Fantastic. So a few questions, if I may. Firstly, will any votes be required from Unilever shareholders? Secondly, can I assume you'll do a share consolidation? And thirdly, are you at all concerned that McCormick's Ingredients business could lose clients because it's probably one thing McCormick given them ingredients. But when that now is part of a business that may be one of their principal competitors, obviously, puts quite a different perspective on things.

Do you want to cover shareholder vote and consolidation, Srini?

Yes. So from a Unilever perspective, there is no requirement from a shareholder vote. McCormick will have to undertake a shareholder vote. Share consolidation, early to comment on this. This is one of the variables we will definitely take into consideration post closing.

And whenever we do that, we will come back to you. So the third question wasn't entirely clear to me. Did you pick that up, Fernando?

No, I couldn't hear. It was a bit broken in the line, Jeff. If you can repeat, you're asking something about McCormick and some competitor. I don't know exactly what you.

Probably being polite -- yes, it's probably you're being polite and it's just my accent. Let me try and be clearer. At the moment, McCormick has many of your foods business competitors, I guess, as customers, i.e., they'll be providing ingredients to them or flavor solutions.

But when that ingredients business becomes coupled with your business, effectively, it means one of their competitors is now becoming a key partner and actually a key innovation partner, which strike me is this situation that's not that comfortable -- so my question is, have you, in your discussions with McCormick factored in any potential loss of business on the ingredient side of McCormick because of the combination?

Yes. We really discussed about the Flavor Solutions business because this was a business which we didn't have so much exposure in terms of our knowledge. I was impressed by the capabilities that McCormick has in that kind of business.

And I'm very impressed also with the access to consumer trends that this has to give to McCormick, clear exposure to health and wellness trends that held their strategy of innovation and has held their strategy on innovation for a very long period of time. I think McCormick is the #1 flavor solution business in the U.S. That's where the main business for them is. And they have been very careful in walking that fine line between supplying customers and competitors at the same time. So basically, we have been given assurance that this is not an issue at all. And in our due diligence, this is an area we'll cover and we feel comfortable about it.

Our next question comes from Warren at Barclays. Go ahead, Warren. Warren, can you unmute? We'll move to the next question, which is coming from Sarah Simon at Morgan Stanley. Go ahead, Sarah. We'll try the next question.

The next question is from James Edward Jones at RBC. James, hopefully, you have better luck with them.

Can you hear me?

First, the One Unilever markets, how difficult will it be to carve out the food business in those markets? And secondly, I was convinced I have to say when you talked previously about not needing to exit the food business because it largely consists of 2 very powerful brands in Hellmann's and Knorr. What changed your mind on that to the extent that you're now asking your shareholders to become investors in a significantly less focused food business?

Well, I feel -- let me talk about the exit of the powerful brands. I feel we have been very, very clear about what were our 7 key priorities and our journey into a pure-play HPC.

And nothing I have said before is contradictory with this. I feel if you have to integrate the food business with another one, the real luxury is to have 70% of your revenue into brands. And this makes the integration and the risk of integration of this business much lower than us in other cases. I believe what attracts us of the combination with McCormick is the incredible number of adjacencies and complementarity and the very limited overlap that we have seen there.

And if I look at the opportunities of unlocking growth, I can see front of house McCormick strengths with back of house Unilever in foodservice. I can see the trends of McCormick in hit in hot sauces with the strengths of [indiscernible] I can see the strength of McCormick in herbs and spices and a much, much more fragmented offering with the strength of Unilever and [ Beyonde ].

So there are multi, multi opportunities for delivering growth here that we believe it will really accelerate growth in that company as McCormick has stated in the 3% to 5% [ algorith ] for top line growth. So we believe that this is a superior profile of a food company. And we really believe that this will generate a lot of value creation for our shareholders.

In terms of One Unilever markets, there are a few markets in which Unilever Foods has a relatively larger presence. Practically, no market in One Unilever has more than 25% food presence. There are a few markets in Central America and Eastern Europe in which this is different. But as I said before, we don't see any kind of revenue synergies and the disentanglement of the food business with the rest of HPC is something that we have been working for many, many, many years now. So it's just 4 years in which we have established a long-standing foods organization that we can really separate in a time frame like the one we are stating here of 12 to 15 months.

Just to add 2 complementary points to what Fernando made. [ Regi ] and the team have actually been clearly mapping out some of these opportunities for some time now. And we have also actually been working on different models, which will enable us.

For example, in some cases, it's really -- while it's a dedicated country, in some cases, it made sense to really think it from a cluster of countries and servicing perspective and managing them. In some other countries, we actually looked at and already implemented distributor models, given that they don't have scale adequately. We have moved to a distributor model and which is really managed from our Unilever International.

Again, people, a set of team, which has really developed expertise in managing this in multiple parts of the world. So there are other levers and organization models that we can also put into play to really manage this.

I think it's an important point, Srini, that is 30% of One Unilever business is run by through Unilever International and another 30% to 40% is run through distributors, also [indiscernible]. So basically, what you leave in terms of countries where we have a stand-alone organization across HPC and Foods is relatively limited.

Our next question comes from Guillaume at UBS.

Two questions for me, please. The first one, Fernando, you listed what Unilever will get more of with the separation of Foods and more India, U.S., premiumization, et cetera.

But is there something you will get less of that you could be missing in the short term? I'm thinking the strong profitability and cash generation of food, but also the business stronger skew towards hard currency. So any color on the strategic role that was played by Foods in the past few years? -- and the implications going forward for Unilever ex Foods or how you're thinking about filling that gap? And then my second question is on the one-off EUR 0.5 billion restructuring program you just announced to offset the stranded cost.

Wondering if there is a risk of restructuring program fatigue at Unilever because this comes after a EUR 800 million program announced 2 years ago. So here, wondering to what extent the organization and maybe its employees can cope with additional restructuring and what I would imagine will be also involving some overhead reduction.

Let me cover the impact of what we will miss with the separation of Foods and Srini can cover the restructuring issue. Of course, I have always said that Foods is a fantastic business. And it's not that we are separating a business that we are not proud of, we are separating a business with very concentrated into brands, 70% of our revenue with a very good food service business with an excellent cash conversion profile and with an excellent profitability level.

So of course, we have been investing -- we have been using some of the cash proceeds of Foods to invest in the rest of the business. But I believe that when you are a good long-term owner of a business, when you are prepared to give that business a very significant priority role in your portfolio. And it's very clear that we have taken a decision of giving absolute priority to our HPC business, particularly to the growth of Beauty, Personal Care and Wellbeing. We have allocated all our capital in acquisitions to Beauty & Wellbeing. We have allocated most of our incremental brand marketing investment to the kind of categories and in certain extent also to premium Home Care.

So we will miss foods, we will miss Foods. It's a great business. But we are giving our shareholders also the possibility of getting the upside of this food business being combined with another very big and very focused and very competent foods company, and we believe this will create a lot of value. Restructuring, Srini?

Yes. So again, I think it's important to highlight that, listen, our first priority in all of this is to continue to keep our focus on execution and drive growth. I just want to make sure we land that. We're very clear Foods, continues to be a part of our business.

We have an HPC business to run over the next 12 months. We will continue to do that while we talk about the other elements. Now coming back to the restructuring elements to it. Look, that's why it was important to highlight what I did in terms of some of the transitional service agreements which actually ensure that. And there are classically some of the standard costs likely to be. Classically, some of the standard costs are likely to be in the space of tech, in the space of services because that's where we have a common infrastructure.

The second place that are likely to be some of the elements of corporate and corporate structures because that's where we lose scale. And therefore, some of the other elements could be in some of the smaller markets where we use national management or combined roles. So that gives you a bit of a context on why the transitional service agreements start to play. At least in 2 out of these 3, having the ability to do that over a period of 2 to 3 years makes -- ensures that we can do this in a sensible manner, we can do this in an orderly manner. That becomes important for us.

And there are obviously other levers which we can actually manage to get this, and we will continue to sensibly work on some of them. We are -- we have learned a lot from our prior experiences. We have clear playbooks on what to do and what not to do. We're also conscious that we don't want to be in a perpetual restructuring mode. But clearly, we have a plan to manage productivity as a habit. That actually then starts to help us because in the last 12 months, we have really strengthened that muscle and that we believe is going to go a long way in enabling us to manage this. There will be some third-party contracts because not everything is people. There will be some non-people and third-party contracts where we have to restructure them or we'll have to really think about exiting some of the contracts. We've also factored some of that into our working.

That, I think, is a good holistic summary of how we are thinking about it, and we will manage it in a sensible manner without impacting the operational intensity and the focus on driving growth.

We have some written questions from Warren who was unable to mute. So these questions are from Warren Ackerman at Barclays. Firstly, can you explain the secondary listing where and when might that be? And what does that mean from a liquidity perspective for euro and U.K. holders? And the second question is, can you explain what happens to the multiple when McCormick share price goes up or down? Is the equity fixed? Or does the value of the equity also move with that percentage?

Srini, you can take that?

Yes, absolutely. So look, the secondary listing, what we have stated is that we will want to have a secondary listing in Europe. We will require to do some consultation and with various stakeholders involved. We expect to make the decision somewhere between the next 90 days to 120 days in terms of the [indiscernible] location.

We will take into account some of the elements, Warren, which you have really raised. So that's really on the card. The second question, sorry, just remind me, the one related to the share. Sorry, got that. So look, the shares and the share ratio has been determined as it exists because we went through a clear exercise of looking at the relative valuations of our business, not only 1 month, 3 months, 1 year, multiples from the food sector, multiples for Unilever and HPC.

And what we have really determined is an equity component. So therefore, the cash component remains cash component. The equity value will vary depending on the share price, but there is no change to the ratio of what we are really working on...

And our final question comes from Jeremy Fialko at HSBC.

I hope you can hear me. Just one from me. Can you talk about the leverage in the food side of things? Obviously, that was kind of your decision to put 4x net debt to EBITDA in that business.

That is right at the very high end of consumer staples. It's an obstacle to a lot of investors holding shares. Now I know tend to come down over time, but still it's a lot. So what was behind the decision to go quite so high in the Foods business?

So Fernando, I can start and maybe you can comment. End of the day, it's good to start where the origin of the transaction started from where McCormick came to us to really look at this opportunity.

And that's when we really work through what really then starts to make a proper valuation case both for stakeholders from a Unilever point of view and McCormick, making sure if we had to do a proper RMT structure, we had to get the right structure between cash and debt.

So some of these elements went into consideration in terms of determining the net debt. Given the profile, the growth profile and the margin profile and the cash generation capacity of this business, McCormick has got committed financing. And clearly, given the clear plans that they have to drive revenue synergies and cost synergies, there is a good level of confidence to really bring down the leverage to around 3 levels between 2 and 3 years. So I think it's a combination between the structure, valuation and finding the right balance, which therefore determine the leverage at the levels that it did at inception.

We are talking here of a potential superior growth foods company with an excellent starting operating margin of around 21% that McCormick believe can go into '23, '25 and with cash conversion in the 100% territory. So -- and McCormick very, very importantly, also has a history of a dividend payout very, very similar to Unilever, 60% payout.

And they are very, very keen on keeping this kind of capital return policy for the combined company in the future. Cool. I would like to close and probably I would link to one of the comments of Guillaume because Guillaume talked about is there any fatigue in the company, et cetera, et cetera, and with so many, many changes.

And probably the question related with that is why now? And I would like to address this today and of course, very happy to discuss in our one-to-one interactions. And we really believe this is the right move now because it is absolutely in line with what we have been stating in our strategy and because it accelerates our strategy.

At the same time that we are unlocking significant value to our shareholders, giving them exposure to 2 stronger, faster-growing companies. And let me share with you one question that we ask ourselves before taking a decision. And that question was, what would more time give us? Would it have changed our strategy of becoming a pure play leading HPC player? No. Would it have changed our conviction of increasing exposure to U.S. and India? No.

And a few more questions. Is McCormick the best strategic partner given the verticals in which they play, the huge complementarity with our portfolio, their ability to integrate and accelerate brands they acquire? Yes. Is the relative valuation of McCormick and Unilever an enabler to make this combination happen now with maximization of ownership for our shareholders? Yes. And this is a very significant difference with the last 5 years.

Is the inbound proposal one that unlocks significant value for our shareholders? Yes. Does the deal have a high degree of certainty in a relatively short time frame? Yes. Having completed the separation of ice cream, do we have a team in place with capabilities and expertise to make the separation happen without disruption and supporting McCormick in their integration plans? Yes.

So if you look at all these lists, there are many, many reasons to avoid delaying the decision-making or the decision of making Unilever a pure-play HPC company and unlock significant value for our shareholders now. With that, I believe we are closing.

Thank you very much. I'm very, very happy to our future interaction that I'm sure it will be in a very short period of time. Thank you.

Thank you for your participation. You may now disconnect.

All right. Good afternoon. It's my pleasure to introduce Unilever, one of the world's most important global consumer franchises with category-leading positions across wellness, home, personal care and food and deep exposure to the world's fastest-growing end markets.

Over the past year, Unilever has reached a clear inflection point under a refreshed Board of Directors, new CEO and CFO. The company is moving with urgency, simplifying its portfolio, completing the Magnum Ice Cream demerger in December and sharpening its focus on volume-led growth, margin expansion and returns on invested capital. Fernando and Srini bring nearly -- several decades of experience from Unilever and a proven track record of building the company's fastest-growing, highest quality businesses.

Please join me in welcoming Unilever Management, CEO, Fernando Fernandez and Srini Phatak to the stage.

Thank you. Thank you, Steve, for such a kind introduction, and thank you, everyone, for having us today. I hope you have had a good lunch. We are your 40-minute dessert. I don't know if that's very good. But we will try to give you a bit of an interview in what is Unilever now, what is the change that we are introducing in the company now.

I will be in stage doing the first part of the presentation, fundamentally showing this kind of profound change that is going on in Unilever. And then I will be followed by Herrish Patel that is the Head of our U.S. business. He will cover how our Desire at Scale model has been landing in our most important market, the U.S., and how this has helped to deliver 4% growth in volume terms in the last 3 years.

Then Srini Phatak, our CFO, will share with you the value creation model of Unilever, but also even his previous experience as the CFO of our subsidiary in India, Hindustan Unilever, during a very, very successful period. He will show how Unilever is very well suited to take probably the best -- the biggest exponential growth opportunity that you can find in the world now in terms of potential volume growth with Unilever there, and then I will close.

Let me show you what is Unilever today. We are a -- close to EUR 51 billion business, 20% operating margin, more than EUR 10 billion in underlying operating profit. We have delivered very, very solid cash with cash conversion at 100%, EUR 6 billion cash delivered in the last year, EUR 6 billion capital returned to shareholders in the last couple of years in a kind of 75-25 split between dividends and share buyback. We are present in 185 countries. Every single day, 3.7 billion consumers use a Unilever product in the globe.

But if I have to leave with you one important message today is that many things have changed in Unilever in the last few years. We have not been in [ Ukraine ] since February '22, so 4 years without being present here. And many, many, many things have changed in the company. We moved from a historically geographically led model into a simpler category-led organization in 2022.

We have made significant interventions in our portfolio. In the last year only, we rotated 15% of our portfolio, including the separation of Ice Cream that, as you know, was a business with very low level of complementarity with our current portfolio, and we are focusing our business in a much higher portfolio growth footprint. We have made volume growth the most important metric in the company. It is very different to the Unilever of the past that has been very inconsistent about it. We have restored competitive level of investment in our brands. Recently, in an internal town hall, I was telling my people that being consciously uncompetitive is a criminal act. And we have built a much leaner structure with higher degrees of accountability and very clear incentive systems to ensure that we grow our top line and our bottom line in hard currency.

We have made very clear what are our 7 priorities at the category level, geographical level, segment level and channel level. This doesn't mean that the rest of organization, the rest of the business is not important, but these are the areas in which we will invest disproportionately for disproportionate growth. In category terms, we are really shifting our portfolio into more beauty, more well-being, more personal care. Urbanization, wealth expansion, massive entry of the female gender in the labor market, low fertility rates, massive adoption of healthy lifestyles, this all plays in favor of categories in which you invest in your own. And this is what Personal Care, Beauty & Wellbeing are.

Personal Care, Beauty & Wellbeing are now 51% of our portfolio. Our intention in the medium to long term is to make it 2/3 of our business. We believe that this business structurally have more potential growth and they have more scope for premiumization.

In terms of geographical focus, we have made U.S. and India, the 2 clear anchors of our portfolio. They represent today 33% of our business, but our intention is to make it 45% in the medium to long run. U.S. is 21%, India is 12%. And it's very, very important for us to focus in U.S. because historically, Unilever has been a kind of federation of local and regional brands. We believe that the U.S. is the only market that provides simultaneously critical mass to build a big business locally, but at the same time, provides a platform for international brands. And this is what we are doing with the acquisitions that we are doing in the U.S. in order to build the portfolio that can travel internationally in the premium segment.

The times of Unilever buying a sole company in Colombia or a food company in Egypt or a home care business in Vietnam are gone. We will concentrate the capital allocation of Unilever in building a portfolio for the future in the U.S. that can travel internationally.

India, Srini will cover that later, it is our second largest operation, close to EUR 7 billion, very, very successful historically. But we are very, very conscious that the portfolio that brought us to a huge position of leadership in India is not necessarily the portfolio that will propel us into the future, and we will make the changes and the investment there to ensure that we have a portfolio that is suited for the channels of the future in India.

We are moving into a more premium offering and with a significant presence in digital commerce. We are really convinced that concentration of retail will accelerate in the context of AI and LLMs. And we believe that the profit pool for the staple sector is shifting upwards. And that's the reason why we are moving our portfolio upwards. 42% of our portfolio now in premium positions. Our intention is to really move it to 50% in the next few years.

And we are really accelerating in digital commerce. 17% of our global Beauty & Wellbeing business is already in e-commerce. 17% of our U.S. portfolio is in e-commerce today, growing double digit and going very, very fast. We have built a portfolio now in which 30 Power Brands are the core for our investment. We have 11 brands that are beyond the EUR 1 billion, [ 15 ], if you take that in dollars. They have been growing 3.3% in volume in the last 3 years in average. That represents 78% of our portfolio. There is EUR 11 billion of revenue in Unilever that is not part of this Power Brand. Around EUR 2 billion of that is our brands that will be disposed in the near to midterm. The other EUR 9 billion are important brands, particularly to provide us resilience against economic volatility in emerging markets. But these Power Brands, these 30 brands, is where we are concentrating our investment.

We have a very attractive financial profile that has changed significantly since the last time we have been in CAGNY. Our gross margin has expanded 460 basis points. 2/3 of this increase in gross margin has been used to restore competitive investment levels in our brand. It's an implicit recognition that Unilever didn't invest enough in our brands for many, many years, but this is the past. We are now investing competitively with 16% of our revenue behind our brand marketing investment. 1/3 of the increase in gross margin has flown into the bottom line to achieve what has been our highest margin ever, 20%.

We don't believe this is a peak. If you compare with some of the HPC players in our space, some of them you know very well here in North America, they are significantly above us. And we really believe that we continue having significant scope in our gross margin to go up. Our return on invested capital is very competitive at 19%, definitely in the top third of the sector.

We are now organized in 5 clear P&L pillars, 4 at business group level, one for Foods, one for Home Care, one for Personal Care, one for Beauty & Wellbeing. This covers 85% of our revenue, and these 4 business groups take care of the top 24 markets of Unilever. All the rest of the markets of Unilever, we manage them under what we call the One Unilever market organization.

The 4 business groups run a whole P&L end-to-end in these top 24 markets. They have full accountability. And the intention there is to provide focus, category focus and category expertise to compete with the best pure play of the sector -- pure players of the sector.

In the One Unilever market, from market '25 onwards, we believe the benefit of scale continue being significant. They are not big enough to separate our sales organization. And this is a very successful unit that last year grew 5.2%. It has become accretive to Unilever with an expansion of operating margin of more than 250 basis points. We are operating that pillar now with 35% less headcount than 2 years ago.

95% of the P&L of the business groups is under full control of the business group president. People like me or [indiscernible] or the IT organization and part of procurement is managed centrally, but the business group president have full control of the key revenue drivers and the key lines of cost and investment of their P&L.

And importantly, in the 19th of March of 2024, we announced a significant productivity program at the same time that we were announcing the separation of [ Ice Cream ]. We have reduced now 17% our white collar workforce. This is a very different Unilever. This would have been very different -- very difficult in the Unilever of the past. You have seen that in the significant improvement in our overheads, 50 basis points in the last year.

We have also changed incentive systems. We are driving more accountability, differentiated performance. Historically, annual bonus, 90% of the people will receive an annual bonus between 80% and 120% of the par. In 2025, now we are paying this, only 55% are in that kind of range. 45% of our people are receiving rewards this year below 80% or above 120% of the par. So it's a very, very differentiated reward system versus what we used to have in the past.

All these changes in Unilever would have never happened without significant changes in leadership we have gone through in the last 3 years. You can see this number as a show of instability in the company, but we see it as the necessary refreshment of leadership that was absolutely crucial for a company that was underperforming. 8 out of the 10 Board members were not there when we presented in CAGNY in 2022. 9 out of the 11 leadership executives were not there, including myself, including Srini, 4 years ago. It's a huge, huge, huge change in the company -- in the leadership of Unilever, and I believe this is showing in some of our improvement in performance.

Let me now go in how we are transforming our innovation modeling, how we are adopting new models of reach and engagement with consumer -- and persuasion with consumers and also how we are executing flawlessly in the market. This is the mantra that we have put in place. We call it Desire at Scale. It's fundamentally about elevating the offering of our brands and executing flawlessly in the markets. And it has 2 pillars, what we call SASSY brands, bold disruptive brands and a frontline machine -- putting in place a frontline machine.

SASSY is an acronym for Science, Aesthetic, Sensorials, Shared by Others and Young-Spirited. Science, Aesthetic, Sensorials; superior science for superiority in product use, aesthetics for premium look and sensorial for wonderful experiences is what is defining the way we interact with consumers through our product development initiatives. It's all about driving superiority in our innovation plan. 3 years ago, I was standing in front of the [indiscernible] shelf, and I was not proud. That feeling has changed. And this is what's behind the 7% volume growth of that in the last 2 years.

I tend to say that our science has always been ahead of our marketing. Some people think the opposite, but I'm not. Unilever has historically had some of the leading science in the sector. We have close to 4,500 scientists in the company, 500 PhD. We spend around $1 billion in R&D every single year, but we have not leveraged that enough. Now what we are using is not using only the flow of new R&D, but also leveraging much better the historic R&D stock that we have not used in the past because our price points were not able to capture some of these great initiatives. And we have seen this in some innovations like Wonder Watch that is here in the middle that is really changing completely how people is washing in Europe, close to $200 million in 1.5 years since launch in this innovation. The same in brands like K18, allowing us to reach $80 price point in Hair Care. So this is what we are really driving very, very strongly in our scientific program.

Irresistible aesthetics across our whole portfolio from the high end of color cosmetics in prestige to the functionality of household cleaning through Cif or the new range of Cif probiotics. It's all about premium look, it's all about on-shelf appeal. It's all about real functional and look differentiation. We have our new unit of packaging development in the company. We are making big steps. This is one of the areas in which we have made more progress in the company.

Elevated sensorial for wonderful experiences, more extreme weather, really changing how people connect with categories like skin care or hair care in the globe, very different demands in places like India or places like U.S. when it comes to facial treatment, et cetera. Texture, a very, very important of our scientific program now. Fragrances, significant changes in how people interact with categories like laundry in which there is no tough dirt anymore and elevated sensorials in areas like fragrances matter more than ever. We are investing $100 million in our own fragrance house there. And significant changes in taste also in foods, particularly with adoption of hotter taste in categories like mayonnaise, condiments, et cetera.

All this is resulting in a much faster, much larger innovation plan that we are rolling out at speed and with a lot of focus in the premium sector. You can see here some examples, the Invictus technology, our superior body odor control technology, really driving our performance in deodorants, particularly in the U.S., in which a couple of years ago, we were having some issues in the premium segment, and now we have taken leadership.

As I mentioned before, quick wash cycle, very, very important in our strategy for Home Care. When you wash in a machine during 2 hours, the one that makes the hard work is the machine. When you wash in 15 minutes, you need great chemistry. And this is what this product brings into the market. And this is a principle that we're applying in our whole portfolio. We want to shift our portfolio into areas where there is more demand for science because we believe that this is a fundamental competitive advantage, particularly in category like Home Care against local players in emerging markets. And I can go on and go on.

Shared by Others, Young-Spirited, this is what we call social first demand model, and it's all about a new way of reaching and engaging and persuading our consumers. I'm absolutely convinced that the times of big corporate big brand messages are gone. You need an army of people talking for your brands today, and you need your brands to keep contemporary. And this is really, really tough with the kind of media fragmentation that we are seeing. These are numbers only for the Beauty division.

We have now 180,000 content creators working for Unilever in the Beauty & Wellbeing division. When you look at the company as a whole, it's close to 300,000. In Beauty last year, we have 75,000. This is the kind of exponential growth in the infrastructure that we are building for social media. We have increased the number of assets in 7x last year in Beauty. This is only possible through the adoption of AI at scale in content creation. We have increased by 2 the frequency of posting. The life span of a video now is 4 days. The time of lazy marketing, a couple of ads a year for a couple of innovation are gone. Marketing today is hard work, and we are ensuring that in every single corner of Unilever, we are adopting this model at scale, variety of creators, volume of content, velocity of posting.

Young-Spirited brands that are immersing culture, that are contemporary, that are experiential. This is behind the success of [indiscernible] or the success of Vaseline. Vaseline is a 155-year-old brand. In the last 2 years, 12% volume growth, all because serious immersion in culture, serious adoption of social media modeling. Social validation, the importance of event marketing, creation of significant amount of quality content for algorithmic preference and in a context of huge media fragmentation, more important for retail activation. These are the 4 key drivers in our model of reach and persuasion with our consumers.

Perfect Stores. We have put together a template now to run our business in emerging markets, in traditional trade or in modern trade, physical modern trade or in e-commerce, 9 key metrics of Perfect Stores in physical presence, 11 metrics for our digital presence. This is an example of how we have executed Wonder Watch launch in U.K. in this case. And this is what we will do, for example, with the FIFA activation for our deodorants, hair care and skin cleansing business in the next few months here in U.S. and all around the globe. We really believe that in the context of media fragmentation, physical presence in a store is more important than ever. We want to enter a store and feel that is a Unilever store. If you go to Central India and you go to one store, Unilever is 12% of the sales of that store. The second supplier is 1.6%. You have to fill it. And this is what we are doing with the level of investment that we are doing in store.

And the same when it comes to digital, we have built 3 hubs for digital commerce. U.S. with the likes of walmart.com or with the likes of Amazon in which we are enjoying growth about 25%. It's all about joint business planning. It's all about leaning in retail media. It's all about creation of great content.

In China, with the likes of Douyin, TikTok Shop, we are growing more than 50%. It's all about content to commerce. And in India, where quick commerce is only 3% of our revenue, but it's growing more than 100% for us. It's all about how to supply the dark stores in which these products are delivered -- from which these products are delivered to homes. It's all about premium offering. It's all about availability. It's all about content creation.

With that purpose of fundamentally putting together media marketing and commerce, we have announced today an important strategic partnership with Google. We really believe that in the future, the consumer journey of discovery of brand and shopping will be more conversational, will be done with much more presence of agents, and we want to be sure that we are at the forefront of technology when it comes to this. And this is the reason behind this deal that we have announced today in the morning. This will help us in our marketing, but also in our modeling simulation in R&D in order to shorten the innovation cycle significant. So it's a very, very important development for us that we have announced this morning.

With this, I would like to really put a short video. And after that, Herrish will show how this is landing in the most important market in the U.S. and how this has helped us to deliver 4% volume growth in the last 3 years.

[Presentation]

Good afternoon. My name is Herrish. As Fernando says, I lead the U.S. business. I just want to recap a few things that Fernando talked about, portfolio change, organizational change and cultural change. And for me, the U.S. is the leading market within Unilever of that change.

Allow me to start with portfolio. If you see the data here, Fernando talked that in the midterm, he would like 2/3 of his business, personal care, beauty, health and wellness. In the U.S. today, we are 77%, close to 80% of our business is already where the global vision is. What's fueled that is the $15 billion capital that we spent in the U.S. over the last 5 years. Yes, M&A acquisitions, but it's also built a supply chain that's fit for the volume growth that Fernando talks about. At the heart of the portfolio transformation has been the well-being footprint. We've pretty much doubled our footprint over that 3- to 5-year period.

But Unilever has operated in the U.S. for over 80 years. The one thing that hasn't changed is that we serve all of America. We serve 95% of households. We have one side brands that are 70-year-old like Dove. The other side, we've got fast-growing brands like Olly, Dr. Squatch, heading towards that [ 1 billion ] to join Liquid I.V. recently. They're at the heart of that transformation. What's most important about this portfolio is that it's building penetration with high-income households and Gen Z, build penetration where the growth is happening in the U.S.

At the heart of that has been Dove. Yes, you may expect me to talk about Liquid I.V., Olly, but the GBP 3 billion franchise is at the heart of Unilever USA. And what I'm going to take you through is what happens when you take SASSY and it finds the magic of execution.

Let me start with what Dove you should look like in '22. And I'll leave you pausing of some of the words that may come up, fragmented, cluttered, regional federation of Dove. Let me take you through now what Dove looks like today, dramatically different. Desire at Scale applied consistently at every touch point, craftsmanship, elevated sensorial cues, thoughtful design and packaging the cues beauty all the way through it, very much inspired by the SASSY framework.

So let me take you through some of the detail of what's driven the double-digit Dove performance in '25. Dove, since its inception in 1957, has always brought science to the categories in the U.S. And in '25, it does not change. We brought bioprotein to hair care, makes your hair 10x stronger. We bought nanoemulsion to skin cleansing, gives you 4x moisturization, gives you skin lotion effect. These technologies are decade-long in research. They are patent in the technology, and they have a long-term funnel about how we will continue to revolutionize the categories that we operate. It's supported by aesthetics, premium format and material, as you can see. And we have particularly even at the merchandising level, every touch point is about aesthetics.

But as you know, sensorially, functional superiority isn't just the name of the game now. You have to have formats and fragrance forward thinking. Think about formats like scrubs, oil, they are incremental to the category. They are premiumizing the category. Think about more usage and more benefits, which is what the brand has been bringing.

Fernando talked about Shared by Others. Let me give you why this is the future of marketing. We've tripled the volume content on Dove over the last 2 years. We are obsessed about meeting our consumers where they are, and we have to be part of that conversation. That's why it is powered by more content. We've tripled the level of creators and the influencers that we have in the U.S. As you know, the future of marketing is many to many, community to community. Yes, you can have mega creators, but you need to have now nano creators and influence to have that community to community feel. And yes, we're getting more engagement.

The last column tells you that we're spending more investment behind our brands. We're getting more content. We're getting more engagement, and we're reducing CPM, which means we're getting a better return for our investment going forward. We feel we've got an algorithm. But we're obsessed about going deeper in culture. And Fernando coined it as Youth-Spirited. I hope in the break, you got a time to engage with Crumbl and Bridgerton. But these are more than collapse.

These are strategic partnerships where we spend time looking at the 2 brand versus of Dove, Crumbl or Bridgerton, and we look for the magic of the equity of both brands. And once we find it, it inspires fragrances, it inspires sensorials and the data speaks for itself. 30% of Crumbl users are new to the brand, and they're Gen Z. There's a whole new generation coming into the Dove franchise.

There's a new marketing model, and the words I'll leave you with is that we [ seed ], we ignite and we scale. When we launch these, we seed through Reddit and we create a bit of fandom. We then ignite on TikTok and then we scale by owning physical and digital availability. So Desire at Scale in the U.S. is working, a GBP 3 billion franchise that's grown volume at 5% for the last 3 years. But the message I want to leave you with is Dove is a repeatable model that we will roll out across all our brands in the U.S. We did it on our biggest brand to prove that the strategy works when you bring SASSY and execution together.

So let me talk a little bit about execution. The one thing that we've benefited very quickly over the last 2 years is a dedicated sales force. By every business unit is dedicated. We play for scale where relevant. Every sales organization has a perfect store. Perfect store is a picture of success for how we want to build the brands. And what's happened over the last 2 years is that we are now #1 in Advantage Survey in the U.S. for personal care, for foods and #3 for Beauty & Wellbeing. That's an endorsement by the biggest retailers in the world to say you have a category vision, you have really good people and you're delivering on the execution. We are truly an omni player. That's the currency in the U.S., 25%, and it's competitive. And we're bringing culture to store and to digital platforms. We own some of the biggest assets. Just think of what you saw outside. We started with Super Bowl. We went Crumbl. We went Bridgerton. We're about to go FIFA, and there's so much more in the second half.

So as I look to wrap up, the big message is portfolio change, organizational change and a fearless culture about play to win and the joy of winning. What you see in the U.S. is 3 years of volume growth above 4%. We believe it's starting to become consistent, and now we're building a track record of year in, year out, quarter in, quarter out volume growth.

So let me add a bit of texture and maybe a bit of confidence on '26 before I hand over to Srini. As we look at '26, our innovation funnel has never been so strong in the U.S. Let me give you one data point. Our innovation funnel on deodorants in '26 is 2x what it was in 2018. The Compass organization, I like to think of as U.S. for U.S. powered by global scale and technology. It is working. We bring culture, but we're always part of the conversation. We're obsessed about our brands being always on, think more content, more influencers, more creators. And by the way, we spent $600 million more investment in BMI over the last 5 years. And to fuel you with, we're about -- we're [indiscernible] in Q2, this company, Unilever USA will launch its biggest activation they've ever done in the history of the U.S. Every single retailer is with us, and this is going to be a monumental moment for the U.S. and obviously, when England win the World Cup.

Thank you. Well, there's a round of applause. On that note, let me hand over to Srini to talk about our other anchor market, which is India.

Thanks, Herrish. I'm Srini Phatak, CFO for Unilever. Actually, a privilege to be here and actually talk about the other serious growth engine, which is actually India. Actually, what I got -- we've got a very nice internal gig going on here saying that who is going to do better, either which way Unilever wins. It's actually a fantastic place to be. India, when you really look at it, it's poised to be the third largest market in the world in terms of GDP, a market which is poised to actually continue to grow upwards of 6% when it comes to real GDP. There are very few places where you'll start to see growth like that.

Today, our category consumption classically is at about $54. Even if you were to compare it with a market like China, there's 6x opportunity and Indonesia, 4x opportunity. And it's also a place which is incredibly well positioned for us for -- really for exponential growth and the numbers really say it.

We've got market-leading positions, about 85% of our business is #1. To give you some context, in Hair, we got a 55% share. That's 3.5x larger than the nearest competition. If you really look at skin cleansing, we are at 37% market share, which is again 2.5x the nearest competition. If you look at [ dish ], we are upwards of 51% of market share, and that's actually 4x of the nearest competition. That starts to give you a flavor in terms of the leadership positions that we have. And this business has, over the last decade, consistently delivered 4% volume growth. And as we are doubling down on the India opportunity with investments, people and capabilities, that is a trajectory we only believe is actually likely to go further and beyond.

This is another important element. Fernando talked about where our consumers. There is a rapid shift, which is really happening towards digitization. There is people moving up from mass to premium from distributed trade to general trade. And that's where the profit pools are, and that's where our competition is. This, again, is an important element to highlight here that we are incredibly well positioned when it comes to as people move up the straddle, as we move up from mass to premium, our shares are higher. As people move from general trade to modern trade, our shares are higher.

And equally impressive and important to highlight is our profitability actually starts to get better as people start to upgrade as consumers come in. So simply put, our profitability in modern trade is higher than our profitability in general trade. Our profitability in premium is higher than our profitability when it comes to mass. So as consumers continue to move up, we are actually very well positioned to really capture the lifetime value of this opportunity.

Fernando also spoke about quick commerce today. It's about 3% of our business, growing 100%. Again, continues to be a huge driver for us in terms of growth. Here, we have actually created a dedicated organization between supply chain and sales, along with tech-enabled and agentic solutions to really make the supplies and capture the demand. Equally, we have actually got into clear partnerships with the top 3 players, which actually then starts to uniquely position us. Therefore, we are well poised to win both in search as well as in supply in this channel.

And this is the other element to see. Indian opportunity is not just a premium opportunity. It's a good way to really segment our portfolio between the 70 million. The top 70 million are actually equal to the per capita consumption. The 5% of the population has got the per capita consumption of France. There is growth to be had in the mid. There is growth to be had in the mass. We have more tailwinds in India and where we need to actually bridge our portfolio gaps, we are putting inorganic capital, the only place other than U.S. And you'll see that the notable example there is the acquisition that we made in Minimalist.

So our strategy is pretty much about 5-pronged in India. First is really segment the country by affluence and therefore, have the right product, brand channel combination to cater to that. That's number one. Second is really make our brands more contemporary through social, through digital and the SASSY framework. The third element is actually to double down in a bigger, fewer bets where we can actually put disproportionate resources to capture the value. The fourth element is actually customize some our India-specific capabilities when it comes to media, when it comes to R&D, while complementing with what Unilever really offers to actually enhance the proposition. And finally, obviously, an organization structure, which is simplified to continue to drive this at pace and therefore, capture the opportunity that is.

I'll quickly shift gears to really talk very quickly about our value creation opportunity and therefore, really anchored around the 2 big drivers. You've seen this. And in some ways, it absolutely remains consistent. This is a business which is really anchored on volume-led profit delivery growth, profit in hard currency. So the simplest way to think about is consistent compounders. That's how we would really like to run the business. Our ambition is obviously mid-single-digit volume growth with a modest margin improvement. Our focus really is improving profitability. And the way we will do it with enhanced gross margins, which we then start to invest behind our business. and a business which is actually anchored on 100% cash conversion.

We've got a clear strategy on bolt-on acquisitions. We deploy about $1.5 billion each year. That's a strategy which is working well for us. And you saw some notable examples of it, Liquid I.V., Nutrafol, Dr. Squatch. They continue to give us that additional leg of really spurring growth and actually really reshaping our portfolio. And our balance sheet is well positioned with net debt about 2x of EBITDA, which actually then gives us the financial flexibility to really work this through.

What's important for us is, therefore, I thought I will go a bit deeper into 2 important elements which really make a difference. One is really volumes and second is really gross margins. Very intuitive because that's really the way we will run the model, and that's really how we will build this business.

Important to highlight for us that UVG is a combination of mix and volume. Therefore, what you really see is the absolute volume and the premiumization opportunity and the price for us is pure price play. We've actually looked at this from 3 different angles and therefore, why it gives us the confidence to really say we can continue to sustain this business in upwards of 2% of UVG year-on-year.

We talked about Power Brands. 78% of our business is really Power Brands. And in the last 3 years, we've actually grown this upwards of 3% consistently. And that's where we are actually putting all our resources, our incremental BMI, our technology and our best efforts. We talked about Beauty & Wellbeing -- Beauty & Wellbeing and Personal Care. Again, half of our business consistently growing about 3.2%. That's again really a focus area. Even in 2025, 100% of our incremental BMI went into Beauty & Wellbeing and Personal Care.

And the last angle we really talked about is U.S. and India. Herrish spoke about how U.S. has actually delivered 4% consistently for the last 3 years. India is coming back into the game. Even if there is a bit of a recalibration between the 2 markets, there is high levels of confidence for us to then say we will be able to get this number and do better. So multiple ways to really look at the confidence that we have and it is also a testament of the level of execution and focus and how we are actually shaping the business through these power centers.

Important also to highlight here the gross margin story. Fernando gave you a bit of a flavor of the improvement. I want to give you a bit of how of what we have done in this case. Again, a housekeeping element to highlight. Actually, our gross margins take into account the primary distribution costs that we put in, yes. So the distribution cost from our factory to our distribution centers. And some of the other peers don't do it on a like-for-like basis. If you actually back that out, our gross margins actually tend to be upwards of at least 500 basis points higher, so close to 52%.

Having said that, we have clear levers to drive and enhance gross margin. And you see that pricing is not one of them. We are actually very responsible when it comes to pricing discipline to ensure the right balance between the affordability, the price pack architecture and balance value creation with competitiveness. So the levers really are what we influence and we drive.

Volume is actually a big, big enabler for us. Our gross margins, as you see, is give or take, 47%. But every incremental unit that we produce actually has got a marginal contribution of upwards of 60%. That then starts to become a virtuous circle of how volumes then tend to really drive margins for us.

If you think from a mix perspective, the mix can really be portfolio, mix can be power brands, mix can be geography, that actually tends to be a positive enabler for us. And there, we have an opportunity to actually think about 20 to 25 basis points of expansion that we can actually drive from a mix perspective.

The third element is really productivity. While productivity is really today a cultural shift from a gross margin line, we continue to have market-beating competitiveness enabled by buying efficiencies, enabled by tech into buying and multiple models, including partnerships. That is something which is serving us well. At some stage, some of the benefit will come down, but there are other levers to continue to pull because you can't indefinitely beat the market by 1%. But today, we are actually able to do that across the markets.

And the last point really is on CapEx. We spend about $1.5 billion, $750 million of that is really towards productivity. Even if you take a 4-year payback, we are talking about anywhere between 25 to 30 basis points of margin expansion on gross margin, which can actually continue to be delivered. This, therefore, gives us the confidence in terms of the investments that we are making, a 300 basis point step-up, massive shift towards digital and more than 100% of this going really towards Power Brands, really going towards Beauty & Wellbeing and Personal Care.

And we also started to put in models to really measure the ROI of our digital spend. Our rapid ROI tool, which is today live in U.S. and in India, is well poised and is giving us good signals to measure the effectiveness, and we are actually going to take it to 7 large markets this year to really then start measuring the effectiveness and therefore, better redeployment.

So in simple, putting it back, this is my last chart before I hand over to Fernando. We are well poised when it comes to growth and productivity with more than 21% of our turnover being invested, a big portfolio shift and a consistent policy of capital returns between share buyback and dividend.

With that, I'll hand over to Fernando.

Thank you. Good. So in terms of outlook, as we said in our earnings call recently, we see for this year our USG between 4% and 6% in the range that we have communicated for the long run, probably at the bottom of that range. Markets are relatively soft. That will require that we outperform market as we did in 2025, but we are very confident that we can do it with UVG a 2-plus percent volume growth with modest improvement. And as we have mentioned in the earnings call also, we have announced recently another share buyback of EUR 1.5 billion that will start in the second quarter.

Let me just close with 3 key messages. Unilever has gone through a very, very profound change in the last 3 years. That change has affected our organization, our portfolio, our leadership, but we believe that we are now a structurally simpler, leaner, stronger business. Desired scale, our mantra of elevating our brands is working, it's real, it's differentiated. It's really taking into account how people discover brands today and how they shop. And the U.S. performance is a proof that this model is working, and we are rolling out this model into the whole of Unilever, considering that this is an emerging market play, close to 60% of our business is in emerging markets. We believe this can be a significant competitive advantage. So we are well positioned to continue to outperform the market. And I hope next year, if we are here again, if you invite us, we can show that this will be a reality.

Thank you very much.

Hello, and welcome to Unilever's full year results announcement. Thank you for joining us. In a moment, Srini Phatak, our Chief Financial Officer, will take you through a detailed breakdown of Unilever results for 2025. But before that, I would like to share with you a few reflections on our performance last year.

Let me start by saying that we have delivered a solid year, fully in line with our commitments despite challenging conditions. When I took over as CEO, I made clear that one of my biggest priorities was to ensure that in Unilever, we could both perform and transform. 2025 has demonstrated our ability to do both. We delivered a good performance, delivering competitive volume growth, positive mix and gross margin expansion, with sequential improvement throughout the year.

We sharpened the portfolio. The successful demerger of Ice Cream, combined with 10 deals, including acquisitions like Minimalist, Wild and Dr. Squatch. And the disposal of several nonstrategic brands means that we have rotated 15% of the total portfolio in 2025. We have significantly elevated the offering of our brands, stepping up their functionality, their aesthetics, their sensorials, strong innovation plans and a decisive shift to social-first demand-generation models also contributed to a strong improvement in the Unmissable Brand Superiority scores of our brands, a key reason for our ability to outperform markets.

This is then powered by another increase in our brand and marketing investment. We improved our execution, reflected by our continuing strength in developed markets and our improved performance in emerging markets. including the successful operational resets in key markets like Indonesia and China. We have also acted decisively to correct performance gaps in areas like Home Care and Deodorants in Brazil or U.S. Care, businesses in which we expect significant improvements during 2026. We drove cost discipline and improved overheads by 50 basis points through the continuing delivery of our productivity program that is significantly ahead of schedule.

We are moving at speed to build a business that drives desired scale in our brands and execution excellence. There is much still to do, but we have entered 2026 as a simpler, sharper, more focused business, better able to capture the many growth opportunities that exist across our categories and our channels. Our performance in 2025 give us added confidence that we are on the right track, as Srini will now highlight in taking you through the numbers.

Srini?

Thank you, Fernando. Before I turn to the results, just a brief point on the basis of reporting. All the figures that I refer today are on a continuing basis, which excludes Ice Cream. Comparative figures have been restated to reflect the demerger of the Ice Cream business. So all growth, margin and cash metrics are presented on a like-for-like basis.

For the full year, underlying sales growth was 3.5%, with volumes at 1.5% and price at 2%. Looking beyond the single year, performance over a 2-year period highlights the underlying momentum of the business, particularly in Beauty & Wellbeing, Home Care and Personal Care, we delivered compounded annual volume growth of 3.6%, 3.1% and 2.1%, respectively. In 2025, we saw a clear sequential improvement through the year with quarter 4 growth at 4.2%, with a step-up in volumes to 2.1% and pricing at 2%. This reflects our disciplined execution and a sharper focus on volume-led growth.

Our 30 Power Brands, which represent more than 78% of the group turnover, continue to grow ahead of the average, delivering 4.3% underlying sales growth for the full year with volumes up 2.2%, in line with our medium-term growth algorithm. This performance has been sustained over time, with Power Brands delivering a 2-year compounded annual growth rate of 5%, including 3.4% volume growth. Power Brands have the first call our incremental resources with 100% of our incremental BMI in 2025 being invested behind them. The performance we see reflects the impact of those prioritization choices. Momentum strengthened further in the fourth quarter with Power Brands delivering growth of 5.8%, driven by volume growth of 3.5%.

Beauty & Wellbeing delivered balanced growth across the year with underlying sales growth of 4.3%, evenly split between volume of 2.2% and price at 2.1%. Dove, Vaseline and our premium brands continued to outperform, delivering double-digit growth, reflecting the strength of our innovation and focused execution. Category performance varied across the year, reflecting different stages of portfolio reshaping, innovation delivery and execution.

Hair Care was flat overall with pricing offset by lower volumes. Within this context, Dove Hair continued to deliver double-digit growth, driven by the rollout of its fiber repair range across multiple markets. Total Hair Care performance in North America was flat, reflecting portfolio simplification actions, while softer market conditions in some emerging markets weighed on volumes.

Core Skin Care delivered mid-single-digit growth. Vaseline again stood out, delivering double-digit growth for the third consecutive year and becoming our eighth largest brand.

Wellbeing remained a key growth engine, delivering double-digit growth for the year, led by volume. Liquid I.V. and Nutrafol both delivered double-digit growth, with Liquid I.V. reaching 2 important milestones: becoming a $1 billion brand and achieving a record U.S. household penetration of over 18%. Olly delivered high single-digit growth, and it is now an over $500 million brand.

Prestige Beauty delivered low single-digit growth. Hourglass and K18 continued to grow double digit, and Dermalogica and Paula's Choice returned to growth in the second half.

In the fourth quarter, Beauty & Wellbeing growth stepped up to 4.7% with volumes up 2.8%. This performance underpins a 2-year compounded annual volume growth rate of 3.3%, reflecting improved execution and a stronger performance across several key Asia Pacific Africa markets as the year progressed. While market growth moderated in Wellbeing, we delivered volume growth above 5% for the quarter, continuing to materially outperform the market. Meanwhile, our core portfolio delivered improved growth with Hair Care at mid-single-digit growth.

From a profitability perspective, underlying operating profit in Beauty & Wellbeing was EUR 2.5 billion in 2025, with an underlying operating margin at 19.2%, down 20 basis points year-on-year. This reflects a significant improvement in overhead efficiency with increased brand and marketing investments behind Power Brands and premium innovations supporting long-term sustainable growth.

Personal Care delivered underlying sales growth of 4.7% for the full year with a much stronger competitive performance driven by the momentum in the United States. The U.S. remains a big growth engine and a benchmark for execution across the business group. Price contributed 3.6%, largely reflecting commodity-driven increases with volumes growing 1.1%, supported by premium innovations, particularly in Dove, which delivered high single-digit growth. Strong volume growth in developed markets led by North America more than offset softer conditions in Latin America, where volumes declined, but the performance remained ahead of the category.

Deodorants delivered low single-digit growth, supported by both price and volume. Dove again led performance, delivering double-digit growth with scaling of Whole Body Deos across 15 markets, reinforcing our leadership in the category. In the fourth quarter, growth improved sequentially to mid-single digit as actions to address product format mix in Brazil began to gain traction.

Skin Cleansing delivered mid-single-digit growth led by price and continued premiumization. Oral Care also delivered mid-single-digit growth, driven by strong performances in Close Up and Pepsodent, with premium whitening and naturals innovations in Asia Pacific Africa.

During the year, we further strengthened Personal Care's portfolio through the acquisitions of Wild and Dr. Squatch. These acquisitions enhance our exposure to premium segments and are expected to contribute meaningfully to growth over time. In the fourth quarter, underlying sales growth remained strong at 5.1%, led by North America and Asia Pacific Africa. Growth was driven by price and supported by positive volume, reflecting the positive trajectory of the business and the sustainability of U.S.-led momentum.

From a profitability perspective, underlying operating profit in Personal Care was EUR 3 billion. Underlying operating margin increased by 50 basis points to 22.6%, driven by improvements in gross margin and overhead efficiency. We continue to invest behind our brands, most notably in the U.S. and in the premium segments in line with our strategic priorities.

Home Care delivered underlying sales growth of 2.6% for the year, with growth primarily being volume-led at 2.2% and a modest contribution from price of 0.4%. Performance improved sequentially through the year, supported by strong growth momentum in Europe, driven by premium innovations and improved execution and performance in India.

Fabric Cleaning was flat as strong performance in Europe was offset by a softer performance in Brazil, where corrective pricing actions were taken earlier in the year to restore competitiveness. Wonder Wash continues to go from strength to strength following its launch in 2024, and it's now established in more than 30 markets. This demonstrates the speed at which we can roll out high-impact innovations at scale.

Home & Hygiene delivered mid-single-digit growth led by Cif and Domestos. Growth was supported by premium innovations, including Cif Infinite Clean and the continued rollout of Domestos Power Foam beyond Europe, extending our leadership in hygiene formats.

Fabric Enhancers delivered high single-digit growth led by volume. Comfort, one of our EUR 1 billion brands performed particularly well, supported by premium formats and fragrance-led innovation, with strong momentum across several emerging markets.

In the fourth quarter, growth accelerated to 4.7%, driven by 4% volume growth, underlining the recovery of the business. India was a key contributor to this momentum with Home Care delivering mid-single-digit volume growth, led by strong performance in liquids across Fabric Wash and Household Care and reaching its highest ever market share. Brazil, Home Care's second largest market, also returned to growth in the quarter, further supporting the overall improvement.

From a profitability perspective, underlying operating profit in Home Care was EUR 1.7 billion, with an underlying operating margin of 14.9%, up 40 basis points year-on-year. This reflects improved overhead efficiencies and disciplined brand investments focused on fewer high-impact innovations, partly offset by a decline in gross margin.

Foods delivered underlying sales growth of 2.5% for the year, with 0.8% from volume and 1.7% from price. Growth was ahead of the market, driven by strong performance in emerging markets, while developed markets were broadly flat amid weaker consumer demand. Against that backdrop, this represents a solid performance with clear evidence of competitiveness across our core brands.

Hellmann's continued to perform well, delivering mid-single-digit volume-led growth for the year. This was supported by the continued strength of its Flavored Mayonnaise range, now scaled across more than 30 markets and established as EUR 100 million platform, demonstrating our ability to premiumize at scale.

Cooking Aids delivered low single-digit growth, driven primarily by price. Knorr grew low single digit with softer retail conditions in developed markets offset by volume and price growth in emerging markets.

Unilever Food Solutions was flat. Volumes were positive in North America, offset by declines in China, reflecting a weaker out-of-home consumption. We expect the UFS performance in China to improve during 2026.

In the fourth quarter, underlying sales growth was 2.3%, with volumes up 1.3%, reflecting a market environment that remained subdued into year-end. From a profitability perspective, Foods delivered a record year with underlying operating margin increased by 130 basis points to 22.6%, the highest level achieved by the business group. Underlying operating profit was EUR 2.9 billion. This reflected portfolio pruning, disciplined pricing, productivity gains in gross margin, tight overhead control alongside continued focused brand investments in line with our food strategy.

We delivered balanced growth across developed and emerging markets despite a more uneven macro and consumer backdrop through the year. This highlights the advantage of our geographic footprint. In developed markets, we grew ahead of our categories despite consumer conditions softening, particularly in the second half. In emerging markets, performance improved throughout the year, reflecting decisive actions we took to address challenges alongside improved execution, a step-up in innovation and a more focused channel execution as well as an improving trading environment in several key markets.

Developed markets, which represent 41% of the group turnover, delivered underlying sales growth of 3.6% for the year, a sustained outperformance versus the market. Growth moderated in the second half as the macro and the consumer backdrop softened with fourth quarter underlying sales growth of 1.7%, with slower market growth in both U.S. and Europe.

North America was a standout performer. Underlying sales grew 5.3% for the year, with volumes contributing 3.8%, reflecting continued share gains and the benefits of multiyear reshaping of our portfolio towards Beauty & Wellbeing and Personal Care. Premium innovations supported by strong retail execution continued to underpin growth, allowing us to outperform the markets despite more subdued consumer conditions. In the fourth quarter, growth moderated as category conditions softened across the segments. Despite this, our portfolio performance remained resilient, reflecting the strength of our portfolio and execution.

Europe delivered low single-digit underlying sales growth for the year. Home Care and Personal Care performed well, supported by the volume growth and the continued rollout of Wonder Wash and Whole Body Deodorants. This was partly offset by softer conditions in Foods, where we continue to outperform the market. Growth across Europe was uneven with good momentum in France and Italy, offset by softness in Germany. In the fourth quarter, underlying sales were flat, in line with the slowing market environment, but our performance remained robust relative to the categories.

Emerging markets, which account for 59% of the group turnover, delivered underlying sales growth of 3.5% for the year. Performance improved sequentially through the year with growth accelerating to 5.8% in the fourth quarter including 3.2% volume growth, reflecting the impact of decisive actions taken earlier in the year, alongside a return to growth in Latin America.

Asia Pacific Africa delivered underlying sales growth of 4.6% for the year, with volumes contributing 3% and price 1.6%, reflecting strengthening of execution across several key markets. Momentum strengthened in the fourth quarter with APA delivering underlying sales growth of 6.9%, driven by volume growth of 5.7%.

In India, underlying sales grew 4% for the year, with volumes up 3%. Growth accelerated in the fourth quarter to 5%, with volumes up 4%, reflecting market share gains, a gradual recovery in market growth and the normalization of the trade environment following GST adjustments in the third quarter. Performance was led by our premium Personal Care portfolio and strong execution in laundry liquids.

In Indonesia, underlying sales grew at 4% for the year, with a sharp recovery in the second half, following a comprehensive reset of the business. Alongside price stabilization and trade stock normalization, we stepped up innovation and significantly increased social-first brand activation, strengthening relevance and demand across our core categories. As execution improved, availability and affordability were sharpened. The performance stepped up materially with growth accelerating to 17% in the fourth quarter against soft prior comparators.

In China, underlying sales growth were flat for the year, with clear improvement in the second half, including mid-single-digit growth in the fourth quarter. Actions to reset the business, including strengthening of go-to-market execution, and accelerating premiumization supported this improvement. This was led by Beauty & Wellbeing and Personal Care, despite overall market growth remaining weak.

In Latin America, underlying sales grew 0.5% for the year, reflecting a broad-based market slowdown amid ongoing macro and political uncertainty. Price growth of 5.9% largely offset a volume decline of 5.1%, with elevated price elasticity continuing to weigh in on volumes as consumer demand remained under pressure.

The region, however, returned to growth in the fourth quarter. For the year, Beauty & Wellbeing and Foods both delivered low single-digit growth. In Foods, performance was supported by Hellmann's, led by the continued strength of the Flavored Mayonnaise range in Brazil. In Beauty & Wellbeing, growth reflected improved execution and the strength of the core brands. During the year, we took targeted actions in Brazil to restore competitiveness, including corrective pricing in Fabric Cleaning and adjustments to the format mix in Deodorants. Home Care returned to growth in the fourth quarter, providing a clear indication that these actions are beginning to gain traction.

One Unilever markets delivered mid-single-digit growth with positive volume and price and were accretive to both group sales and profit growth in 2025. This performance reflects the benefits of radical prioritization and sharper focus in our smaller markets. Turnover for the full year was EUR 50.5 billion, down 3.8% versus the prior year. This was driven by significant currency headwinds with FX reducing turnover by 5.9%.

The currency impact was broad-based, reflecting a weaker U.S. dollar alongside depreciation across a number of emerging market currencies, including several of our large markets. This was only marginally offset by strength in a small number of currencies. Excluding currency, turnover increased by 2.3%, driven by underlying sales growth of 3.5%, partly offset by portfolio actions as we continued to sharpen the business.

The net impact from acquisitions and disposals was negative 1.2%. Within this, acquisitions contributed 0.6%, driven by Minimalist, Wild and Dr. Squatch, all performing in line with their acquisition business cases. This was more than offset by a disposal impact of 1.8%, reflecting the exits of Unilever Russia and the China water purification business in 2024. Disposals of Conimex, The Vegetarian Butcher and Kate Somerville were completed during 2025.

Underlying operating margin expanded by 60 basis points to 20% in 2025, reflecting a structurally strong margin profile. Gross margin contributed positively, expanding by 20 basis points and marking a third consecutive year of gross margin expansion. Importantly, following the Ice Cream's demerger, gross margin now is at structurally higher level of 46.9%. This reflects a fundamental shift in the shape of the group alongside improvements in mix, price and sustained delivery of savings.

Our productivity program and the ongoing cultural shift enabled a further 50 basis points reduction in the overheads. Since the program began, we have delivered more than EUR 670 million of savings and are well ahead of the plan. We remain on track to complete the EUR 800 million program in 2026. Brand and marketing investment increased by 10 basis points to 16.1% of turnover, the highest percentage in over a decade and 300 basis points higher than 4 years ago. This reflects a clear choice to prioritize investment behind our strongest brands and innovations, consistent with our focus on sustainable growth and long-term value creation. 100% of the incremental BMI was allocated behind Beauty & Wellbeing and Personal Care.

Underlying operating profit was EUR 10.1 billion, a decline of 1.1% versus prior year. In line with our multiyear priority, in 2025, we delivered hard currency underlying earnings growth. Underlying EPS rose to EUR 3.08, up 0.7% versus the prior year, with sales growth and margin expansion together contributing 6.5% to EPS growth.

Net finance costs were broadly flat year-on-year, reflecting active balance sheet management and disciplined funding decisions. Net finance costs represented 2.1% of average net debt, underscoring the resilience of our financing structure following the Ice Cream separation. Tax contributed positively, adding 1.3% to underlying earnings per share as the underlying effective tax rate decreased slightly to 25.7%. This reduction reflects the mix of earnings and the benefits of local tax optimization measures.

Our share buyback programs contributed 1.5% to underlying EPS. These positives were morely offset by currency, which had a negative impact of 8.8% on the underlying earnings per share. On a constant currency basis, underlying earnings per share grew by 9.5%. Following the separation of Ice Cream, an 8 for 9 share consolidation was implemented in December 2025 to ensure comparability of earnings per share, share price and dividends with prior periods being restated accordingly.

Sustainability remains a fundamental part of Unilever's strategy and is managed with the same discipline as our financial performance, with clear accountability and a direct link to remuneration. In 2025, we reached an important milestone in plastics, delivering both on our multiyear targets due this year. This reflects sustained focus and investments and demonstrates our ability to deliver against complex commitments.

Free cash flow for the year was EUR 5.9 billion, representing 100% cash conversion. Compared with the previous years, free cash flow was around EUR 400 million lower, reflecting costs associated with the Ice Cream demerger, including separation-related tax on disposals. Excluding these demerger-related items, free cash flow was EUR 6.3 billion, underlying the cash-generating strength of the business.

Net debt at the year-end was EUR 23.1 billion, an absolute reduction of EUR 1.4 billion following the Ice Cream separation. This reflects the combined impact of cash generation and the demerger, offset by dividends, acquisitions and share buybacks. Net debt to underlying EBITDA closed at 2x, remaining within our target range and consistent with our capital structure objectives.

Turning to returns. Our underlying return on invested capital was 19%, placing us in the top 1/3 of the sector. Our ROIC benefited by around 100 basis points from Ice Cream demerger, reflecting the higher quality and the lower capital intensity of the group following the separation. Overall, ROIC remains firmly in the high teens, which we continue to view as a key guardrail for capital allocation and a core pillar of our multiyear value creation model.

Our capital allocation is clear and disciplined and remains focused on 3 priorities: growth and productivity, actively shaping the portfolio and delivering attractive capital returns. Starting with growth and productivity. We continue to invest at scale where it matters most. Brand and marketing investment was 16.1% of turnover, while capital expenditure was 3.1% of turnover. Importantly, more than half the CapEx is directed towards productivity and margin initiatives, reflecting our focus on strengthening the underlying economics of the business while continuing to support our brands and innovation agenda.

Turning to the portfolio. We remain value focused. We are continuing to simplify the portfolio through targeted disposals while pursuing bolt-on acquisitions aligned to our strategy. Our focus remains on Beauty & Wellbeing and Personal Care, with emphasis on premium segments, digitally native brands and e-commerce exposure, particularly in the U.S. and India.

Finally, on capital returns, we returned EUR 6 billion to shareholders in 2025, comprising EUR 4.5 billion in dividends and EUR 1.5 billion in share buybacks. This reflects our capital allocation priorities with a clear preference to maintain in principle a 70-30 balance between dividends and share buybacks. Taken together, this provides consistency and visibility supported by strong cash generation and disciplined execution.

We continue to transform the portfolio in 2025, allocating capital towards higher growth premium segments while exiting businesses that no longer fit our strategic direction. Taken together, 2025 represents a step change in portfolio transformation. With the Ice Cream demerger and 10 transactions completed or announced during the year, we materially increased the focus and the growth profile of the group.

On the acquisition side, the additions of Minimalist, Dr. Squatch and Wild strengthened our exposure to Beauty, Wellbeing and Personal Care, premium segments and digitally native e-commerce-led brands with particular emphasis on the U.S. and India. At the same time, we were decisive in simplifying the portfolio. We completed exits from lower growth and noncore businesses, including Conimex, the The Vegetarian

Butcher and Kate Somerville and announced further disposals such as Graze, Indonesia Tea and the Home Care business in Colombia and Ecuador. These actions further sharpened the focus of the group and reduce complexity.

The Ice Cream demerger is the most significant step in this portfolio transformation. It reflects a deliberate decision to simplify the group, increase the strategic focus, enabling both Unilever and the Ice Cream business to pursue distinct strategies, capital structures and growth priorities more effectively. Overall, the scale and pace of change in 2025 underlines that this is a different Unilever, one that is actively transforming its portfolio to drive higher quality growth and stronger returns over time.

Turning to 2026. Our outlook reflects the progress we have made and a disciplined focus on what we can control in a slower market environment. On growth, we expect underlying sales growth for the full year to be at the bottom end of our multiyear range of 4% to 6%. We expect underlying volume growth of at least 2%, maintaining focus on our volume-led growth and outperforming slower markets.

On margins, we are confident of a further modest improvement to the underlying operating margin. Our structurally strong gross margin will continue to benefit from value chain interventions, fueling ongoing reinvestment into our brands. In 2026, we expect inflationary pressures in select commodities, with the overall inflation being lower than 2025. As before, margin progression is an outcome of our choices, not a short-term objective in its own right.

On capital returns, we have announced a new share buyback of EUR 1.5 billion, reflecting confidence in the strength of our balance sheet and the consistency of our capital allocation framework. We also continue to expect sustained, attractive and growing dividends supported by strong cash generation.

With that, over to you, Fernando.

Thank you, Srini. As we look ahead, we expect conditions to remain challenging, with soft markets in many parts of the world. Our confidence in the future stems from the significant progress we made in 2025, and we enter '26 as a very different looking business, one that is not only simpler and more focused, but also now built to deliver consistently.

We are building a sales and marketing machine founded on 3 fundamental shifts that transcend our whole business, with 7 clear growth priorities. Let me take them in turn.

The 3 fundamental shifts encompass our brands, our organization and our people. Our brands are benefiting from a desire at scale model that is elevating every stage of the journey, from product development right through to the way we reach and engage with consumers, to the way we execute in both offline and online retail. where fully deployed, we have seen incredibly strong performances in brands like Dove, Vaseline, Persil and Hellmann's.

We are making our organization fit for the AI age, transforming every link in the value chain, particularly around the consumer. That means deploying AI to supercharge demand generation, scaling and hyper targeting marketing content, partnering with consumer faces, LLMs, and working with retailers on agentic shopping models, creating a future fit model for how our brands are discovered and shopped. And our people are embracing a new play-to-win philosophy and approach where the demands may be greater, but where targets are sharper, accountability is clearer, potential rewards are higher and with the highest ever differentiation between best and worst performers.

When it comes to our growth priorities, this will be increasingly familiar to you by now. They involve honing in and doubling down on our biggest growth opportunities across categories with more Beauty, more Wellbeing, more Personal Care across geographies with U.S. and India as clear anchor markets for Unilever and across segments and channels, focusing on premiumizing the portfolio and further increasing our exposure to e-commerce.

These 7 areas are already driving a large proportion of our growth. And with the additional focus on investment we are bringing to them, we see opportunities to go considerably further. I look forward to going deeper on these fundamental shifts and growth priorities at next week's CAGNY conference in Orlando.

Nowhere does the robustness and validity of the transformational fundamental shifts and strategic growth priorities show up more clearly than in the strength and quality of our innovation program. You have seen in our results today how effective our premium innovation is when we create or grow categories like powder hydration, short-cycle laundry, probiotics in surface cleaning, flavor mayo, all powered by our superior science, irresistible aesthetics and elevated sensorials. We are doubling down on this approach in 2026, with an excellent pipeline of innovation, leveraging our multiyear scientific streams and introducing new ones. And many of our Personal Care innovations will be activated alongside our sponsorship of the FIFA World Cup 2026, an exciting moment for us and our brands.

A simpler, more focused company is not an end in itself. It is all about delivery, consistent delivery. That's what we are concentrated on. And while there is a lot more to do and more to prove, we are confident that '26 will be another big step forward in moving to a model and an approach that is built for delivery.

The key elements are all there. First, our mantra is and will remain volume growth, positive mix and gross margin expansion. We are laser-focused on these very clear metrics. This is a route to sustain success for Unilever and to top 1/3 shareholder returns, and we will continue to invest accordingly to achieve these objectives.

Second, with the well-executed separation of Ice Cream now behind us and with other recent bolt-on deals successfully completed, we have a sharper portfolio radically focused around our strongest categories and our biggest brand. Third, with our emerging markets strengthening and developed markets continuing to outperform, we have a real opportunity now to leverage one of Unilever's most distinctive assets, our global strength.

Fourth, our capital allocation priorities, as you heard from Srini, are crystal clear, focused on driving growth and productivity by supporting our brands, sharpening our portfolio and maximizing margin initiatives, while at the same time, delivering strong capital returns to shareholders. And finally, the strength of the organizational change at Unilever over recent years can hardly be overstated. The heavy lifting has been done.

This is now a new business simpler, leaner, more accountable, with P&L ownership now squarely in the hands of our category-led business groups, all back up by differentiated reward to drive top performance. All these elements give us the confidence that we are moving towards a model and an organization built for consistent delivery even in markets that will remain tough.

Thank you for your attention. We look forward now to taking your questions.

[Operator Instructions]

Thank you very much for joining the call. Our first question comes from Celine at JPMorgan. Celine?

Moving to the second question, Warren. The second question comes from Warren Ackerman at Barclays.

Warren here, at Barclays. Can you hear me okay? I'm doing echo.

Yes, we can, Warren

Okay, super. So first one, Fernando, can you talk a bit about the emerging market outlook for 2026? I think about the big 4, Brazil, India, China, Indonesia. Can you maybe hit on some of the key topics that people are interested in? The fix on Brazil Deos, for example? Is China and Indonesia proper reset? Is it done? How should we think about volumes in '26? That's the first one.

Second one, another geo one. It's on the U.S., obviously slowed versus Q3. Can you talk a little bit, Fernando, about where you see U.S. category growth? Any signs of price pressure in the U.S. and your confidence about the '26 delivery? What kind of innovation pipeline, what kind of delivery should we expect out of the U.S. in '26?

And just quickly, if I can squeeze in a housekeeping for Srini. Can you just tell us where the productivity savings landed, Srini? Is the EUR 800 million done? And what should we think about productivity-wise in '26?

Thank you, Warren, and good morning, everyone. Well, let me start saying that we consider our strength in emerging markets a significant long-term competitive advantage given the exposure to give us to better population growth rate, worse margin expansion, et cetera. And we have a portfolio in emerging markets that is really diversified in terms of geographies, category, segment, price points, and this gives us resilience against volatility.

We are very, very confident in our step-up in emerging markets. We are seeing now -- with the exception of LatAm, in which the market volume growth is flattish, we are seeing now growth in Asia Pacific Africa, in the territory of 3% volume growth for the market. And our performance is improving across the board.

India is improving both in terms of economic backgrounds and the fundamentals of the business, particularly the strengthening of our brand equities, our Unmissable Brand Superiority scores in India are improving across the board. Our execution, particularly in rural areas and traditional trade, independent trade, is also improving. And we are growing shares. And particularly in Home Care, we have achieved -- that as you know, it's 40% of our business there. We have achieved the highest ever share there in the last reading.

China is slowly getting better. Growth has accelerated in second half 2025. We have made some significant interventions in the route to market of e-commerce. More work to do there, but we expect a better year in China in 2026.

In Indonesia, we are very pleased with the renewed leadership team that we have put in place. They have done the right thing to reset the fundamentals of the business. We are now operating with very, very historic low levels of stock in our distributors. That has removed any fundamental issue of channel price conflicts we have had in the past. We have relaunched our 8 top brands in the market.

And of course, in quarter 4, we were benefited a very weak comparators. But I feel the metric that we look obsessively in Indonesia is an improvement in our sales run rates. And every single quarter, we have been selling more in Indonesia in the last 4 quarters.

Other markets, like Vietnam, Pakistan, Bangladesh, Arabia are all also improving. We have significant operations in other countries. So all this is growing nicely.

Regarding LatAm, markets remained flattish. We have seen in the second half of last year around 0% growth. Volume growth in Latin America, macroeconomic remained challenging in Mexico and Brazil. But we are pleased with the return to growth in quarter 4 led by the great momentum in Foods. We have a flying Hellmann's there. Solid growth in Beauty & Wellbeing. I'm very, very pleased with the fast reaction in Home Care to the corrective actions that we have put in pricing to restore competitiveness. This is starting to bear fruits there.

We expect improvements in Deos in the next few months. Actions have been put in place to rebalance our investment, increasing the one in aerosol relative to the one in contact applicator formats. Reigniting growth in aerosol is absolutely critical, given the higher revenue per use and the higher profit per use. We are getting a lot of support from retailers in this aspect. We are resetting planograms in thousands of stores and across the region, and we expect Deos in Latin America to be a key contributor to growth from quarter 2 onwards. So in summary, optimistic about emerging markets in 2026.

In U.S., let me start saying that our volume growth in North America in the last 3 years has been 3.9% in 2023, 4.2% in 2024, 3.8% in 2025. So this is a very consistent performance despite tough markets, probably one of the best performances in the sector.

And this is a reflection of a profound transformation we have done in our portfolio, the setup of a U.S. for U.S. innovation model and a huge focus in a strengthening relationship with retailers there.

Quarter 4 had a soft start, but we are encouraged by the fact that the market has rebounded in December and January. We have -- we are off to a good start in North America in 2026. Of course, we have seen some slowdown in Wellbeing. Wellbeing in North America in the quarter 4 delivered around 5% volume growth when it was in double digit in the first 3 quarters, we have a couple of issues there. Fundamentally, the share of assortment of Liquid I.V. in a key retailer of the club channel, also some increase in the customer acquisition cost of our DTC business of Nutrafol, but we continue very, very confident in the structural growth in the verticals of Wellbeing in which we compete and in our ability to continue expanding our leadership there.

So optimistic about the emerging markets, really optimistic about emerging markets. I believe that the solid delivery in U.S. in the last 3 years give us confidence that we will continue with outperforming the market there.

Thanks, Warren. On the productivity savings, I think we've said it in the press release. Cumulatively, we have now delivered about EUR 670 million of savings. The program is ahead of our own plans and internal plans and schedule. Most of this benefit, you will actually see in our SG&A line general overheads line, while some part of it was in supply chain overheads.

From a 2026 perspective, we expect to at least deliver the balance, EUR 130 million, that was a commitment we said about EUR 800 million, and we'll continue to go further on that. And more as a cultural shift that we have really made in the company is, we'll continue to keep our SG&A costs and other overhead costs at run rates which are lower than the turnover and therefore, in a sense that productivity, therefore, becomes an ongoing habit.

Our next question comes from Guillaume at UBS.

A couple of questions for me, please. The first one is on the pricing outlook for 2026. Fernando, can you maybe shed some light on how you expect price growth to play out this year, particularly given the sequentially, I think, lower inflationary pressures you're expecting for '26. And also, it seems a pickup in promo activities in many of your categories and regions. So it would be interesting, did you hear if you anticipate some are maybe contrasted pricing developments by region or product category this year?

And then the second question, probably for Srini. Could you maybe walk us through the key building blocks that support your confidence in achieving this modest margin improvement in '26? And in terms of phasing, anything you would flag at this stage, be it for margin or for underlying sales growth?

Thank you, Guillaume. Well, I think that the category and geographical footprint of Unilever offer in the long run around 3% pricing. That's the kind of normal pricing we have seen in the last 10 years. This year, we probably see that probably a bit lower than that, around 2%. We have seen some increased promotional spending, particularly in promotional intensity, particularly in Foods, but it's not dramatic. We have not seen really an increase in promotional intensity in emerging markets. So overall, I would expect pricing to be around the 2% level. Commodity inflation, Srini can give a bit of background on that.

So absolutely right. I think Fernando summarized the pricing outlook quite well. In 2026, the commodity inflation is not going to be broad-based. It's actually concentrated in a few set of the materials, most notably really being palm, canola oil and surfactants, where we continue to see year-on-year pressure coming through. The second angle, which is important, and the first element of that really comes from a Home Care and Personal Care perspective, that's where we'll start to see elevated inflation in comparison to the other categories.

The second aspect, which is important and sometimes overlooked, is that half our inflation classically comes from imported inflation or currency devaluation in the emerging markets. And therefore, that becomes an important element. It's also equally important to highlight that in some other commodities, notably in some of the food side of it or let's say crude related, including packaging, we are actually seeing deflation. So it's important in the first element to understand the difference between the different sets of the commodities that we have. Notwithstanding, we'll all recognize that there is also wage inflation, which is happening in the markets. And that's also an important element, which we'll have to cover through a combination of productivity and through pricing.

Coming back to, I think, the point really on the building blocks on gross margin. It's actually been quite an incredible story. If you really read, we have now consecutively increased our gross margins for the last 3 years, and the increases have actually been sizable, over 330 basis points.

What we now start at 46.9% is a structurally and a sustainably high gross margin business. And the levers in a manner are consistent with what we have been talking about. Mix plays a very important role for us through a combination of portfolio and geography, we'll continue to drive that harder. Our savings program, notably in procurement, has actually demonstrated very differentiated capabilities now. On a consistent basis, we are actually beating across more commodities and markets we are beating the market, and that's actually flowing into the bottom line. We have also significantly enhanced some of our commodity risk management practices, which is enabling us to use more of the tools and the instruments to really hedge and actually mitigate the risk for us.

We've also talked about capital investment. More than 50% of our capital has been now consistently, for the past 18, 24 months, being put towards savings, and that's something that we will continue. A combination of these elements, we are quite confident that our gross margin expansion in 2026 is likely to be higher than 2025, and that becomes actually a super important lever for us to actually continue to invest behind our brands. '25, we actually reached 16%. We'll continue to increase the spend, both on our Power Brands and also on our Beauty & Personal Care businesses.

And completing the picture, I did talk about overheads. Culturally and philosophically, we will keep overheads increases lower than sales. That means there is inherent productivity built into our plans. A combination of all of this actually then starts to give us a confidence to have a higher gross margin, which we'll reinvest, and therefore deliver what we call is really a modest margin expansion.

The last point in terms of your question on the phasing, while from a margin perspective we don't expect material differences between half 1 and half 2, it's important to highlight that we'll have slightly additional or higher headwinds of currency in half 1. That's really reflecting what has happened in base period of 2025. But from a full year perspective, we should be in the right ballpark.

Our next question comes from Jeremy at HSBC.

First one is on Europe, perhaps you could just go into a little bit more detail on that, sort of flattish at the end of the year. Was that reflecting kind of entirely slower markets? Or did your relative performance slip a bit? And then what would the outlook for the region be in 2026?

And then the second part was, I guess, the Power Brands versus everything else. I guess that was an unusually big difference from what I could remember in Q4. Perhaps you could talk about sort of the non-Power Brand stuff because logically, that was quite a lot weaker. Just kind of how you kind of intend to manage that sort of 25% of the business to make sure that it doesn't become too big a drag on your turnover or whether you're happy with this sort of more dramatic Power Brand versus everything else growth that you saw in the quarter?

Thank you, Jeremy. Well, in Europe, our performance, yes, there was some slowdown in Europe in the last quarter. We have seen markets getting a bit more flattish in Europe. We continue outperforming the market, particularly in Home Care and Personal Care. They continue performing really well. Our Home Care business is gaining share broad-based across Laundry and Household Care. And our Deodorants business really performing also very, very strong. We have a strong innovation pipeline coming into 2026 in these categories. We continue thinking that we will remain strong when it comes to our competitiveness. We are in a round of negotiation with retailers at this stage. Everything is progressing well. So we don't expect any kind of big impact coming from that.

Probably the biggest issue in Europe has been in Foods, that has been gradually soft, particularly in Netherlands, Germany. We have very, very good performance in Italy and France, overall. And U.K. has been solid for us. Poland has been a weak spot also. 40% of our European business is Foods, so that has an impact. But overall, we are confident that the kind of improved performance that we have had in Europe in the last couple of years, we can sustain that in average.

When it comes to Power Brands and non-Power Brands, Power Brands are now 78% of our revenue. You already remember that we used to call out around 75%, 18 months ago. They are growing strongly. In the quarter 4, we grew close to 6% UAG in Power Brands with 3.5% UAG. This is where we are concentrating all our incremental investment, particularly in the Power Brands of Beauty & Wellbeing and Personal Care.

When you look at the non-Power Brands, 22% of our revenue, for the year, we delivered a volume growth negative of 1%. It has accelerated to minus 3% in the quarter 4. There are some discontinuation that we have done in that quarter. And also, there is some geographical elements that has played a role there. But we are not -- we continue thinking that the strategy of focusing behind our most strongest assets is the right one.

If you look at our Beauty & Wellbeing and Personal Care combined, our performance has been, I believe, 4.5% growth for the year and 4.9% in quarter 4. And if you look at Power Brands in that territory, it's close to 6%. So that's what we will continue to put in the focus, and we will manage the rest of the portfolio accordingly.

I would like to highlight also that the One Unilever markets, that our smaller markets have an excellent performance in 2025. This is an organization that we have put in place in 2025, with 35% reduction in headcount. It delivered 5.2% growth, and we have delivered an expansion of margin of more than 250 basis points. So smaller markets for us are a key engine for growth, but we are managing them in a simpler way, in a sharper way, with clear focus in the portfolio. They are focusing the portfolio there, and we are very confident about those geographies also.

Our next question is coming from Celine at JPM. Celine, we're trying your line again. Celine, can you hear us?

Yes. Can you hear me?

We can.

Excellent. So I hope I'm not asking something that's already been asked, but my first question would be on the sequencing of growth for the year. So you're looking to grow around 4%. I understand maybe pricing, 2%, and volume, above 2%. But then you've been flagging probably some weakness in the U.S. in the first quarter, and I presume a normalization in Asia or at least in Indonesia. So can you talk about how we should expect these to evolve throughout the year?

And my second question is coming back on the Wellbeing and Beauty category. If you can talk about, on the Wellbeing side, what you're doing in the U.S. to reconnect with growth? And as well, what is your expectation about internationalization on that business? And what can we expect as that business, I would say, more normalized growth rate to be, if I could use that word. And I think on that division too, if you can talk about Hair Care and what we should expect for '26.

Cool. Thank you, Celine. We are guiding our topline growth at the lower end of our midterm guidance from 4% to 6%. If we are doing that, of course, there can be some quarters that can be below and some quarters that can be above that 4%, okay? So we will not guide on a quarterly basis. We have a good start in January, but there is a lot to do in the next few weeks to close quarter 1. But overall, we are confident that we will be delivering that 2-plus percent volume growth for the year and around 4% -- at least 4% for the topline growth.

Going into Beauty & Wellbeing, what is the performance? As I mentioned before, if you look at Beauty & Wellbeing and Personal Care, that combined business, because there are some brands that travel across the categories. We delivered an aggregated growth of 4.9% in the quarter 4 and 4.5% in the full year. And within Beauty & Personal Care, we had another great year of our largest brand, Dove, it grew 9%, with 7% volume growth on top of our 7% volume growth in the previous year, I would like to highlight that.

In the case of Beauty & Wellbeing, we saw a solid performance in Skincare, great performance in Dove and Vaseline. Vaseline has delivered, for the second year in a row, double-digit volume growth. In Hair Care, we have been accelerating performance throughout the year. Dove Hair relaunch is a great success. We are seeing growth in markets like U.S, about 20%. This mix is traveling globally, and the rollout is expected to be completed in all key markets by mid-'26. And we expect better performance from Sunsilk and Clear that in 2025 were affected by the issues in Brazil and China.

In Prestige Beauty, we accelerated also. The second half in 2025 was much better than the first half. We have great performances in brands like Hourglass and K18, our last acquisition. And in the retail channel for Dermalogica, we need to improve performance in Paula's Choice. There is a full relaunch of the brand ready for March this year, and we have to improve performance in the professional channel of Dermalogica that takes 30% of the brand.

In Wellbeing, another great year. If you look at each of our 3 biggest brands, liquid I.V., 16% growth, Nutrafol, 23% growth, OLLY, 9% growth. All these brands are U.S.-centric. We saw some softening in quarter 4, some of that fundamentally linked to market growth. The volume growth we delivered in the quarter was about 5%. We expect a relatively soft quarter 1 due to strong comparators, but we -- as I mentioned before, we are very confident on the structural growth potential of the Wellbeing verticals in which we compete and in our ability to continue expanding the leadership positions our brands enjoy there.

I highlighted before, there are a couple of issues that we have to sort out. There was a decrease of share of assortment for Liquid I.V. in an important customer of the group channel. And there is some increase in the customer acquisition cost in Nutrafol, but we have great teams working on that, and we will find the solution quickly.

Our next question comes from Jeff at BNP.

Two questions, if I may. The first one is with respect to innovation, you've made quite a few comments about it. But could you just tell us what are the sort of big new innovations that you've got coming to market this year that we should be expecting to hear quite a lot about as the year progresses? And the second one, really just a housekeeping issue, but are you able to quantify the magnitude of the TSA receipts that you'll be getting from Magnum?

Thank you, Jeff. Well, first of all, I would like to highlight that our first pennies go to continue investing behind the innovations that have been very successful in the last few quarters. The Dove Hair relaunch, Persil Wonder Wash, Vaseline Gluta-Hya and Vaseline Pro Derma, the flavored range of Hellmann's that is really driving significant growth, all these platforms are above the EUR 100 million, EUR 200 million. So this is really going very, very fast, and we continue investing behind them.

There is new innovation hitting the market in multiple categories. I would like probably to mention the UV repair range of Dove hitting the market in January in countries like China, Indonesia, Thailand, Vietnam, South Asia, Philippines. The derma scalp range of Dove Hair with focus in developed markets. I would call out, particularly Vaseline lips. That's a EUR 100 million franchise already. We are gaining share in every single market around the globe. We see lips as an entry for younger users into Vaseline, and we are very excited with the kind of Gluta-Hya range in lip care that we are bringing into the market. The rollout of the Silk Press range of TRESemm� that has been a big success in India. We are rolling out that across Asia. Nexxus, a big relaunch in U.S. and significant innovation in China and Indonesia. In China, Nexxus is really one highlight of our performance.

In Personal Care, many things coming into the market, but I would like to highlight also the importance of the activation around the FIFA World Cup. This should be a real support for our performance, particularly in quarter 2, quarter 3. In Foods, continuity to the development of Hellmann's flavored mayo, but we are entering with protein caps in North with the launch in U.S. and scaling into European markets during the year.

These are just some of the things that we are doing. So our innovation machine, I believe, has improved a lot in the last 2 to 3 years. Now our focus is ensuring that our execution capabilities are in line with the improvements that we have done in product development and innovation. But a good plan for the year. And as I mentioned before, our absolute priority is in investing heavily behind the big winners that we have in the portfolio now.

On the TSA, Jeff, we are not actually quantifying externally the cost -- or the total cost of the TSA. Having said that, there are 3 important elements. It's a cost plus and therefore, there's a very small markup that we charge on these services that's got to do with IT and it's got to do with the other commercial services, mostly in the functions.

Point number two is that most of these TSAs will actually -- there are separate contracts, individual components. Between '26 and 2027, we expect most of them to really be taper off as the Magnum Ice Cream Company starts to take on these activities.

Third element is that we have clear plans, which are ensuring that we manage these contracts well. And more importantly, there are no stranded costs left at a Unilever level. So all in all, very clear plans to handle this for the benefit of both companies.

Our next question comes from Olivier at Goldman Sachs.

Fernando, Srini, and Jemma, could you please provide an update on the strategy for Prestige Beauty, first? Some brands are doing great like K18 and Hourglass, other, less so. Do you need more brands to -- for the portfolio to reach a bigger scale? And what does the M&A landscape look like at the moment?

And then secondly, going back to Food. You had an amazing margin improvement. I think you reached 22.6% margins there. That's well above historical trends. What's the driver behind this improvement, how sustainable it is? And perhaps is Food Solutions better margins than the rest?

Good. I will cover Prestige, and Srini will cover the Food margin question. In Prestige, you are right. We have had a great performance in brands like our Hourglass and K18, not so well in Dermalogica, Paula's Choice. Even in Dermalogica in the retail is showing a lot of strength, but the brand is exposed to a professional channel that is declining, and we need to address some issues there.

The Prestige market is changing dramatically. I feel you see less importance of travel retail. You see department store practically disappearing. You see a huge growth of the e-commerce channel. And I believe this give us a lot of opportunities. And we consider our presence in Prestige a natural continuity of our presence in Skin Care and Hair Care. So that's how we see that. We are working in a much more integrated way, particularly in areas like Asia, in which channels of specialist beauty are not so developed and e-commerce is really taking the lead in developing the prestige market.

We are always scanning the market for opportunities. Our acquisition criteria are very, very, very clear. We look at brands that are digitally-native with the big exposure to e-commerce, in categories in which we can add value and there are a set of criteria that we follow with a lot of rigor. But we will not rush into acquisitions if the right asset doesn't emerge.

And at this stage, we have not acquired in Prestige recently because we have not seen any asset that really fill any gap in the portfolio that we can have. But super, super committed to Skin Care, Hair Care. To a brand like Hourglass, that is a real jewel in the color cosmetic super premium space. We see Prestige as natural continuity of our presence in our Skin Care and Hair Care business.

On the Foods margins, we are actually quite pleased with the way the whole business has been managed and being operated. There is a very sharp strategic choices that we've made in terms of where to play, how to win. And what's also notable is actually the execution discipline which has come into this business, which is actually leading to our market outperformance across various markets and various segments. A lot of this really is read through gross margin. Some of the levers, which I explained earlier are also applicable to the Foods business, and therefore, I will not repeat them.

Having said that, Foods business has also benefited significantly from some of the portfolio rationalization. We have, over the past 18, 24, 36 months, taken out or delisted the parts of the portfolio which were not value accretive. So I think that has really helped us. Second is we also have some very good whole pack price architecture, especially when it comes to Hellmann's and some of the innovations. Secondly, when it comes to the UFS business where we manage it extremely well with profitable accounts has also been a big driver for us.

It's also important that the whole overheads element of savings, which we have executed in the company, are also benefiting from a Foods perspective. Having said that, we continue to invest well. I think that's the most important element because we see Foods as a growth business for us. So we are absolutely determined to invest to really grow the business. At an aggregate level, I think we are quite happy with the margins. The focus from here on for us is going to be more drive growth, volume-led growth, and not necessarily a big margin expansion.

Our next question comes from Sarah at Morgan Stanley.

I have 2 questions, please. One was the impact of discontinuations generally across the Group. Can you quantify that in terms of volume? And then the second one was on Dr. Squatch, have you -- obviously, that was growing super fast before you acquired it. Can you give us any idea how much that's grown during fiscal '26 -- sorry, fiscal '25?

Yes. I don't know if we will provide any discontinuation figure, Srini. But in Dr. Squatch, the -- of course, this is an important acquisition for us. It will only count in our underlying sales growth from September next year, but the performance has been good since acquisition, continued growing double digit, a strong brand, very distinct proposition in the male grooming space. Really making significant inroads, particularly in the Deo category after establishing a very, very strong position in skin cleansing.

So we are very pleased with having Dr. Squatch in our portfolio. We expect that to be a significant contributor to growth during 2026. But as I mentioned before, it will only count in our underlying sales growth from September onwards. But of course, pleased with the performance until now, absolutely in line with the business case that we put at acquisition time.

Just a short one. See, anything that we actually do from an M&A or a disposal perspective, you get a full list of those disposals and the impact. Discontinuations and new launches of SKUs happen in the normal course of our business. Having said that, some of these discontinuations actually sit in the non-Power Brands section. And Fernando actually gave you a bit of a flavor in terms of whether it is the tail list of SKUs in Beauty & Wellbeing or some of the elements in Foods. I think that's the right place to keep looking for it, and it gives you a bit of a sense in terms of what's happening there.

Our next question comes from David at Jefferies.

Just one for me, I think, in terms of the topic. Just Latin America, which I know, you talked about a little bit, but it feels like that's recovered volume wise a little bit quicker than maybe you were kind of indicating at the third quarter. So just whether that is the case, what was done better that meant that, that's happened? I guess, to some extent, was the innovations, a relaunch that took place? And did that -- effectively, did that flatter the quarterly volumes in the fourth, maybe leading on to then saying, well, volume growth you think be flat to positive in the first quarter or the first half?

Yes. Yes, we don't see in Latin America, any performance that is fundamentally different to what we what we said to you one quarter ago. The macro environment remains tough, both in Brazil and Mexico. Markets, as I mentioned, has been flattish. But we have intervened in some areas in which, as I mentioned before, we have scored some own goals, particularly in Home Care pricing and in Deos format focus. Our Food business continue performing very, very well, particularly Hellmann's having a blast in Brazil, gaining share penetration, brand equity. And Beauty & Wellbeing has had a solid performance.

In the case of Home Care, as I mentioned, we are pleased with the reaction to our pricing correction, is showing really impacting our volumes, particularly in Brazil. And in Deos, I believe there is much more to come. Some of the actions that we have taken are being implemented now, particularly the reset of planogram in thousands of stores across the region. We are really investing heavily behind aerosol format that as I mentioned before, has a much higher revenue per use and profit per use than some of the contract applicators, and we have a strong support from the retailers in that space.

So we are confident for 2026 that Latin America will have a much better contribution to our performance. I have been associated with Latin America for many years. I have never seen 2 bad years in a row in Latin America. So we are very confident that we will deliver in that region and the team is super, super committed in that region to improve performance there.

Our next question comes from Tom at Deutsche Bank.

Yes. I wondered if you could just say a few words on the channel shift that is occurring in North America and how that's impacting you? We're obviously seeing very high growth on Amazon, and it appears that your shares are a bit lower on Amazon than they would be off. So what is the outlook for your share on that channel? And what's the effect of that channel growth?

And particularly, I guess, as well is just the growth of smaller peers and what that then does to the cadence of your innovation because you're stating a lot of innovation globally, but it's not clear whether that is speeding up in any one particular market, if you say, particularly in North America. So are you combating the growth of smaller peers by fewer, bigger innovations or more iterative, please?

Thank you, Tom. Well, we continue having a strong performance in digital commerce. And I would say there are 3 types of digital commerce in which we have delivered strong performances. One is classic marketplace in North America, big retailers, they are like Amazon and Walmart.com. I have mentioned the performance last quarter, I will not repeat numbers today, but we are growing double digit with these people strongly in North America. Social commerce in places like Southeast Asia and China and quick commerce in India. So in all of them, we are growing double digit.

We are growing our double digits through a special assortment of our core brands. And of course, through the portfolio of new brands that we have been acquiring, particularly in the case of North America, our focus in acquisitions has been in digitally-native brands with a strong exposure to e-commerce, and that has been working for us properly.

We have not seen a significant slowdown in the North American market in the e-commerce side. Probably what you have seen, particularly in the month of October, that was very weak in the North American market, it was more related with physical stores with the offline channel. And there is always, of course, e-commerce opens an entry point to many small brands, but very few brands has been able to scale big. I continue thinking that brands like that or like Vaseline have significant competitive advantage also in online. And when I said before that, that is growing 7% volume globally. When you look at that growth in e-commerce, it's practically 2x that. So good performance in digital commerce. Of course, this is accelerating, particularly in some markets in Asia, that is, I would say, a leapfrog of modern physical retail into e-commerce, but we are very well prepared to take advantage of that.

Our final question comes from Ed Lewis, Rothschild.

Yes. A couple ones for me. I guess a lot of change, a lot of heavy lifting, as you said, Fernando, the last 2 years. So as we think about 2026, is this really the first year that we should start to see the benefits of the revamped approach to innovation that you introduced a couple of years ago?

And then for Srini, just on the CapEx plans, over 3% of turnover, how much of CapEx will be spent on what you call margin-enhancing activities? I think you were close to around 60% last year.

Thank you, Ed. Yes, a lot of heavy lifting has been done, I would say, particularly in terms of organization. And if you think that last year, we divisionalized our sales force, we separate Ice Cream, we made significant steps in our productivity program. All these are potential, very disruptive initiatives. And the fact that we delivered a solid year in the context of all these initiatives, we consider that something important for us.

Our product development, our innovation capabilities definitely are in a very different place to where they were 3 years ago. I have not said 3 years ago, that I would have been proud when I stand up in front of the Dove shelf or the Vaseline shelf. I am now. And that's basically a sentiment that I may start an experience with many, many of our brands.

Of course, there are some elements in execution that have to improve. We have had issues of channel price conflict in some markets, some issues in country like Brazil that should have not happened. We have launched a program of what we call Perfect Store in order to ensure that pricing assortment visibility are really properly managed and in a homogeneous way across Unilever. I'm really focusing to that now. But as you said, a lot of the heavy lifting has been done, and we see 2026 as a very important year to really bear some of the fruits of this effort that -- this investment that we have put in the business, both in terms of money and time and focus during all these years. Srini?

So on the CapEx for the past 2 years, we have actually been spending around the 3% level. And you're right that we are even from a 2026 point of view, we will look to spend anywhere about 55% to 60% going towards what we call as productivity or savings. From a capacity perspective, I think we are well covered, and therefore, that gives us the ammunition to continue to drive the savings harder.

Having said that, we are actually open to increasing the levels of CapEx to support the further growth in the productivity agenda, but with 2 caveats. One is obviously each of the case -- business cases have to justify themselves. And we have actually taken up the thresholds in terms of both the IRRs as well as the payback periods, and these are nonnegotiable. So each of the projects have to justify and they justify. We will invest. That will not be a constraint.

The second element is we are committed to maintaining 100% cash conversion. So therefore, we will generate this cash for us to be able to fund it. But our focus on leveraging productivity CapEx remains on track from 2026 perspective.

Cool. I believe there are no more questions. So thank you, everyone, for joining the call. And let me close saying that I hope it's clear that first, we have delivered a very solid 2025 despite subdued markets and a very negative currency environment for Unilever. Second, that we enter 2026 as a simpler, more focused business with stronger brands and competitive level of investment. We're investing now 16% of our revenue in our brands, 3 years ago, we were at 13%. Third, that our geographical footprint is an asset, and we are very confident in a step-up in emerging markets in 2026. And fourth, that our key metrics don't change, volume growth, positive mix and gross margin expansion to deliver earnings growth in hard currency. That's where the whole company is focused on. Thank you very much.

Good afternoon. Good morning, everyone. I'm Celine Pannuti, Head of Consumer Staples at JPMorgan. Thank you very much for joining me. Today, I have the pleasure as part of a CEO fireside chat series to be at Unilever with Fernando Fernandez, CEO of Unilever. Fernando, thank you very much for hosting us.

No, thank you for having me, Celine. It's a pleasure.

It's my pleasure. Obviously, there was a lot of change this year. You became CEO during that year. And yesterday, the Magnum company has started its life as an independent company. Obviously, you came with the remit to accelerate change, and we saw as well there's been some disposals, some acquisition. But what I'm interested to know is from within, what acceleration of change has been like at Unilever under your leadership?

Well, yes, it has been a very important day yesterday. We completed a process that started on March 2024. We announced the separation of Ice Cream. It was very important for us to complete that during this year, and we have done it. It has been a complex process. It was not easy. But now it's behind us. We will be cheering for Peter Tercoru and his team on the in company. I'm sure it's a very exciting business.

In our case, yes, I took over in March this year as CEO. It has been a very intense period. In January with the separation of Ice Cream for me, it was very, very important to continue accelerating our performance and our competitiveness. I believe we have done it. You have seen our results. Our volume growth has been accelerating around the year. Quarter 3 at 1.7%, we expect at least a similar performance in quarter 4. And our competitiveness is really improving.

So we have been putting a lot of emphasis in how to do things differently in Unilever, particularly in elevating the quality of our portfolio, the quality of what we are doing in our brands, ensuring that execution is flawless. And I would say the other 2 elements is fundamentally working in our talent and in our culture.

One of my principles IS really to be compromising on talent and ensuring that we have real -- the right leadership team in place.

And in terms of culture, I have always said that there is a coexistence in Unilever of pockets of excellence and pockets of [indiscernible] , and we are trying to elevate what we do in every single geography, in every single category. So a lot of work. It looks much more than 8 or 9 months, but I believe we are doing significant progress.

So maybe if I can go a bit deeper in that point about culture because obviously, you've been close to 40 years at Unilever. You are really a Unilever product and yet you are pushing for culture change or elevation. Can you explain what you are trying to achieve? Where is it? And like with example maybe? And then how you measure that and how it's linked to compensation and rewards?

Yes. Well, you are reminding everyone that I'm too old, but I believe that my 37 years in Unilever is a big advantage when you have to drive change. It's a complex company, 120,000 colleagues. It's important that you align them, that they are very clear about what is important in the company, what are the metrics that we are following.

And this is anecdotal, but every time I join a meeting in Unilever, before saying hello, I say volume growth, positive mix, consistent gross margin expansion for profit growth in hard currency. Hello. And it looks silly, but it's very, very important to align company and to ensure that everybody knows what is important.

We are also aligning everywhere about how to do business in Unilever, how we are really running our brands, what is the framework to run our brands, what do we want from our marketing machine, the same when it comes to execution. And I think we are doing progress in all these areas. Regarding incentives, there have been significant changes. The vast majority of our long-term incentive plans are now hard currency linked. It was not the same in the past. When you look at our 8,000 managers in the company, the annual bonus is really linked to what is line of sight for them.

So if you run Personal Care U.S., you are paid for the performance of Personal Care U.S. or if you are in Home Care Europe, it's Europe, it was not the same before. And finally, we have made a significant change also is for the leadership team until now, but for the whole company from 2026 onwards, we are including restructuring in the calculation of profit growth.

And I feel it's very important because Unilever restructuring cost has been historically above the level of the sector. So these 3 changes in terms of incentives are important. And now basically, we don't expect any significant changes beyond that.

'25 was also quite a specific year because it's the first year that the 4 business groups are operating with 24 markets or business group market, and then you have the One Unilever structure. So can you explain how you think this has gone? And like how do you measure that it's been effective?

The other point is that your biggest division Beauty &and Wellbeing is still without a head of divisions. So can you talk about what are the skill sets that you are looking for this person to join? And when do we expect to have an announcement?

Well, first of all, I feel if I look in a bit longer stretch, we moved from a geographically led organization into a category-led organization in 2022. And now basically, we run the P&L of Unilever through 4 divisions that are what we call the business groups. I believe this change has been very, very important to ensure that we build a more consistent and coherent portfolio.

Also in order to focus our innovation plans. I believe that -- the impact that this has had in our product development capabilities, it has been very, very significant. This year, we have gone all the way. We have divisionalized our sales force. Now we are running the company with 63 different sales force in our top 24 business group markets, top markets. These top 24 markets represent around 85% of our revenue is very, very important. For the rest of the organization, we decided to adopt a simpler model. That is what we call One Unilever.

These markets from market '25 onwards are not big enough. They don't have the critical mass to go for the divisionalization of the company. In these markets, we are really simplifying the way we operate in a dramatic fashion. We are also making our power brands much more important because you can accept some complexity in a market like U.S. or in a market like India, but you don't want complexity in smaller markets. And that's something that this year has been important because we have done all these changes, and it has been pretty smooth.

You have seen our performance has been good despite all these changes. And now I can say that the heavy lifting of all the organizational changes is behind us. So basically, focus now is in continue elevating the quality of our brands and our execution. Regarding the business group President of Beauty, this is a decision for the next 10 years. We are looking for somebody that really understands how to run business models of high margin, high investment.

This is a category in which digital fluency is very, very important. And also the ability to scale brands globally is very, very important because in beauty brands tend to travel well. So we will take the time that is necessary to find the right candidate. In the meantime, the team we have leading Beauty is a high professional team. And as you have seen, it has been our fastest-growing category and continue performing very well.

Okay. So now that the Magnum company has life on its own and early in 2024, when you announced that, you announced as well your ambition to grow mid-single digit and with modest margin expansion and to be top TSR company. At that time, the world was looking in a certain way, the world has changed and somehow as well slowed if I think about CPI across many regions.

Now mid-single digit, the market is interpreting that at 4% to 6% in an environment where some of your competitors are calling out category slowdown. We heard that last week again in the U.S., but as well even in beauty, the category has not been as buoyant as it used to be. So how do you -- I mean, how do you relate to that 4% to 6% ambition in an environment where things are a bit tougher?

Our medium-term guidance remains unchanged. And if you look at our 2-year compound annual growth rate in volume terms, it's about 2% already today. And as I mentioned, quarter 3 volume was 1.7% for us, and we expect quarter 4 to be at least in line with that. So it doesn't change in the kind of guidance that we have given.

It's true that the market is a bit tougher when it comes to -- there is a bit of decoupling now between GDP growth and market growth. The market volume growth today at which a company like Unilever is exposed is more in the 1% than the 2% that has been historically. But I don't want to project the long term basing what has happened in the last 6 months or something like that.

When you look at the last decade, this is -- Unilever is exposed to a kind of 2-plus percent volume growth markets. And it's true that CPI has been a bit slower. But when you look at wage inflation globally, it's clearly now in the 4% to 6% territory. So that kind of alignment between wage inflation and CPI at one point of time will come. So I'm not so concerned about what will happen in the next quarter.

We believe in the long run, I don't expect the market growth rates that we will see in the future to be the ones of the last 6 months or so. But we are focusing what we can control. We cannot control the economy. What we can control is the quality of our innovation, how we are elevating our brands, the quality of our execution. And I believe we are doing a better job. Our competitiveness is improving. We have close to 60% of our revenue winning share now.

I know you look at the same data that we look, you look particularly in Europe and U.S., we are gaining significant share in these markets. So our absolute focus is in continual outperforming the markets, doing what we need to do. And this is what the plain to win culture is. So whatever the conditions you have, you go for more. I don't want journalists in the company. People telling me what is the context there? I want people that whatever the context in which we operate, we outperform.

It's absolutely true. I think in an environment where growth is slowing, the ability to outperform will set you apart from competitors. And that was, in fact, my next question, and you already said the keyword, which was marketing machine, and I wanted to hear because I think it feels that there is a lot of change happening in Unilever. It's not just changing your portfolio, you need as well to be able to outperform in this new faster growth category.

So traditionally, Unilever has not been seen as really at the forefront of beauty and personal care. So can you explain what -- how changes, how Unilever is different in terms of its agility, its digital frequency, which you mentioned earlier, its innovation and the ability to premiumize? I know you presented that SASE model a few months ago. But yes, try to put some color on how you can effectively change this company to operate at the highest level and win share in this category?

Yes. First of all, I just say we are outperforming practically in every single category. When you look at our food business, outperforming the food industry. When you look at our Beauty & Wellbeing business, I feel the numbers speak for themselves, the same in Home Care.

So -- but this SASE framework and just -- sometimes you need simple language in the company to align the whole organization about what needs to be done. SASE is an acronym that stands for science, aesthetics, sensors, set by others and young spirited brands. Fundamentally, it defines the way we approach product development and the way we approach our models of reach, engagement and validation by consumers for our brands. So we are talking about science for superior functionality, aesthetics and sensors as a driver of consumer preference.

So a much more holistic approach in how we address up our science than what we have had in the past. And a real revolution in social first marketing that we are really putting in place. When I took over, I made some bold statements about the number of influencers that we would like to have in the company. I can say that in Beauty & Wellbeing now, we are operating with close to 170,000 in the total company, close to 300,000. This has happened in a relatively short period of time that basically shows how important is this point of validation by consumers of the offering of our brands. I have mentioned before that I believe that broadcasting messages from big brands now can become suspicious.

And as we all go to a restaurant after looking at rating and reviews today, brands have to have a very solid infrastructure to deal with what we believe is called -- what we call set by ours or recommendation by ours. And I believe we are doing significant progress on that. I really -- I'm standing to be proud when I stand in front of some of our shelves. So I was in U.S. recently, I stand up in front of the Walmart shelf for DAF, look at that, and it's a very different brand to the one that was 3 years ago.

I went to U.K. and to France recently, looking at what we are doing with Pepsi, with Omor, the innovation that we are bringing there with -- and again, the brands look very different to what we used to be a couple of years ago. So I believe that our product offering is improving dramatically.

And as I mentioned before, our social marketing machine is gaining a very significant infrastructure. When we put all these things together, we have what we have, for example, with Vaseline, a 155 years old brand that in the last couple of years has been growing volume at 12% per annum. That didn't appear in any ranking of brands in the digital space and now it has wiped out with all the current awards, really rank in the U.S., for example, #4 brand in the skincare space. So we are making progress.

All this said, there is much more that has to be done. I always say that if I have to score in a 1 to 10 scale, the quality of what we are doing, I probably give us ourselves 6.5. My mom used to say that 10 doesn't exist, but we need to put the company in a level of 8, 9 in everything we do. But there is a significant step change in how we are doing marketing in Unilever.

And it really goes from product development to models of rich engagement persuasion, validation of our brands. I'm very, very intuit. It's just where I spend 80% of my time is on this. The other 20% is on talent. And I believe we are doing progress here.

So following on that premiumization, and there will be 2 parts to my question. We talk about Prestige & Wellbeing in the second part. But first, if -- I think you said overall for the group, you expect -- the ambition is to be 50% premium right now is about 1/3.

When you look at the core brands, which are the brands which you think have the right for that premiumization? What are the geographies which I think are there to premiumize? And in an environment which we discussed earlier where, okay, maybe the salary inflation is still there, but a lot of consumers feel under pressure. How -- I mean, is that the right time to think that premiumization is going to work for Unilever?

Well, let me say first that we don't see significant consumer down trading in categories of high involvement. So categories of low involvement tend to have significant down trading in economic downturn. But at this stage, in the categories in which we operate, we don't see significant consumer down trading. We don't see private label expansion, neither in beauty, nor in personal care, not in home care.

In -- probably in the most basic food space, yes. But even in the condiment category, we see significant premiumization opportunities. And why I'm obsessed with premiumization, I believe there are 2 fundamental significant shifts that are going on. One is related with the impact of digitization in the amount of knowledge consumers have. So I always say that digitization has a step change the consumer power to now. And with that, there is an increased interest in science. People is much more interested in what is in the jar, what is in the bottle, and they are prepared to pay more for products that really perform.

The second is, at the same time that we see a significant reduction in the population growth rate, we see a significant increase in household numbers. That fundamentally means that the household structure is changing dramatically. And you see an incredible amount of households of 1 to 2 people. In these households, people tend to spend more in self-indulgence, in categories in which you buy fundamentally for yourself.

So that's what we see as a fundamental driver of premiumization in the long run. And we have seen this happening in our portfolio. We are putting a lot of focus on this. We have around 30% of our revenue above what we call 120, 130 price index, but the intention is to bring that into at least 50%, and we are making progress on that.

So we are really going for premiumization because there are some fundamental consumer household trends that really -- are structured and are there. The important point is that the only thing you can be sure is that in most of the market, there will be more retailer concentration. And with this retailing concentration, it's very important that you are in the right parts of the profit pool. And the profit pool is really shifting into premium. And that's why we continue shifting the portfolio into that direction.

So 7% of your sales are in Prestige Beauty & Wellbeing. And these have been growing double digits, adding close to 1% to total group, so showing that the power of premiumization. Now maybe I would like to dig a bit more because you always ask about the sustainability of Nutrafol and of Liquid IV.

I think those 2 brands alone are getting closer to be billionaire brands. They are quite young brands. So what do you think makes -- or what makes you believe that there is sustainability in that growth? What is different in terms of the science, the barrier to entry, the investment that you're making? And can those U.S.-based concepts travel outside of the U.S.?

Well, we have had double-digit growth in that space of our portfolio for 5 years now. And I have received this question for 5 years. But it's fair, I cannot promise that we will have double digits forever, but I'm absolutely convinced, but these are spaces that are accretive to Unilever overall in top line.

So I'm very excited by the well-being opportunity. I believe there is a soft spot today in some categories that is what I call the urban wealthy female opportunity and wellness is really driven by that. So it's an urban female that is really adopting wellness, taking their health on their own. And if you can find spaces there that you can really establish a strong position of leadership, it's a very attractive territory because you can scale up brands very, very fast. So it's true Liquid I.V., we acquired Liquid I.V. in 2020.

It was $120 million brand. This year will be around $1 billion. We acquired Nutrafol in 2022, April '22, it was $220 million, and it will also hitting close to $1 billion this year. So it basically shows that if you establish strong leading position there in power hydration in U.S., we have more than 45% share. In hair fall, we have close to 80% share. You can establish very, very strong brands that also have a lot of headroom because penetration of LV is in high teens.

Penetration of Nutrafol is less than 2%. So I'm very, very interested in this space of well-being. It's fragmented. New segments are emerging. We are looking at that with the potential of adding new brands in that space but we only have brands that can have the possibility of really scaling to this kind of level that we are talking. In the case of Prestige Beauty, we look at that -- fundamentally as an extension of our skin care, hair care strategy. Prestige used to be a channel play.

But with the impressive development of e-commerce, I believe it opened opportunities for people like us that were not in the Prestige space. And it has been a very successful unit for us. It has seen some slowdown in the last year, particularly in the U.S. But the high end of Prestige Beauty for us continue growing double digits, the likes of Hourglass, K18, Tatcha, where you have items of $80 or more continue going very, very well. Potential for international rollout is very, very significant, but we took -- I took a very conscious decision when we saw a slowdown in China of solidifying our presence in the U.S. first because when China started to slow down, where people were going to go.

They were going to go back to U.S. and they would go into scatter India. So for us, it was very important to solidify our position in the U.S. And now that we have built very profitable profile for this business, we are ready to internationally roll out, and we are starting to do that.

So the U.S., obviously, 75% of your business now is in Beauty, Personal Care and Wellbeing and you've been growing volume mix above 4% for the past 2 years. So it's quite a good playbook if effectively you can replicate that elsewhere. We just discussed about the well-being and Prestige Beauty brands. So if I think about the core personal care and food portfolio in the U.S. Can you talk about what kind of growth rate you are seeing in an environment where your peers are saying that the market is slowing?

What are you doing differently in terms of go-to-market channels but as well brand? And food, you mentioned earlier that there was demand for premiumization. What about GLP-1? Is that something that could impact your food business in the U.S.?

Well, our core in the U.S. is doing very well. We just received what is called Advantage salary that is fundamentally the top 130 retailers of the U.S. scoring their suppliers. We're ranking #2 in the U.S. We're ranking #1 in personal care, #3 in beauty, #1 in foods. This is completely unprecedented for Unilever. We are growing with people like Walmart, close to double digit or with Amazon mid-teens.

And that's not only the Prestige or Wellbeing. There is significant growth in the core. We are having a spectacular growth in Dove that is a power brand in the U.S. And as I mentioned before, Vaseline, we're having some issues in hair care, but our helmets business in food is doing very well. Our DS business that went through a rough period, now gaining share in every single segment of the category. So we really believe that we have built a footprint in the U.S. that is very strong.

It has gone a bit unnoticed for investors, I believe that it has been now 5 consecutive quarters of more than 4% volume growth in the U.S. I cannot promise that it will be 4% volume growth forever, but we are confident that we have built one of the best growth footprint for any big company in the U.S. So we are happy with what we are doing. We have put an excellent leadership team. Our intimacy with retailers is at a level that I have not seen before. And we continue winning with the winning retailers there.

So it's a good setup, the one that we have in the U.S. Regarding -- and by the way, some of our power brands there are reaching price points that they have never reached before. We continue to have an offering for the mainstream, but we are now stretching our brands into segments in which we can put our best science there and consumers are really recognizing that in their demand. In terms of GLP-1, at this stage, we have not seen a significant impact. Hellmann's is doing very well. It's a very strong business, 46% share in the condiment category.

The condiments category is probably one of the most attractive categories within foods. There are huge opportunity for premiumization. People are sitting hotter and they are paying more. And I feel everything that is related with dipping sandwiches, there is a trend into more, I would call it, French kind of stuff than the one that historically we have seen in the U.S.

And Hellmann's is really profiting from that and doing a good job. So we have had a good run with foods also. In GLP-1 until now, we have not seen any significant impact in the volume of adoption of the categories in which we play. But it's true that in the U.S., we are fundamentally anchored around condiments.

Yes. So in Beauty, if I look at the different subcategories, right now, the category that's doing super well is hair care, and it's a fundamental category for Unilever. I think it's about 11% of your sales. I must say growth has been flattish this year. It was up 4% last year. And if I look at some of your global peers or even regionals, they are much -- growing much faster than you.

So I know there has been some issues in the U.S., which you try to fix. But -- so can you talk about how -- I mean, are you ready now to really step up that opportunity in hair? And do you need, by the way, to go more premium? I know you have 8. Is there another brand, professional? Like how you see the whole category and the channel performance?

Well, hair care has been our -- one of our fastest-growing categories for a decade. And it's true that this year, we are underperforming in hair. Our performance around flattish. Some of that was conscious decision we take to streamline our portfolio, particularly in the U.S. We have removed 3 brands in the U.S. We are the leading these brands because we wanted to focus our portfolio in our power brands there. We have pockets of strength.

So that hair relaunch is really proving a big success. We are growing more than 20% in U.S. in the last quarter, and we have seen the same in every single market in which we are relaunching that. Our styling of TRESemme has been doing well. But at the same time, we took some decisions on pricing in our shampoo and conditioner business that probably went too far, and we have adjusted that.

So regarding the portfolio -- and of course, we have been affected by China. China is very big for Clear. The issues that we have had in Brazil this year have affected some. So there are a couple of geographical issues that have affected our overall hair performance. But we have a great portfolio in hair covering every single price point.

So it's really very well suited for the different geographies in which we operate. And the acquisition of K18 is very, very important to enter into the, let's call it, the professional space of hair care that, as I mentioned in the case of Prestige before, we want to do it without investing in physical infrastructure. So I believe the expansion of e-commerce, K18, for example, is a massive brand in TikTok.

The emergence of e-commerce really open opportunities to continue expanding our portfolio into more professional propositions in hair care. And if there are good opportunities, we will go for that. And if not, we will develop that organically. So we are happy with the portfolio we have. We will continue to look into additions in that portfolio.

And I feel next year will be a good year for hair care because the innovation that we are hitting, the market and the momentum we are getting now in the end of the year with some of the relaunches that we have put like TRESemme styling, or Dove in shampoo, conditioner and treatments are really doing very well.

Being an emerging market company, you have more pricing ability. Nevertheless, we -- as I was mentioning earlier, CPI has been slowing. Your pricing around -- is around 2%. In an environment where COGS inflation are not that great, where there is consumer pressure where some of your competitors are talking about higher promotions, is it a sustainable level? We've seen times where Unilever was pricing less than that. How do you feel about your pricing ability as we go next year?

Well, first of all, I feel it's important to look at what cost inflation the industry is exposed. And if I look at the categories in which Unilever is playing now and I look at 2026, I have around 2% inflation in the material side, and we have between 4% and 6% inflation in the wage side. Both are important. So that's the kind of cost environment that we have.

And it's true that the CPI has slowed down a bit, but is a difference between 3% and 2.5% or 3.5% and 3%. It's not so dramatic. So when markets get a bit tougher in volume, of course, there is some downward pressure on pricing. But we have not seen irrational promotional intensity in the categories in which we play.

And we are really trying to elevate our portfolio to ensure that we get this kind of short-term trap of pushing a lot of volume through promotions. So we have not increased our promotional volumes. By the contrary, it's slightly down for us this year. And let's see. Let's see what happened in the market. And...

In Europe, it has been always a challenging market and pre-COVID pricing effect was negative almost every year in Europe. Obviously, post-COVID, things have been better, but why shouldn't we be looking back and say, yes, maybe we're going to go back to an environment where there's not much pricing. There's competition, retailers are buying power and putting together their procurement.

So specifically for Europe, do you think that we would go back to the old Europe that we knew? Or you think the pricing still remain? And then Europe, on volume mix, I must say you've done quite well. You've gained market share. It's a bit different than the U.S., but still quite a good level. Do you think that there is more room for you to gain share when effectively some of your peers have mentioned a weaker environment, especially in laundry, in DO. How do you see the competition evolving?

Well, I think our performance in Europe is testament for the kind of a step change we have done in innovation in the premium segment. We are doing very well, particularly in 2 categories, Home Care and Personal Care. In Home Care, I feel the innovation we have brought in laundry, particularly around the short cycle washes -- washing machines in 15 minutes instead of 2-hour wash.

This is the kind of shift we want to do in the portfolio when it comes to innovation, move our portfolio into areas in which science is more demanding. It's not the same to wash in a machine for 2 hours, where a lot of the work is done by a machine, now working in 15 minutes where a lot of the work is done by the product. And this kind of innovation has allowed us to really move into higher price points, driving the liquid segment very, very strongly.

So the same in deodorants in which we brought whole body the proposition that initially we [indiscernible] in the U.S. and now we are expanding into Europe. So when you look at the pre-COVID period, the negative pricing was not there for all the industry. In average, there was negative pricing. But for a company that has been able to really shift their portfolio into premium and that has been able to really come with very powerful innovation, they were able to sustain positive pricing. So it's a difficult environment in the European one.

At this stage, I can say that our relationship with the retailers is good. We have not seen any dramatic conflict in the last couple of years. We are trying to demonstrate them that we can grow the pie that we can bring initiatives that grow markets. Innovation and renovation are both important to ensure that there is no price dilution.

So we are gaining significant share in Europe, both in Personal Care and in Home Care. We expect to continue that -- doing that. It's not easy because other players also play. But all our focus there is in increasing our investment that we have already done and ensuring that we can with innovation in premium segments that retailers value and that our consumers are prepared to pay for.

A region that is close to your heart, Latin America has been a bit the center of mini storm, I would say, for the past 12 months. Obviously, the environment has been a bit more challenging from a macro perspective. But also you acknowledge that there's been maybe some missteps in terms of the pricing in laundry and then promotion in deodorants.

So I know you mentioned that Q4 will still be challenging. But do you think that -- can you grow volume in 2026 in that region? And what is the midterm outlook and how you feel that you have addressed these issues?

Yes, it's true. The macro environment in LatAm suffered. I feel Mexico has suffered a significant decline in remittances that is very important for 40% of the households in Mexico. The Brazilian political instability is also having some economic slowdown. And in Argentina, there is economic contraction, but I believe situation will get better. And I would say that, that probably explains half of the problems in LatAm.

Then as you said, there were a couple of missteps and probably to have missteps, but it has been very difficult to price in Brazil given the volatility of the exchange rate. We have to roll back some of our pricing in a country in which taxation is very complicated, putting prices backwards takes some time. But I believe in Home Care, in particular, in Brazil, we are gaining momentum now.

So we expect to close the year better. And definitely, for the whole Latin America, I see next year with positive volume, no doubt, structurally continuing probably our strongest region with, I would say, with India. We have some of our best operating companies there. We have great talent that I don't see any structural issue in competitive terms that should really make ourselves very, very concerned, but we have to improve our game there.

We are doing it already. And in category like DS, we are gaining share at the scale there. We are gaining close to 250 basis points of share, but we need to reignite growth in 80% of that category that is the aerosol format. That is very, very important for us, and it has been a bit soft this year.

We have put all the plans in place. We have an incredible plan also around the World Cup next year that, as you know, for all the Latin America is a very important event. So we expect DO also and the whole business in LatAm to be in a much better shape in 2026.

Excellent. So another company that has gone into some transition has been Unilever India, a new CO, GST tax run rate around mid-single digit for a market where it feels like the opportunity should be much wider. So how do you feel about 2026? Do you think -- do you see -- do you expect to see an impact from consumer demand from GST? And what are Prior's plan to accelerate volume?

But more widely, I think one of the major discussion points with investors is while recognizing the strength of Unilever in that country, how others are also trying to take a share of that pie? And how you have to balance maybe the turnaround of your historical portfolio with some investment in pricing, in competitiveness and then balancing top line and margin?

Well, I'm sure many companies would like to swap their portfolio in India with our portfolio in India. We have 55% share in hair care, 80% share in functional, 80% share in Functional Nutrition, 45% share in skin cleansing. 50% share in Skin Care, and I can go on and go on and go on. I was recently in India, opportunities there are massive. You have 60 million, 70 million people in India with the income per capita of France.

You have 700 million with the income per capita of Indonesia, Thailand, Philippines and another 700 million with the income per capita of East Africa and West Africa. There is growth for everyone in India. And we believe that we will be the main beneficiaries of what will be a much more dynamic economic environment in India. I feel the government in India has taken very relevant measures lately.

So GST reduction, that is the VAT of India, personal income tax reduction, interest rate reduction. When a government does something like this, because things in the economy are not right. And really, that's what happened in the last couple of years in which India consumption was affected significantly by -- in 3 years for double-digit food inflation. Now that's not there anymore. We are seeing some food deflation.

And you have seen that immediately in the GDP growth in India actually in the last quarter, it was 8.2%. So I see a lot of opportunities in India. The GST reduction affects 40% of our portfolio. But I believe the GST reduction, the impact in the whole economy will be very, very significant. We have made changes in our leadership team there. The CEO now is [indiscernible] that she used to be my CMO in beauty, then she's succeeding me in beauty is one of the best Unilever Resources.

I have 100% trust on her. We have brought also another 2 CEOs into our Indian leadership team, the CEO of Hero Motors as the CFO of the company, the CEO of Britannia as the Head of our Food business. They have the mission of really putting our volume growth in similar levels to the one of GDP growth. It will take some time, but I'm very confident about the opportunity. I was recently in Central India, 4 states there, 500 million people, GDP growth 10%, income per capita of Pakistan among the rest. These people aspire to that to into bonds.

Our brands are perfectly suited to really take advantage of what will be an explosion of wealth expansion. So I'm super excited with India. And I always say India is 14% of our revenue, U.S. is 21%. If you put these 2 companies together and we can deliver in these 2 thresholds, let's say, close to 4% growth in volume, we have 1.6% at company level. So that's fundamentally the anchor of our 2% volume growth plan for the whole company.

Earlier on, you mentioned that you have to run a business with higher margin and -- higher gross margin and higher investment. And that's my next question. Your gross margin, if I look at how you account for distribution costs, would be post ice cream in the low 50s. Some of the beauty peers are 60% and well above. So it feels like there is a structural margin opportunity.

Happy to hear your view on where you think you can go there. But at the same time, your P&L, you have a 20% EBIT margin. It is one of the best in Europe. It is close to the top level in the U.S. So how do we think about the gross margin opportunity, but maybe the investment, A&P at 16% of sales, is that enough? And how as well do you marry your ambition to grow mid-single digit, but as well to grow EPS in euros and therefore, which means some margin expansion. So how do you know?

Well, first of all, I feel our underlying operating margin for the second half of this year after separating Ice cream -- excluding Ice cream will be at least 19.5%. So that's the kind of level -- the base of our margin after Ice cream. And our gross margin, yes, you're right. We include logistic costs in the calculation of our gross margin. Our people have that in the SG&A. If you would exclude the logistic costs, our margin -- gross margin is in the low 50s.

But of course, there are big difference between our Beauty business and our Home Care business. So there is a big divergence there. There are 4 levels of gross margin expansion we are working on. The first one is volume growth. The next -- the margin in our next unit of volume is close to 55%, 60%. So for us, if we achieve 2-plus percent volume growth, our overall margin expansion start to pick off. Then it's mix, category mix, segment mix, channel mix.

The third one is some interventions we are doing in the value chain of some key materials. I have talked about surfactants in U.S., oleo chemicals in Asia. We are investing heavily in fragrances in which we invest $1.3 billion, and we see there are big opportunities for savings and for quality there. And of course, also, we are allocating a much more significant fraction of CapEx to margin expansion initiatives. We are now allocating close to 60% of our CapEx into margin expansion initiatives, and this should give us 30, 40 basis points of margin expansion every single year.

The level of competitiveness of our investment in 2022, we were investing 13% of BMI -- of revenue in BMI. We moved to 14.1% in 2023, 14.3%, 15.1% in first half last year, 15.9%. And this year will be somewhere between 15.5%, 16%. And we believe this is competitive levels. It's an implicit recognition that we were not investing competitively in the past. And I always say that not being consciously uncompetitive is a criminal offense. That's how I see it.

So whatever it takes, we will invest in line with our ambition of 2% volume growth. And this is what we are doing. We believe our level of investment is competitive now. And if we put all these things together, we believe that 4% to 6% top line growth with a moderate or modest margin expansion will position us in the top 30 ASR of the sector. So that's the kind of model we are working on.

When we look at your ambition to position more the business into Beauty & Wellbeing, I think one of the key question is now that you have deconsolidated ice cream, food seems to be the elephant in the room. What are the impediments for you to not dispose food? And can you talk about maybe other -- I mean, I know you are doing some organic disposals. How does, for instance, Olic fit in the overall portfolio you are building? And we have seen this year an acceleration in M&A even in the consumer sector, some bigger M&A.

You've always mentioned that you are focused on India, U.S. and Beauty. How do we -- first of all, can you talk about whether a big acquisition is something that you completely write off or it depends? And whether there will be adjacent categories like maybe color cosmetics, perfume, OTC that you would consider in that beauty framework?

We continue focusing bolt-on acquisitions. In our algorithm, we are allocating around $1.5 billion a year in net M&A. And the focus remains in Beauty, Personal Care and definitely in the U.S. and in India. Why in the U.S.? Because we believe that strategically it's very important for Unilever to build a new leg of portfolio that can travel internationally in the premium segment.

And the U.S. is probably the only market that gives simultaneously critical mass and a platform for international brands. So that's the reason that we are allocating 90%, 95% of our capital of M&A into the U.S. We have a very clear strict process in M&A -- in choosing M&A targets. It has to be lifestyle brands. You have to be digitally native brands. It has to be seriously exposed to e-commerce.

It has to be in categories in which we can add science, channel or marketing capabilities. It has to be in super growth stage, and it has to be brands that can be globally scalable. So we have a very, very, very strict process now that we follow with rigor, and we will continue doing that. Transformational acquisitions are off the table. So we are not looking at that at this stage.

And regarding foods -- sorry, regarding color cosmetics and fragrance are not priority for us. We are much more interested in skin care, hair care, personal care territories and Wellbeing. I'm very excited about the wellness opportunity. As I mentioned before, it's very fragmented. There are many, many new segments emerging. We believe that we can establish strong positions in leadership in what we call narrow verticals that allow us to scale fast and to become profitable very, very fast. So these are the areas of focus.

Regarding foods, we are outperforming the food industry. You have seen our numbers. You compare particularly with American Foods, we are doing well. I believe we have a food portfolio that is envy of the industry. 60% of our food business is in Hellmann's & North. After completing the disposal of around 1 billion, 1.5 billion business in what I call the peripheral foods particularly in local food brands in Europe, Hellmann's and Knorr will become 70%, 75% of our revenue, and this will give us a lot of optionality in the future.

At this stage, our food business is margin accretive, is cash accretive, has low capital intensity. It's a very attractive business. And it has to outperform the market as the same happened to the other part of the portfolio. They have to gain the right to stay in the portfolio, being called Hellmann's, being called Knorr or being called Dove or being called TRESemme. So that's the way we are approaching that.

All right. I think we are close to the end of this. So I have 2 more questions. So a quick one on free cash flow. Post the disposal of the separation of Ice Cream, how do you feel -- I mean, it was EUR 7 billion free cash flow that you achieved in 2024? What do you think is the right level of free cash flow? And should we expect continued share buyback as you have done maybe at a higher level, but you've done EUR 1.5 billion in the past years? And it's my last question.

Well, as I mentioned before, our underlying operating margin after the separation of Ice cream will be at least 19.5%. And our working capital is very strong. So we operate with a negative working capital of 89%. So if there is good top line growth, our ability to generate cash conversion at around 100% is very, very high. If we do that, we will continue with the kind of disciplined approach in terms of capital allocation that we have.

First of all, we invest for growth, meaning the support of our brands in our R&D, in our CapEx, they will ensure a good dividend payout ratio, probably in the 55% to 60% range. Third, allocating EUR 1.5 billion to net M&A every single year. And then if there is excess of cash, we will not sit upon that, and we will continue doing share buyback. But if in 1 year, there is an opportunity to acquire for EUR 2 billion or EUR 3 billion, I will privilege that because it's more important for us to ensure that the portfolio rotation keeps accelerating in the same way, there could be a year in which no target is available, and I will put 0 into M&A, and that can give us a space for more share buyback.

But overall, I like the balance between 70%, 75% of our capital return to shareholders in dividends and 25%, 30% in share buyback, but I will not commit to share buyback as a routine practice. We will do that in case that there is excess surplus of cash in the business.

Fernando, thank you. 2026 is a big sporting event year, and I know you like football. And I'm not going to ask you who you're going to share, especially given my nationality. But rather, if you are a TikTok influencer, what would be your beauty tip?

My beauty tip. Yes, football is a great year, big, big year. And I feel we are really doing a lot around the World Cup because I really believe that event marketing is more important than ever, and we will be the sponsor in Personal Care and Beauty for next year.

So it's just -- we are very, very excited about the prospects of that in our top line growth. TikTok, as a TikTok influence for beauty, I'm not the best on this, but probably what I would say is just a good face care routine probably require only 3 or 4 steps when you choose the right brands, go for the ones of Unilever. They are great science and go for that because it's great stuff.

Excellent. Well, thank you, Fernando. And thank you, everyone, for joining us today. We wish you a good year-end and looking forward to seeing you again and discussing in 2026.

Hello, and welcome to Unilever's Third Quarter Trading Statement for 2025. Thank you for being with us today.

I am joined here by Srini Phatak. Srini's appointment as Chief Financial Officer was confirmed by the Board last month, following an extensive search process. Srini's vast experience and expertise are great assets for Unilever, and I am really delighted we will keep building on the strong partnership that we have formed. In a moment, Srini will take you through the detail of the third quarter results.

First of all, let me highlight the key elements of our performance as I see it. We have delivered a good quarter with 4% underlying sales growth and acceleration of volume growth to 1.7% for Unilever, excluding Ice Cream, despite subdued markets. Growth was broad-based across all business groups, with each of them delivering underlying sales growth above 3%.

This performance keeps Unilever on track to meet our full year outlook and is evidence of our powerful innovation, improved execution and significant shift into premium segments and fast-growing channels. It is also fully in line with the priorities we have set for the business. For example, our major growth engines, Beauty & Wellbeing and Personal Care delivered particularly strong performances. Our power brands continued to outperform, delivering 4.4% growth in the quarter with volumes up 1.7% for total group and 2.2% excluding.

We also saw a continuation of sustained strength in developed markets, particularly North America. Volume-led growth in that region was 5.5%, and it was driven by Personal Care and improved performance in Prestige Beauty, and once again, exceptional delivery in Wellbeing.

Europe grew underlying sales by a competitive 1.1% despite a strong comparator. Structurally, our business in Europe continued to improve and strengthen.

Our emerging market business step up with 4.1% USG led by a return to growth in Indonesia and China. Overall, emerging markets grew well despite the short-term impact of the goods and service tax reforms in India and some challenges in Latin America. We have delivered these results while preparing our Ice Cream business for the demerger, which we expect to be completed before the end of the year. The time line is being revised as a result of the U.S. government shutdown impacting the work of the SEC. Shin will say more about the final stages towards the merger in a moment.

In summary, a positive set of results this quarter that reaffirm our confidence in the steps we have taken to make Unilever a true marketing and sales machine. They will continue to guide and inform our actions over the quarters ahead.

With that, I will hand over to Srini to take you through the third quarter results in detail. And after that, I will come back to say something about the remainder of the year and beyond and also provide a brief wrap-up. We will then take questions. First of all, over to Srini.

Thank you, Fernando. Unilever's underlying sales growth in third quarter was 3.9% with broad-based progress across the business groups. Underlying price growth was 2.4% and volume contributed 1.5%. This resulted in a two-year compounded annual volume growth rate of 2.6%. We expect the Ice Cream demerger to be completed in 2025. In this context, excluding Ice Creams, our underlying sales grew 4%. Volume in the quarter was 1.7% compared to 1.1% in the previous quarter. All the four business groups delivered positive volume growth with a two-year compounded annual volume growth rate of 2.4%.

Our Power Brands, which represent over 75% of our turnover, grew 4.4% in the third quarter, including 1.7% from volume. Power Brands, excluding Ice Cream, delivered 2.2% volume growth, in line with our medium-term volume ambition. Strong performances included double-digit growth from Vaseline, Liquid I.V., Nutrafol, Cif and Domestos and high single-digit growth from Comfort, OLLY and Cornetto. Dove, our biggest brand, keeps outperforming the market with a 6% USG in the quarter and 8% year-to-date.

Before turning to the business groups, let me first provide some color on our performance across different geographies. Developed markets continue to perform strongly. North America grew underlying sales by 5.5% with 5.4% from volume, reflecting the continued benefits of our multiyear portfolio transformation. Growth was driven by strong performances in our Personal Care and Wellbeing brands, underpinned by premium innovations. This marks the fifth consecutive quarter of robust volume-led growth in North America, supported by share gains across key categories and sustained brand investment.

Europe grew underlying sales by 1.1% with a 0.6% decline in volume and 1.7% growth from price. Our performance was broad-based and robust given high comparators of over 6% growth. We gained share across major markets, power brands and multiyear premium innovations, including the rollout of Wonder Wash and Cif Infinite Clean continued to perform well.

Asia Pacific Africa delivered 6.8% underlying sales growth with 3.5% from volume and 3.1% from price. This is a clear acceleration versus the first half, reflecting an improved performance in key markets and a stronger execution across categories.

Indonesia returned to growth as we saw the benefits of the extensive business reset we have undertaken. Strengthened brand plans, sharper channel execution and renewed customer partnerships are driving improving trends. Sequential improvements in run rate position Indonesia for sustained progress into 2026.

In China, while the market environment remains subdued, we delivered low single-digit growth, supported by innovations within our key brands and interventions in pricing.

The macro environment in India continues to be favorable. Earlier in the year, personal income tax and interest rates were lowered. In September, the government reduced GST or sales taxes to 5% on around 40% of our portfolio, making the affected products roughly 10% cheaper. While these changes are expected to improve consumption through higher disposable income and improved sentiment, quarter 3 sales were temporarily impacted as trade reduced inventories and consumers delayed purchases in anticipation of lower prices. Trading conditions are expected to normalize from November onwards.

Underlying performance was driven by premium portfolios in Beauty & Wellbeing and Personal Care. Turning to Latin America. Underlying sales declined by 2.5% in third quarter with a 7.3% decline in volume, partly offset by a 5.2% from price. Markets across Latin America are experiencing a broad-based softening, reflecting continued macroeconomic pressure on category growth and consumer demand. In Brazil, our focus remains on restoring competitiveness in laundry, where we are seeing early signs of progress. In deodorants, we continued to gain share in a declining market, impacted by a temporary shift in product formats.

Our Foods business delivered double-digit growth in Hellmann's, supported by the continued success of its flavored mayonnaise range.

In Argentina, the macroeconomic backdrop remains unstable amid ongoing political uncertainty. We expect to see improvement in the region during 2026.

Beauty & Wellbeing underlying sales growth was 5.1%, driven by strong volume growth of 2.3% and 2.7% from price. Our volume momentum remains very solid with a two-year CAGR of 4%. Dove Hair, Vaseline, Hourglass, K18, Liquid I.V. and Nutrafol, all delivered double-digit volume-led growth, reflecting the strength of our premium innovations and disciplined execution.

Hair Care was broadly flat. Growth in our premium portfolio was offset by declines in Clear and Sunsilk, which were impacted by soft market conditions in China and Brazil and by lower TRESemmé volumes in the U.S., where we have pricing and promotional corrections in place to support improvement.

Core skin grew mid-single digit, led by Vaseline, which delivered double-digit growth in both sales and volume. Growth was supported by premium innovations such as the new Cloud soft light moisturizer in India.

Prestige Beauty grew mid-single digit, led by volume as the category showed gradual recovery. Performance remained mixed with Hourglass and K18 continuing to grow double digit, while Paula's Choice and Dermalogica returned to low single-digit growth after declines in the first half.

Wellbeing continued its exceptional run, delivering strong double-digit growth. Power Brands, Nutrafol and Liquid I.V. sustained their outstanding performance, supported by deep innovation funnel, increased brand investment and selective international expansion.

Personal Care underlying sales growth was 4.1%, driven by 1% volume and 3.1% price. The two-year compounded annual volume growth rate of 2% reflects the continued resilience across our core categories, supported by strong growth in Asia Pacific, Africa and in North America, which was driven by Dove.

Premium innovations in deodorants and skin cleansing continued to lead growth with the rollout of whole body deodorants and the expansion of premium body wash driving strong consumer engagement and share gains. Deodorants grew low single digit, led by Dove in North America. Growth was partly offset by weaker performance in Latin America, reflecting a decline in category volumes and a temporary shift in product formats. Skin cleansing grew low single digit with commodity-related pricing weighing on volumes. Dove continued to perform well, supported by its premium innovations and the launch of a limited edition seasonal body wash ranges. Lifebuoy grew low single digit.

Oral Care delivered high single-digit growth led by our power brands, CloseUp and Pepsodent with strong momentum in Asia Pacific Africa. In September, we further strengthened our Personal Care portfolio with the completion of acquisition of Dr. Squatch, expanding our presence in the fast-growing premium male grooming segment in North America.

Home Care underlying sales grew 3.1% in the third quarter with 2.5% from volume and 0.6% from price. Volume growth stepped up versus the previous quarter, driven by sustained performance in Europe and improving trends across several key markets in Asia Pacific, Africa. Fabric cleaning was flat overall. Europe grew mid-single digit as the rollout of Wonder Watch continued to drive volume growth and strengthen our competitiveness. Wonder Wash will reach 30 markets by the end of the year. This was partially offset by a decline in Brazil, where the market conditions remained soft and we implemented corrective pricing actions.

Home & Hygiene grew mid-single digit with balanced contributions from both price and volume. Growth was led by Cif and Domestos, both delivering double-digit performances. Cif Infinite Clean, a multipurpose cleaner powered by probiotics has now been rolled out across major European markets and is delivering strong early results. Fabric enhancers grew high single digit. Comfort delivered strong volume-led growth, supported by the continuous success of its Crystal Fresh technology.

Foods delivered growth ahead of the market with underlying sales of 3.4% with 1.3% from volume and 2.1% from price. Growth was broad-based across regions, led by strong brand execution. Condiments delivered mid-single-digit growth with positive volume and price. Hellmann's maintained its strong momentum with mid-single-digit growth led by volume. This was supported by competitive growth in developed markets and by a particularly strong double-digit growth in Brazil, where Hellmann's is growing from strength to strength.

Cooking Aids grew low single digit with positive volume and price. Knorr and Unilever Food Solutions both delivered low single-digit growth amidst subdued market conditions.

Ice Creams underlying sales grew 3.7% in the third quarter with flat volume and 3.7% from price. Volumes were flat against a mid-single-digit comparator last year with a two-year compounded annual volume growth rate of 3.4%. Growth continues to be competitive, reflecting strong innovation, ongoing operational improvements and disciplined execution across regions. Cornetto led with high single-digit growth, while Ben & Jerry's grew mid-single digits, supported by the launch of new Sundae flavors and a larger shareable pack format that is expanding the consumption occasions.

Now let me take you through the latest update on the Ice Cream demerger. All the preparatory work for the demerger remains on track with the shareholder circular published on 2nd October and the approval of share consolidation received on 21st of October. Due to the U.S. government shutdown, the SEC is currently unable to declare the U.S. registration statement effective, resulting in revisions to the original time line. We remain committed to and are confident of implementing the demerger in 2025, and we will share further updates as soon as practicable once there is greater clarity on the timing.

Let me also now explain how the demerger and the share consolidation will work in practice. As a part of the demerger, shareholders will receive one share in the Magnum Ice Cream Company for every five Unilever shares they hold. Following the demerger, we will carry out a consolidation of Unilever shares to maintain comparability between Unilever's share price and key per share metrics before and after the demerger. This is a standard technical adjustment in transactions of this nature, and the final ratio will be confirmed shortly after TMICC shares begin trading. Importantly, Unilever is expected to pay quarter 4 dividend in full, ensuring continuity for our shareholders through the completion of the Ice Cream demerger.

Turnover for the third quarter was EUR 14.7 billion, down 3.5% year-on-year. Underlying sales growth of 3.9% was more than offset by a negative currency impact of 6.1%. We now expect an adverse currency impact on full year turnover of around 6% and a 30 basis points on the underlying operating margin. Portfolio changes also reduced reported turnover with an impact of negative 1% from net disposals. Acquisitions contributed 0.5%, led by strong double-digit growth from K18 and Wild and supported by the addition of Dr. Squatch following the completion of its acquisition in September. This was more than offset by a negative 1.6% impact from portfolio disposals, including The Vegetarian Butcher, which was completed in September.

With that, over to you, Fernando.

Thank you, Srini. Let me conclude by saying something about how we see the remainder of the year. In short, our outlook is unchanged, and that applies both including and excluding Ice Cream. In either case, we expect underlying sales growth to be within our 3% to 5% multiyear range. Growth in the second half will be ahead of the first half. This despite some softness in certain markets, notably Latin America. Overall, we expect we will continue to outperform our markets with a strong competitive performance in developed markets and an improved performance in emerging markets. Volume growth in quarter 4 should be at least in line with quarter 3. On the bottom line, we continue to expect an improvement in underlying operating margin for the full year, with second half margins of at least 18.5% or at least 19.5%, excluding Ice Cream. Of course, we will continue to monitor external events closely in what remains an uncertain environment.

Finally, on the back of a strong quarter, we are looking ahead to the rest of the year and into 2026 with confidence and resolve. Unilever is changing fast and the strategic priorities we have set out. The portfolio is stronger with more beauty, more wellbeing, more personal care. This quarter saw Beauty & Wellbeing up 5.1% and Personal Care up 4.1%. The shift to premium and digital commerce is accelerating, both organically and through M&A as per the recent acquisitions of Wild and Dr. Squatch.

Our anchor markets are delivering superior growth. Our U.S. business has now posted five consecutive quarters of strong volume-led growth. The performance expectation we are placing on people within the company are higher with clear accountability and real differentiation in our incentive outcomes. And our commitment to make Unilever a marketing and sales machine permeates everything we are doing from the acceleration of desire at scale in elevating our brand portfolio to the significant investment we are making to step up execution and excellence in every part of the business.

In short, we are crystal clear on what we need to do and where we want to invest. We will not be diverted from these priorities. As we look ahead, it is clear that some markets and categories will remain soft for a while, but we have put Unilever on a stronger footing and are increasingly confident in our ability to continue outperforming markets, whatever the conditions.

With that, thank you for listening, and we are looking forward to taking your questions.

[Operator Instructions]

Our first question comes from Warren Ackerman at Barclays.

Warren here at Barclays. So I've got two and one housekeeping. The housekeeping one on the clarification on volume, at least Q3 level. Can you just confirm, Fernando, you're confirming also 2% volume growth into '26 as well. So just looking forward.

And my two questions are, firstly, North America, really super growth, very impressive. Can you talk a bit about the growth of the wellbeing -- the Prestige and Wellbeing unit within North America, there's been some investor concerns that Liquid I.V. might be plateauing, and you've seen a recovery in the Prestige piece. Maybe you can talk a little bit about what's happening with Paula's Choice and Dermalogica and sort of the look forward in North America.

And then the second one on Latin America. I mean, clearly, the macro is tough, but there seems to be some self-inflicted issues in Brazilian laundry powder, Brazilian deodorants. Can you explain a little bit your actions you're taking, what learnings you've made? I think you've been in the region yourself. Is there a risk that you've taken too much pricing in Latin America to hit hard currency FX? And what reassurance can you give us that we won't see that in other EMs? And as we look forward on LatAm, can you maybe give some clarity on the pathway forward and the growth you expect in LatAm in '26?

Thank you, Warren, and good morning, everyone. Well, let me start by North America, and I feel the performance that we are having there with five consecutive quarters now of volume growth of 4% and at a time in which markets are visibly tougher there, I believe it's a reflection of the profound transformation we have done in our portfolio, the setup of a U.S. for U.S. innovation model and a huge focus in strengthening relations with key retailers.

I mentioned that in the last call, for the first time in many, many years, we have ranked #1 in Personal Care, #1 in Foods and #3 in Beauty in the most popular survey with the top 130 retailers in U.S., and that basically show our ability to make markets in that region.

Regarding performance of Beauty & Wellbeing there, it was really strong. Wellbeing continue having an exceptional performance in the U.S., double-digit growth both in Liquid I.V. and Nutrafol. Both brands are approaching there the $1 revenue mark for the year. Prestige Beauty has improved after a relatively flattish first half. We delivered mid-single-digit growth. But we don't take that as a new trend, I would say. Very good growth in our glass, very good growth in K18 in the most premium part of Prestige and Paula's Choice and Dermalogica are back to growth, but low single digits. So these are our main Prestige beauty brands there. But also our core in skin care was solid with very, very good performance in Dove and Vaseline there.

We have some issues in hair care in the U.S. We decided to release some brands that is having some impact in our growth in care in the U.S., the likes of AXE Hair and Love Beauty and Planet are in process of delisting. That was a conscious decision. We didn't believe that these brands were sustainable, and we decided to delist them.

About Latin America. Well, indeed, it has been a very weak quarter for us in Latin America. It's a combination of markets under pressure due to a deteriorating macro broad-based price increases to deal with currency depreciation. And as I have already mentioned previously, we scored a couple of phone calls there. The three major Latin American economies are under pressure, different reasons. In Brazil, the level of household debt and the interest rates are extremely high, remittances in Mexico going down, Argentina contraction in consumption run against the local currency in the short term. And as a result of that, we have seen the markets really going down significantly. If you look in volumes in H1 '24, volume growth of 7%, H2 3%, flat in H1, negative in quarter 3.

But there are definitely a couple of goals. In laundry, Brazil, we went too far in our pricing. Historically, our competitors in powders in Brazil tend to follow us in a period of 8 to 12 weeks. That was not the case. We have corrected that, and we are starting to see significant improvements in our sellout. And on top of that, the market is really shifting very quickly to liquids, and we are introducing in quarter 3. We have introduced in quarter 3, our very successful European wonder was mix. So we expect competitive in laundry to progressively improve.

And the other big category we have in Brazil, particularly deodorants in that category, we have been gaining substantial market share in the territory of 200 basis points there. But we did boosting our contact applicator formats at the expense of aerosol and this has had some negative consequence in the overall market growth because the revenue per use of aerosol is significantly larger than the one of contact applicators.

So the negative growth in aerosol format is crucial. The plans are in place, and there are clear learnings from these two issues that we have had, and we will be sure of not repeating that anywhere else. So that's basically to say about Latin America. We don't expect -- we expect that we will see improvement in Latin America during 2026. At this stage, I don't want to commit to more than that.

Regarding the long-term ambition, we continue thinking that it's absolutely possible for us to deliver 2% market volume growth. In the long run, our combined categories and geographical footprint offers around 2% market volume growth, even if at this moment, it is more in the 1% territory. But we are outperforming markets very clearly in Europe and U.S. And in D&E, we see a significant progress, particularly in Asia.

Our next question comes from Guillaume at UBS.

Two questions for me, please. The first one is on pricing. I mean we're having a relatively benign commodity cost environment. You also flagged a relatively weak consumer environment in some key countries like Brazil, where you mentioned some pricing adjustments. So given this backdrop, do you expect price growth to remain at current levels or to actually come down over the coming quarters? So any color on your price growth outlook would be very helpful.

And then my second question is on Europe. I mean, volume growth turned slightly negative in the quarter. Could you talk a little bit about the drivers behind this? Is it just down to this very elevated base of comparison? And so nothing to see here volume to return to positive territory from next quarter? Or on an underlying basis, are you maybe seeing some changes in category growth or in the consumer behavior?

Thank you, Guillaume, and Srini will help me with the pricing question.

In Europe, we have positive volume when you exclude Ice Cream in the quarter. So against a very tough comparator. We delivered 7% volume growth in Europe in the same quarter last year. So the comparator was very, very tough. I believe you read the same information that we read and you see that we are gaining significant share in Europe, particularly in Home Care and Personal Care that are two of our most sizable business in Europe. So our innovation in the premium segment is really working very, very well there. We are very confident about our prospects in Europe, but the comparator was very, very tough. Our share gain is solid. It is broad-based. In the top five markets in Europe, we are gaining share. We are very pleased overall with the performance that we have structurally in Europe.

In the case of pricing, and Srini will help me with that, it's true commodity cost is relatively benign with the exception of a few family of materials, palm oil in particularly is increasing significantly. This has significant implications in HPC liquids, home care, personal care and beauty liquids and also in skin cleansing bars. Aluminum is going up. But I feel it's important also for you to remember that wage inflation is significant. You see wage inflation in Europe and in U.S. in the territory of 4%, and we need to cover for that also. Srini?

So, two additional elements to that, Guillaume. Clearly, the inflationary pressures, as Fernando said in skin cleansing are higher. However, when you look at something like a home care, it's quite benign with crude sitting at around the $60 mark. Having said that, when we really look at the total net material inflation, which is a composition of the materials and ForEx devaluation. That's another important element to see that in all the emerging markets, the currencies have devalued, and therefore, there is an imported inflation.

Give or take, we see that net material cost should be about EUR 0.5 billion for this year, and we expect similar levels for next year given the information that we have now. This will really warrant a sensible pricing. This is lower than what we have seen the historical average of EUR 200 million to EUR 300 but it's a little better than that, but obviously much lower than what we experienced through the COVID period. So, in essence, if you really think about those levels of inflation, there is price in the market and there is price clearly in some categories.

The only last color is that when it comes to beauty, given the value chain, I think the bigger impact for us will really come from price and mix together because with premium innovations and what we are bringing to the market, we have the propensity and the ability to price up, and we will do that in a sensible manner.

Our next question comes from Olivier at Goldman Sachs.

Just two questions, please. First on within Hair Care and particularly in the U.S., TRESemmé has been struggling for a couple of quarters. Is that still expected to continue into Q4? Or has it improved already by the end of Q3? And how much of an impact it had on price/mix in the U.S.?

And then just lastly on Liquid I.V., could you perhaps give us a bit of an update on the global rollout of the brand in how many countries you're expecting to launch it, not necessarily obviously in Q4, but also into 2026? And which geographies will be the priority?

Thank you, Olivier. Regarding Hair Care in the U.S., this year, we entered with two significant relaunches. One was the Dove hair one and the other one was TRESemmé, both imply significant repositioning of growth brands. In the case of Dove hair has been an incredible success, growing double digit in the U.S., significant reposition in terms of pricing, much closer to the average of the market.

In the case of TRESemmé, that didn't work in the same way. But we have corrected that. And in the quarter 3, TRESemmé is back to growth with particular good performance in styling. So we are confident in the trend that we are seeing in TRESemmé and in hair care in the U.S. The main issue in U.S., I would say, when you look at hair care performance has been the delisting of some of the brands, but this has been a conscious decision.

In the case of Liquid I.V., excellent performance in the U.S., as I mentioned before, the brand is really approaching the EUR 1 billion mark with double-digit growth in another quarter. The brand has been rolled now to eight markets, particularly in Western Europe, Australia. We are starting to introduce the brand in Urban India. The initial results are very, very good. Of course, Canada was launched last year also.

Our next question comes from David Hayes at Jefferies.

So, two from us as well. So, firstly, just on kind of broader questions, I guess. So just in terms of the margin levels, India, Indonesia, you're seeing signs of improvement, but you've obviously taken quite a dramatic step in terms of profitability as you invest in those areas. So, the question is, is that something you need to do more in other markets, I guess going back to the hard currency question that we had earlier, 2019 margins, which is kind of where you're getting back to, you've had two previous CEOs say that was too high. Why is that the right level now? And is something -- does something needs to be done in other markets to try and restimulate the volume growth as you've seen in those two areas?

And the second one, just to pick up on what you talked about a few weeks ago in Boston. The eight power brands focused for the One Unilever markets, you talked about not really supporting the other brands. Just to get a bit more detail on that, is that a case of no A&P spend at all beyond those eight brands in those markets? Can you quantify what percentage of sales that leaves not being supported? And can you talk about what impact you think that might have on those brands in terms of a headwind to growth for a period of time?

Thank you, David. I'll take Power Brands and then Srini will talk about regarding margin. Power Brands in One Unilever market represent around 80% of the revenue. We want to take that into 90%, 95%. This doesn't mean that we will not use other levers of support of our local brands in these markets or that we will let these brands to die. But definitely, we don't want complexity in our strategic move that we are doing. Our performance in One Unilever market has been very strong, consistently strong during this year. We have delivered another quarter of 4.9% with good volumes, excellent performance in most of the geographies.

And definitely, we are really concentrating our efforts in rolling out our strongest brands, usually three in beauty, two in Personal Care, one in Home Care and one in Foods in most of these markets, and this is a conscious decision that we are doing. Of course, when there are local jewels, we will protect them. We will support them. We will use our drivers of demand in all these cases. Margin?

So, David, I think it's important to appreciate what is different in the way we are thinking about our profit and profitability. The six or seven levers that we are today exercising are significantly different. We've talked about the importance of volume growth that the 2% volume growth of the anchor actually then starts to provide a leverage for us across the value chain, and that starts to become an important contributor.

Given the work that we have done, whether it's in terms of the portfolio mix, the geography mix, the channel mix or the format mix, mix is actually becoming a component, which gives about 25 to 30 basis points on a regular basis for us.

In the past, we have spoken to you about how we have reshaped the whole supply chain space, how we are actually buying, whether it's technology, whether it's game theory. Project Lighthouse is consistently enabling us beat the market inflation by about 1%.

When we look at the controlled cost element to it, again, serious amount of work which is happening in terms of reshaping the network of manufacturing and logistics, and we can go on. You've also seen how we have reshaped our overall overheads trajectory where we have actually completed, we are well ahead on our productivity program. And actually, now we are driving productivity as a habit and a culture in the organization where our costs will be lower than our revenue growth on a consistent multiyear basis. And we are deploying capital, more than 55% to 60% of our capital today has gone towards savings initiatives, and we are actually looking at a lot more backward integration projects.

So when we add up all of these elements and also given the relative strength of our brands, this is what is enabling us to drive our margins differently. Equally, important to highlight that the margin profile, now we will be talking about businesses, excluding Ice Creams, and Ice Creams at an aggregate was a margin dilutive for us. So when we really look at Beauty, Personal Care and Foods, very strong and healthy margins. Given the footprint of Home Care and the positioning, a little lower, but all of them are actually contributing in a sensible way.

We're also really very focused on hard currency earnings because that's again a multiyear clear objective. And there, when you look at it, we are also pulling all levers, which includes below-the-line items such as taxation, pension, interest costs. All elements of the value chain today are in play. And I think what gives us this when we have a consistent business, which is delivering day in and day out, margin expansion becomes very integral to the way we really think about growth and we think about profit. So a lot more confidence today is Unilever to continue to build our margins, drive hard currency earnings and get hard currency earnings, hopefully, on a multiyear basis, which are ahead of our sales ambition.

Next question comes from Sarah Simon at Morgan Stanley.

Just a question on the U.S. So we're starting to hear some sort of negative commentary from some of the consumer-oriented companies about the effect of the government shutdown. Just wondering if you are seeing any of that in your businesses?

Thank you, Sarah. We have not seen any significant impact of the government shutdown at this stage in the consumer sentiment. Of course, we follow similar service you follow. I feel the Michigan University consumer sentiment service shows relatively low levels in the last metric, and we see a clear bifurcation in the market there between households that own stocks and households that don't own stocks.

So that is -- I believe this explains probably the resilience of our premium portfolio in the U.S. And as you could see in our performance, we continue delivering significant volume growth in the U.S. We are very pleased with our performance there, but it's very clear that we are outperforming markets by a mile there.

Our next question comes from Tom at Deutsche Bank.

Just you mentioned in the presentation, the growth of digital commerce and the channel shift in retail seems to be happening at an accelerated pace. Why would you be well positioned versus that channel shift, please? And any sort of details you could give me? We've got a bit more of an idea of what's happening in the U.S., but some sort of views on the pace of that channel shift in Europe, perhaps in India and some of your other larger markets would be great, please.

And just a quick one just on China. Maybe any details on the improvement there and any impact of timing of Chinese New Year on Q4 growth, please?

Yes. Digital commerce is 17% of our revenue. I can give you some data. We are growing Amazon at 15%. We are growing walmart.com at 25%. We are growing Flipkart in India at 30%. We are growing TikTok globally at 70%. So our portfolio is much better suited now after the kind of reset we have done with disposals of value brands and with significant acquisitions in the premium segments, digitally native brands that are operating with a lot of success there. And I believe one of the reasons that we are delivering the type of growth that we are delivering in U.S. is that that's the portfolio with the highest exposure to e-commerce that we have globally.

But we see similar trends in other markets. Of course, China India, quick commerce is accelerating a lot. Our quick commerce business in India is more than doubling this year. So we believe that our portfolio is well suited. Our capabilities are significant in that space. A lot of capabilities that were acquired to the business through the acquisitions we have done are really helping us in all these markets. So we are very, very happy with the development of e-comm, particularly in Beauty & Wellbeing in which the level of e-commerce is approaching 27%, 28% for our total business.

China, Srini, do you want to talk about that?

So, on a China perspective, actually, it's quite encouraging for us. In the sequence of improvements, we had said that Indonesia will do much better, and it is doing much better. China, we said just given the macroeconomic conditions, we said we are making some fundamental changes to our business model, our go-to-market are updating our capabilities in e-commerce and also actually driving the ongoing premiumization of the portfolio, particularly in Beauty & Wellbeing, Vaseline and Home Care.

What's really encouraging is that in quarter 4, all four of our business groups, I'm excluding ice creams, given where we are, have actually returned to positive growth, both from value terms and on volume terms. And just given the fundamental work that we have done, it positions us well going forward.

Of course, as Fernando referred to, there is more work to be done in some of the channel shifts which are happening, notably Douyin and what does it really mean to compete. And that's where we are spending a lot of time and effort to really make it strategic, make it important and really play the full 6 piece to win in that channel. But overall, I think given where we are, we are confident in terms of our progress going forward.

Next question comes from Jeff Stent at BNP.

Three questions, if I may. The first one is, could you just shed a little bit more color on Mexico, which I think was down high single digit. What's happening there beyond the macro?

And then secondly, do you still expect to grow hard currency earnings this year?

Yes. Mexico, we have seen soft markets there. If you look at the performance of the main retailer in Mexico, I feel in the last two quarters was around 1% and 4%. And that has basically reflected the fact that remittances reduction are having a significant impact in the economy. tariffs have created uncertainty and the GDP growth expected there is around 0.4% the last number I have seen there.

So our competitiveness is strong in Mexico. So we don't have significant issues there, but we have seen margins really softening. And there are some significant promotional periods in Mexico, particularly during July. It's called July 3. Most of the retailers have significant activities and the pickup in that period has been relatively poor.

So the macro in Mexico is not very good. We don't have any fundamental structural issue in our portfolio in Mexico. Our performance has been good. We have a great food business with Knorr there. We have an excellent deodorant business, and they are very, very solid in shares, but the market has been soft. Hard currency earnings?

So, Jeff, an important element for us is the gross margin trajectory and investment behind our brands. On both these elements, we are making solid progress. In fact, we had said that the 45% gross margin, all businesses included end of last year was really the base for us. All the three quarters, we have made continued progress. I've already explained to you some of the levers and the drivers in this respect. We are continuing to invest significantly behind our brands. We have said that we will continue to increase absolute spends every year. Even this year, we'll be actually increasing our absolute spends and our percentage of BMI will be in the range of 15% to 16%.

What's really helping us is significant amount of work that we've done in terms of productivity across the value chain. Our program on productivity, we've already confirmed the about EUR 650 million of savings. We are looking to push that harder and get more out of that. We're going to be very disciplined in terms of our costs, which are within our control. That's going to become an important lever for us. We have done significant amount of work and found efficiencies in the taxation line. We've also had benefits coming through from our interest line.

Summary, all these put together, we are confident of really having a positive hard currency earnings in the current year.

Our final question comes from Ed Lewis at Rothschild.

Yes. Just a couple of questions really just on Indonesia and China. Fernando, could you just put in sort of context how you feel about the performance, how good or bad, whatever the 12.7% growth in Indonesia is relative to your expectations?

And also on China, backing growth in Q3, I think that might have been a bit earlier than we might have expected. So just the changes you made there, how they're having an impact and how you would assess performance there?

Well, thank you, Ed. In Indonesia, we are very pleased with the renewed leadership team we have put in place there and the progress they are doing in resetting the fundamentals of the business. We are operating now with historic low levels of stocks in our distributors. We have removed any fundamental issue of channel price conflict and that drag us down in 2024. We are relaunching our top brands in the market. We are stepping up significantly our social first marketing capability. As a result of that, we are seeing our run rates in Indonesia improving consistently quarter after quarter. We initiated this reset around July, August last year, and the results are solid. So we expect Indonesia to continue contributing to growth in the next quarters.

In China, I feel that, Srini has been clear about it. We are pleased that our four business groups for the remaining company are back to growth in China. It's getting better slowly the market there. We have made significant interventions to disintermediate our route to market in e-commerce. We have set up significant manufacturing and logistics capability for direct-to-consumer delivery, and we are starting to see the benefits of these actions, and we expect that to continue improving in the next few quarters.

Thank you very much. That was our final question.

Let me finish, Jemma saying that I hope after the call it is clear that our major growth engines of Beauty & Wellbeing and Personal Care continue to deliver very strong performance, about 5% and 4%, respectively. Our shift to premium and digital commerce is accelerating. The performance in developed markets is strong. We are outperforming markets clearly, both in U.S. and Europe with U.S. being a clear standout in terms of our performance.

Our emerging market performance is improving. India, in particular, is very, very well positioned over the medium term. The GST reform has had some impact in the short term, but we believe it's very good news for 40% of our portfolio with close to a 10% reduction. This will boost demand in the medium term.

Indonesia and China continue to improve. And there are lessons learned in Latin America that will not be repeated in neither in Latin America nor in any other places. And our business in Latin America is structurally strong, remains intact and our shares have grown in six out of the last seven quarters there.

All of these give us confidence for the remainder of the year in our ability to outperform markets, and as Srini mentioned, to deliver hard currency earnings growth. Thank you very much.