Olivier Nicolaï

Olivier Nicolai asked for details on the changes implemented in the U.S. over the last 12 months, specifically regarding the incentive structure for new management. He also inquired about the overall equipment effectiveness (OEE) improvement, noting it was 7 points in 2025, which was lower than expected at H1, and asked if a stronger improvement is anticipated in 2026.

Answer

Brian McNamara, CEO, explained that a new U.S. leader was announced in May, and the operating model broadly defined category general manager roles reporting to the U.S. president and connected to global category heads. He mentioned changes in net revenue management tools and sales force structure, largely completed by January 8th. McNamara expressed confidence in these changes to drive growth, citing progress in oral health and Advil's share growth in Q4. Dawn Allen, CFO, expressed satisfaction with the supply chain productivity program, which delivered 220 basis points of gross margin improvement. She detailed drivers like reducing complexity (e.g., Aquafresh packaging harmonization) and operational efficiency (e.g., Levice factory formulation reduction). For 2026, she guided for 50-80 basis points of supply chain productivity improvement.

Olivier Nicolai asked for details on the changes implemented in the U.S. over the last 12 months, specifically regarding the incentive structure for new management. He also inquired about the Overall Equipment Effectiveness (OEE) improvement of 7 points in 2025, noting it was lower than H1 expectations, and whether a stronger improvement should be assumed for 2026.

Answer

CEO Brian McNamara explained that a new U.S. leader was announced in May, and the operating model changes included creating category general manager roles connected to global category heads, enhancing strategy execution. He mentioned improvements in net revenue management tools and changes in sales force leadership, expressing confidence in these changes to drive growth, citing progress in inventory levels, strong oral health, and Advil share growth in Q4. CFO Dawn Allen highlighted the supply chain productivity program's 220 basis points gross margin improvement, exceeding expectations. She detailed drivers like reducing supply chain complexity (e.g., Aquafresh packaging optimization) and operational efficiency (e.g., Levice factory formulation reduction). For 2026, 50-80 basis points of improvement are built into guidance.

Olivier Nicolaï of Goldman Sachs Group, Inc. asked a specific question regarding competitive pressures in the U.S. market. He wanted to know if the market share losses in the VMS and respiratory health categories were primarily against private labels or other branded players.

Answer

CEO Brian McNamara provided a clear distinction: in respiratory health, the pressure is from private label within the smoking cessation sub-category. Conversely, in VMS, the challenges for the Centrum brand are primarily due to competitive pressures from other branded players. He added that other respiratory brands like TheraFlu continue to grow share.

Olivier Nicolaï asked whether Haleon's market share losses in the U.S. for VMS and respiratory health were primarily against private labels or other branded players.

Answer

CEO Brian McNamara clarified that in respiratory health, the pressure is from private label within the smoking cessation sub-category, while the core respiratory brands are growing share. In VMS (specifically Centrum), the competitive pressure is more from other branded players, not private label.

Olivier Nicolaï from Goldman Sachs asked whether the market share losses in the U.S. for VMS and respiratory health were primarily due to competition from private label products or other branded players.

Answer

CEO Brian McNamara clarified that within respiratory health, the pressure is from the smoking cessation business, which is a trade-down to private label. For VMS (specifically Centrum), the pressure is more from other branded competitors. He noted that other respiratory brands like TheraFlu are actually growing share.

Olivier Nicolai asked if the net debt to EBITDA ratio could reach the 2.5x mid-term target by year-end and if more disposals were planned. He also requested a breakdown of the H1 gross margin expansion drivers and whether there would be a greater focus on margin improvement.

Answer

CFO Tobias Hestler expressed confidence in reaching the ~2.5x leverage target over the medium term but was cautious about a specific year-end prediction due to FX and other variables. He attributed the 150 bps H1 gross margin expansion to pricing rollover, easing inflation, operating efficiencies, and lower freight costs, noting that benefits from the Maidenhead closure are yet to come.

Olivier Nicolaï requested an update on Unilever's Prestige Beauty strategy, including brand performance (e.g., K18, Hourglass vs. others), the need for more brands to achieve scale, and the current M&A landscape. He also asked about the drivers and sustainability of the significant margin improvement in Foods, and whether Food Solutions contributes better margins than the rest of the division.

Answer

CEO Fernando Fernandez acknowledged varied performance in Prestige Beauty (strong Hourglass, Tatcha, K18; challenges in Dermalogica professional channel, Paula's Choice relaunch planned). He views Prestige as a natural continuity of skincare/hair care, adapting to market changes (e-commerce growth, decline of travel retail/department stores). He stated a rigorous acquisition criteria for digitally native, e-commerce exposed brands in categories where Unilever can add value, but no recent acquisitions as suitable assets haven't emerged. CFO Srinivas Phatak attributed Foods' record margin (22.6%) to sharp strategic choices, execution discipline, gross margin improvements, portfolio rationalization (delisting non-value accretive parts), pack price architecture (Hellmann's), profitable UFS accounts, and overhead savings. He noted continued investment in Foods for growth, not further significant margin expansion.

Olivier Nicolaï of Goldman Sachs inquired about the drivers of the strong H2 margin guidance and asked about the use of proceeds from the eventual sale of the retained 20% stake in the demerged ice cream business.

Answer

Acting CFO Srinivas Phatak attributed the H2 margin outlook to volume leverage, mix, savings, and cost discipline, without singling out specific divisions. He clarified that proceeds from the ice cream stake sale will first cover separation costs and taxes, with the remainder used to reduce debt. CEO Fernando Fernandez added that retaining the stake shows confidence in the new company's potential.

Olivier Nicolaï from Goldman Sachs inquired about a potential consumer slowdown in Mexico impacting the second half of the year. He also sought a deeper explanation for Brazil's volume decline, asking about pricing strategy and the potential for a second-half recovery.

Answer

CEO Michel Doukeris stated that while Mexico's Q2 was strong overall, the back end was slower due to weather. He noted a broader trend of consumer confidence lagging economic progress globally, with value-seeking consumers under pressure from inflation. He acknowledged that this dynamic affects various markets, including Brazil, and that the company is carefully monitoring consumer purchasing power.