Unilever 4Q16 Earnings Call Notes

Unilever’s (UL) CEO Paul Polman on Q4 2016 Results

Demonetization has affected underbanked areas

“We really have looked at the demonetization and what our business in India is, is an enormously well distributed business, both in rural India and in urban India. We have that as an enormous strength. And the main effects of demonetization have been in the regions where you don’t have a banking sector that is well developed, like central India, so better developed in the south and the west but underdeveloped in the central India. And secondly, in the distributor trade, wholesalers and small trade where there’s really been a cash crunch, lots of daily cash transactions.”

Brazil negative volumes deepening recession

“Yes, Martin, these are two good questions. Let me go to LatAm very, very quickly. Brazil, negative volumes in a deepening recession, volumes are down for the year. I don’t think that will change in the near future. We have strong price growth there to recover the devaluation-related cost increases. ”

Graeme Pitkethly

Brazil down trading accelerated in second half of 2016

“In Brazil, rising unemployment and reduced consumer confidence meant that the contraction of consumer spending power and down-trading accelerated through the second half of the year. In fact, in the fourth quarter, market volumes declined by almost 10%.”

Have had to increase pricing in emerging markets which can have significant impact in emerging markets

“These sharp cost increases require pricing, and sometimes a temporary decline in volumes, as consumers and retailers adjust. In emerging markets, the key points we watch are the affordability of our products for consumers and the actions of local competitors. In some cases, as was the case in skin cleansing in India, the impact of the transition to the new consumer price levels can be significant.”