Unilever PLC (ULVR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Nils Andersen, and I'm Chairman of Unilever, and it's a pleasure for me to welcome you to this virtual Annual General Meeting of Unilever N.V. As you'll appreciate, we're having a different meeting than normal due to the coronavirus. Because we don't want to take any risks with the health of our staff or you, our shareholders, we have chosen to make this meeting a virtual one only. You can view this meeting online, see or -- and hear our presentations and listen to our responses to questions that were submitted ahead of the meeting. Hopefully, this gives you a reasonable alternative to a physical meeting. I'm afraid we cannot offer the possibility to ask live questions because this is an open webcast. This means that we simply don't know who's watching and would be asking questions. We've therefore decided to concentrate on answering the pre-submitted questions, and we received a lot, and thanks for that. I'm pleased to take -- that you've taken the time to join us. And of course, I sincerely hope that the pandemic will be under control so that we can have a normal AGM next year. Let me now go through today's proceeding and formally declare that this meeting was properly convened by publishing the Notice of Meeting on our website on the 19th of March 2020. On 20th of April, we announced that we would hold a virtual meeting, a virtual general meeting only. The deadline to submit voting instruction was extended to Monday, the 27th of April. And shareholders had the possibility to submit questions up to that date as well. On the screen, you can see my fellow directors, and I'm very proud to be chairing such a high-quality and diverse Board. With these directors, I'm joined today by Alan Jope, our Chief Executive Officer; Graeme Pitkethly, our Chief Financial Officer; John Rishton, who is Chair of the Audit Committee; and Vittorio Colao, who is Chair of the Compensation Committee. Ritva Sotamaa, our Chief Legal Officer and Group Secretary, also joined this AGM. We have confirmation from our auditors, KPMG accountants in the Netherlands, that lead partner Mr. Jurgen te Nijenhuis is joining this AGM online. And so does Ms. Irma Kroon, our independent notary, who supervises the voting process. In a moment, Alan will update you on the progress of the business following a question and answer -- followed by a question-and-answer session. In this session, we'll respond to the questions that, as I said before, was sent to us before the deadline that was set on Monday, 27th of April at 10:00 a.m. Following the questions-and-answer session, we'll give you the outcome of the voting on the resolutions that we put to you. Only the timely submitted proxy votes have been taken into account to calculate the voting results, and that means that the voting during the meeting is not possible. And the numbers I will give you at the end of the meeting are final. First, let me share a few personal observations before we start, starting with the situation created by the current coronavirus pandemic. Clearly, we're all deeply saddened by the impact this outbreak is having on people's lives and livelihoods. The world is facing its greatest trial for many, many years. Governments, companies, investors, and all our stakeholders are really navigating uncharted waters. As a Board, we have been immensely proud of the way the company has responded to events. Alan and his team moved quickly, not only to safeguard the well-being of the company and its people, but also in contributing significantly to the wider societal effort. While this is nothing new for Unilever, that is part of our DNA, it has been inspiring for the Board to see. I know Alan will say more about the company's response in a minute, but on behalf of the Board, let me just pay tribute to everyone at Unilever, who is working so hard to help overcome the effects of this terrible pandemic. Over the recent months, we've seen many Unilever qualities come to fore, including a strong financial position, trusted brands, a great management team, and we trust that these will stand Unilever in good stead and well into the future. And of course, also hoping that the qualities and what we're doing and results of it will become evident in 2020. So we can deliver continued good results for the shareholders. They certainly did give us good results in 2019 when the company delivered another year of positive value creation for shareholders. That was driven by a continuing balance of underlying sales growth, improved profitability and strong cash generation. 2019 also marked Alan's appointment to the role of CEO. During that time, he has brought energy and fresh thinking to the role. And everybody on the Board certainly enjoyed working with him, including in the development of a new purpose-led, future-fit strategy that Alan will come back to during his part of the presentation. The strategy is anchored in the belief that sustainable business drive superior performance and long-term value creation for stakeholders. Arguably, it is a strategy that is more relevant today than ever before. In November, we announced that Marijn Dekkers had chosen to stand down as Chairman in order to focus on the growing responsibilities and activities associated with running his own investment and advisory firm. I was very pleased to have been asked to succeed Marijn. And on behalf of all of my Board colleagues, I'd like to thank Marijn once again for his strong leadership and for the contribution he made to the company and to us as a team as Chairman. Finally, my thanks to the Unilever leadership executive, all of Unilever's employees across the world for their work in 2019 and for the tremendous effort they are making right now to ensure Unilever emerges from this current crisis as a strong and healthy business to the benefit of all stakeholders. Before handing over to Alan, I just want to make clear that if I should experience technical difficulties with this webcast, Alan or Graeme will continue to lead the session. So we should, under all circumstances, get through it in a good way. And with that, I hand over to Alan. Alan, the word is yours.

Well, thank you, Nils, and hello, everyone. I'm very sorry that the circumstances mean it's not possible for us to meet and engage direct with you, our shareholders, this year. Though I also know that you'll understand the reasons why. I am very pleased to have the opportunity to speak to you about Unilever and about its performance. And let me begin by saying a few words first about 2019. Then I'll spend time with the rest of my remarks, as you would expect, on how we're responding to the extraordinary situation we find ourselves in as a result of this coronavirus pandemic. First, 2019. It was a good year for Unilever. Although underlying sales growth was slightly below expectations at 2.9%, our profitability was good with a healthy improvement in underlying operating margin. And we delivered strong free cash flow of EUR 6.1 billion. This is important because Unilever's financial model is based on being able to reinvest in the long-term health of the business while also paying out a competitive dividend. The remaining highlights to our performance in 2019, let me mention just a few. We saw a strong performance across our emerging markets business, up by more than 5% in total. These markets now make up 60% of Unilever's turnover and reaffirm our standing as one of the world's most geographically diverse businesses. Among our 3 global divisions, it was a particularly good year for Home Care, which grew by over 6%, thanks to some great innovation like Omo Perfect Wash and an intensifying focus around green cleaning and green chemistry. We also reached an important milestone on our journey of becoming a fully gender-balanced organization, with women now accounting for 51% of Unilever's management population. This was doubtless a factor in the decision to award Unilever the prestigious Catalyst Award for the company, which has done most to accelerate the progress of women through workplace inclusion. It's a great achievement, but we know we have more to do, especially at most senior levels in the company. Our enduring commitment to a multi-stakeholder-led model and responsible growth was also recognized last year, when among many other awards, Unilever was named the Top Company in the GlobeScan/SustainAbility Leaders Survey for the ninth consecutive year. Now we intend that the leadership Unilever showed over many years on sustainability under our Sustainable Living Plan should not only continue, but in future, become an even more integral part of Unilever's overall business strategy. And we're calling this new strategy, the Compass, purpose-led, future-fit and founded on the 3 core beliefs that: brands with purpose grow, companies with purpose last and people with purpose thrive. A key element of this will be to make our product brands even more prominent vehicles for driving positive social and environmental change in what they see and importantly, in what they do. You're going to see a lot more of this from Unilever in the future. You'll also see a continuation of the kind of bold measures that we announced in 2019, including, for example, our commitment to having the use of virgin plastic in our packaging and collecting and processing more plastic packaging than we sell, both by just 2025, which seems right around the corner. And last year, we delivered a year early on our goal of 100% of our grid electricity across the world on all continents coming from renewable sources. As part of keeping our portfolio under regular review, we made a number of smaller acquisitions in 2019, including in the area of prestige, where we acquired Garancia, a French derma-cosmetic brand; and Tatcha, a modern skin care brand rooted in classic Japanese beauty rituals. At the same time, we also announced towards the end of the year a strategic review of our global tea business, and we have an entirely open mind and are considering all options as we look to determine the best long-term future for our wonderful tea brands. In 2019, we also set out some very clear priorities for accelerating growth, and we call these our 5 growth fundamentals. These are proven means of driving growth in the consumer goods industry through an unrelenting focus on: first, improving penetration. In other words, deeper and wider usage of our products in more homes around the world. Secondly, more impactful innovation, leveraging the deep consumer understanding and world-class R&D capability that Unilever has access to. Thirdly, ensuring our brands show up in the right way, in the most important, fastest-growing retail channels that consumers are choosing today, including, of course, online. Fourthly, continuing our mission to put purpose at the heart of all Unilever brands; and finally, driving our efficiency program hard so that we generate the funds and the fuel needed to invest buying the many growth opportunities that we have. Already, by the early stages of 2020, it was clear that this refocusing of the business behind these 5 growth fundamentals was working. We were seeing growing household penetration of our brands and steadily increasing competitiveness in our market shares, as solid growth fundamentals will remain a key element of building an even stronger Unilever. However, over the last few months, we've had to face a very distinct and immediate set of challenges posed by the spread of coronavirus and the COVID-19 disease. Before I say something about our response, let me first be clear that this is, above all, a humanitarian crisis. Our hearts, therefore, go out to everyone who's caught up in this terrible ordeal. And tragically, that includes some of our own Unilever family. I regret to report that we have lost a small number of our Unilever teammates around the world to COVID-19. Now our response to this crisis, I believe, will be seen to have been swift and decisive. We've moved to quickly structure our response around 5 critical areas: people, community, supply, cash and demand. And I'll say just a few words on each. First, people whose safety and welfare has been our first and highest priority. We were one of the first companies, for example, to announce a global, indefinite, mandatory work-from-home policy for all of our office staff. And we moved quickly to put in place new protective procedures for our factories and our field sales operations. Within days, we also guaranteed jobs and incomes for our entire workforce for a minimum of 3 months, including extending that commitment to those not directly on our payroll, but who are an important part of our operations, such as our much-valued facilities workers. When it comes to people, we will go on doing everything we can to protect lives and livelihoods. In our community action, we've been guided very much by our multi-stakeholder model and our instinct to use Unilever's scale as a force for good. In addition to making EUR 100 million of hygiene and other products available to help in the fight against COVID-19, we have also partnered with the U.K.'s Department for International Development in rolling out handwashing campaigns to some of the most impoverished parts of the world, drawing on Unilever's unmatched insights into handwashing and how to drive positive behavior change. Significantly, as part of our broader effort, we've also made EUR 500 million of short-term cash flow relief available to support the livelihoods across our extended value chain. And this is primarily directed for our most vulnerable, small and medium-sized suppliers. On supply, our focus has been on maintaining the supply and distribution of our essential hygiene and food products. And here, our teams have done an incredible job keeping our factories running. There have been times when some of our factories have had to close, but only a few and none for more than a few days. Thank you to our frontline heroes in the factories, some of whom you can see here. On cash, even though we entered the crisis with a robust balance sheet and strong liquidity, we have nevertheless, taken the opportunity to ensure that we're managing our sources and uses of cash in the most disciplined way possible. This has included accessing the bond market earlier this year. And interestingly, our offering was heavily oversubscribed, a sign of what an attractive repository Unilever is in these difficult times. And finally, in responding to rapidly changing demand patterns, our teams have equally done a good job and demonstrated a level of speed and responsiveness that we hope will remain a hallmark of Unilever going forward. In home and hygiene, for example, we accelerated the launch of a new brand, Botanical Hygiene, in China, which combines advanced technology with the wisdom of nature to give reassurance on killing germs. In Italy, we created and launched a new professionals cleaning range under the much-loved Lysoform brand, especially targeted for professional channels, including medical facilities. In Brazil, we teamed up with Heineken, who were able to provide the necessary alcohol as a by-product from their alcohol-free beer to produce a special Cif hand sanitizer which was distributed in 210 favelas throughout São Paulo. Many of our categories and brands have moved quickly to replan their innovation, adjust to consumers buying in different channels and rework their brand communication to make sure that it remains relevant for today's changed circumstances. Lipton, for example, has encouraged everyone to stay connected by enjoying a cuppa together, but to do it virtually. [Presentation]

Although the impact of coronavirus has varied considerably across the world, depending on how far it's spread and the differing approaches of governments, some governments have moved than others. Some of them imposed severe restrictions at the outset. Others have taken a more gradual approach. And we've seen consumers reacting in very different ways. While there's been enormous panic buying in the United States and in parts of Europe, including the U.K., we have not seen an equivalent behavior in the developing world. All of this has required a very high level of agility and responsiveness on the part of our teams on the ground. And I want to pay tribute today to the many women and men of Unilever, especially in our factories, in logistics and in field sales, who have worked so hard to ensure our products reach the shelves. Although often operating under significant constraints and massively enhanced safety protocols, their actions have been, quite frankly, nothing less than heroic. And I've seen some of this first hand. The efforts of our people have included opening up new capacity where it's needed most. Let me give you just one example. Prior to the coronavirus outbreak, hand sanitizer was a small part of Unilever's portfolio. Yet over the last 2 months, we opened up more than 30 new production lines to produce hand sanitizers. And in the U.K., we converted one of our plants in just 3 days to support this effort. Our first priority has been to serve frontline health care facilities, to whom we've been donating bulk product. Now at a very varied nature of the way in which the pandemic is hitting, both across the world and across our categories. We saw that in our first quarter results for 2020, which we announced last week. Overall, flat underlying sales growth for the quarter, which I think represents a solid performance in such uniquely challenging circumstances. We were badly impacted by a decline in the global Food Solutions business as restaurants, cafeterias and cafés that, that business serves closed worldwide. And we saw a steep decline in out-of-home consumption of ice cream as many leisure locations and tourist destinations were also closed. The significant slowdown in the Chinese market during quarter 1 and the complete lockdown in India towards the end of March, which stopped production and shipping for a number of days, also impacted us. Now on the other hand, our handwash and home and hygiene businesses grew double-digit as a result of increased demand for household cleaning brands like Cif and Domestos. And an increase in in-home eating, so Hellmann's, one of Unilever's billion-euro brands, also grew double digits. And we did see a strong rise in our e-commerce business as many households shifted to doing their grocery shopping online. So overall, a decent start to the year, in some unusual and very challenging conditions. I'm delighted to say that earlier in the month, we also completed the acquisition of the health and nutrition brands, Horlicks and Boost, in India and in other parts of Asia. This is a wonderful on-trend acquisition with fantastic growth potential. As we look ahead to the remainder of the year and beyond, the only thing that seems certain right now is how uncertain the world will remain. But we're not fazed by that. We're well prepared. We've already shown in recent months just how agile and responsive Unilever can be. Moreover, we're able to draw on some of our inherent strengths, the experience of having lived through many crises in many countries in the past, crises from which Unilever has generally emerged as a stronger business. We're blessed with a portfolio of essential brands, arguably more relevant today than ever -- excuse me, ever before. Our financial stability [ is ] a source of great strength for the business. And above all, the resilience of our people and the quality of our management teams. For all these reasons and more, I'm very confident about Unilever's future. And that confidence was reflected in our decision to maintain our quarterly dividend payment, something that many others have chosen not to or been unable to execute. We see this as an important element of our multi-stakeholder model to one very important group of stakeholders, our shareholders. Thank you for your continuing support and for your trust in Unilever. It's something we value more than ever at this time. And finally, to the Unilever Board of Directors, my thanks for all the support, encouragement and wise counsel, which has been absolutely invaluable. And a special thanks to Nils and, before him, to Marijn for their very steady hands as Chairman in guiding me as still a relatively new Chief Executive Officer. Thank you, and back to you, Nils.

Thank you, Alan. And we now move on to the formal part of the agenda, and we start with the agenda item 1. And as usual, during this agenda item, we will have a full Q&A session on all matters related to any of the agenda items. We'll answer the questions that were submitted ahead of the meeting. In our website, we explained that questions needed to be submitted by 10:00 a.m. on Monday, the 27th of April, as I said before. And we, once again, want to thank everyone who did submit questions. Because some shareholders asked questions of a similar theme, I'll try to cluster these questions where possible. I'll start by summarizing the first set of questions and state the name of the shareholder or shareholder representative that asked the question. I'll then hand over to Alan, Graeme or any of my fellow directors to respond to these questions depending on who has -- is a natural choice. So we will start with the COVID-19-related questions as this is very much top of mind for all our shareholders and everybody in and around the company. This will be followed by remuneration-related questions, and we will then move to sustainability, followed by financial performance. We'll then discuss specific business-related matters before finally hearing questions and responses regarding audit-related matters. So let's start and first have Alan address COVID-19-related questions, and there are several of those. First, we have a question from Eumedion, who are appreciative for the awareness of the broader societal and economic responsibility that Unilever has shown in response to the outbreak of the coronavirus crisis, but would like to understand the following relating to consumer behavior, e-commerce and targets. So there are 3 questions here. Firstly, you indicated that you expect to see consumers turning to bigger, more familiar brands in crisis time. Would that be of influence in the longer-term strategy of Unilever? Also, can you share something on the influence of the outbreak on the shift to e-commerce as a possibly higher strategic priority for now and in the future, and how well Unilever is positioned for this? And finally, would the current crisis lead to adjusted targets for Unilever's management team? Alan, would you take these questions?

Thanks, Nils. Well, look, the expansion of purposeful brands that consumers can connect to us on many levels, is an absolutely core part of Unilever's strategy. And the impact of COVID-19 on consumer behavior is showing that in times like these, times of crisis, consumers do indeed turn to the brands that they trust. Purpose is one of our 5 fundamental drivers of growth, and we absolutely intend to keep this as part of our long-term strategy, ensuring that all of our brands have a purpose, communicate this purpose to consumers and take action accordingly. To your second point, e-commerce grew very well in quarter 1 by 36% globally, as we have seen a pickup with consumers moving to online grocery shopping during the COVID-19 pandemic. Of interest, China grew by 34%. And the U.S. grew by 100%. Now a focus on growth channels, as I mentioned, is one of the 5 growth fundamentals. E-commerce is certainly one of them, and we intend to keep prioritizing that channel. And I'm only going to make a short comment on targets, which is that depending on how long and how deep the COVID-19 pandemic impact is on the business, our Compensation Committee will use its ability to exercise discretion to decide if any vesting of the bonus is appropriate. And with that, I'll hand back to you, Nils.

Thank you, Alan. The next set of questions related to COVID-19 come from VEB, who referred to the Q1 2020 results presentation, in that during that presentation, Unilever stated that it expected customers to shift to more valued price brands during the economic downturn. They ask whether Unilever believes this downtrading to be only a temporary effect, or will it have longer-term impact result of less spending power by consumers and new habit formation. And also that should this downtrading indeed persist for a longer period of time, what action plans can Unilever put in place to mitigate the impact on the company's financial performance? VEB would also like to understand that apart from CapEx, brand and marketing investments as well as research and development spend have been trading down over the past years, although BMI was slightly up again in 2019. Does Unilever foresee that due to COVID-19 and the longer-term consequences, these investments will decline further? Alan, would you answer this, please?

Sure. Well, look, it does seem like a global economic downturn seems absolutely inevitable. The depth and length of the crisis and which countries are hit the hardest remain unknown. However, our mass portfolio in Unilever is very well positioned, and our products do capture the full spectrum of price points. Actually, this is an inherent strength of Unilever's portfolio. We have been through recessions before in many countries. For example, in the last recession in Brazil, which was only in 2017, 2018, we launched several new brands to allow consumers to trade down if they wished. And actually, they've been very successful. A couple of examples: Brilhante in laundry cleaning and Home Care; and Suave in Personal Care, particularly deos. And this way of offering products at lower price points is a repeatable model for the rest of the business. In relation to brand and marketing investment, yes, we are dynamically reallocating that money in response to the crisis. As you might expect, we are reducing our spend in, for example, out-of-home ice cream or food solutions. But we've also been identifying key businesses where we need to ensure that resourcing is strong to support consumer demand right now. And that the [ more ] of that includes all of our hygiene categories, handwash and surface cleaning soaps, resource for brands like Lifebuoy, Domestos, Cif. But also in in-home eating, more people are eating at home. And so brands like Knorr, we're making sure are well resourced. One thing that may not be clear to everyone is that media rates have been dropping quite significantly in the last few months. And so we are very often able to secure more media weight for the same amount of investment. I should also add that we are 100% committed to competitive investment in R&D. And in the last year, actually, we have opened our latest state-of-the-art R&D facility at Wageningen in the Netherlands itself. With that, back to you, Nils.

Thank you, once again, Alan. And we have another COVID-related question or questions from Dutch shareholders' association who asked a question related to our capital expenditures. And they note that Unilever's capital expenditures have gradually declined over the past years. In light of COVID-19, Unilever recently stated that CapEx spend will be reevaluated. Could you be more specific on this, also given the fact that cost savings have been and are expected to be significant, potentially freeing up resources? Shouldn't that provide room for additional investments? They would also like to understand more around risk assessment in the COVID-19 environment. They say that in the 2019 Annual Report, Unilever states that for the 14 principal risks, worst-case possible scenarios have been performed. They assume that a global pandemic has not been part of those such worst-case scenarios. Therefore, the questions are: firstly, should Unilever elaborate on scenarios and stress tests that have recently been performed as a result of the outbreak or [ COVID-19 ] pandemic? For example, with respect to changing consumer behaviors and preferences, the impact on our pricing strategy going forward, a disrupted supply chain and their respective impact on Unilever's financial performance. Secondly, Unilever also assessed -- could Unilever also assess whether the 14 principal risks have changed compared to previous years? Should this assessment be made again today, for what principal risk factors would the risk trend change and why? Thirdly, Unilever has stated that it's accustomed to operating through downturns. Consensus, however, by now is that this downturn cannot be compared to previous downturns. What gives Unilever comfort that it'll be both be able to perform satisfactory during this period as well as emerge stronger from it? Alan, would you please respond to these questions as well?

Well, that's a comprehensive set of questions. I'll try to give a comprehensive answer. And I'll start with a question on CapEx. So certainly, since the crisis began, we have been reevaluating all of our capital spending to ensure that it's both relevant and appropriate to the times. And this includes our entire cost base, all of our CapEx and restructuring spend. Shareholders may be interested to know, we currently have a hiring freeze, we have a worldwide travel freeze and our consultancy spending has been cut. We're also making savings in some elements of brand and marketing investment, where things like advertising production has been dramatically reduced, and there's been a decline in media rates. In addition to this, our regular savings programs continue to operate. So on an ongoing basis, it is important that we keep finding fuel for growth in the business so that we can put the necessary investment behind our brands and also help to cover any commodity cost increases. I'll answer the second question in 3 parts. This is about risk. Certainly, plausible worst-case scenarios in our risk matrix don't specifically call out a global health pandemic, but it does include risks that have got a sizable reduction in sales as a result of changes in consumer habits. And we also considered significant disruption in our supply chains. Now COVID-19 is having a multitude of impacts on all parts of the business. And so we are continually planning and replanning for the future as this situation evolves. As I mentioned earlier, the plans are being run across 5 areas: people, communities, supply chain, cash and meeting new demand patterns. And we're continuously developing scenarios and plans that cater to the different possible eventualities, including potentially permanent changes in consumer behavior and customer preferences as well as permanent changes on how our supply chain might work. Now you may have noted that in quarter 1, we withdrew our outlook for the year, and that's precisely because there are many unknowns, including the severity and the duration of the pandemic as well as how individual governments and regulators will respond. And we simply cannot reliably assess the impact across the business. And so we do have a number of scenarios, but honestly, they change on a daily basis. To the second point of this question, we do continually assess the risks, and we'll be updating our view on the principal risks to the business regularly. The pandemic is not fundamentally changing the purpose or nature of Unilever's business. In fact, the key risks remain very much the same, but the severity and likelihood of some risks has increased in the last couple of months. And in times like these, the principle that we work to is that agility and responsiveness in the company is more important than predictive ability and locking in on one scenario. And so to the final part of the question about what gives us comfort. Well, our multi-stakeholder model, purpose and our commitment to sustainability, we feel are even more relevant for managing through a human crisis than in normal times. The quality of our leadership teams is a huge asset and allows us to make decisions close to the ground. I sleep well at night knowing we have experienced leaders leading our businesses in the markets around the world. We have a broad portfolio of essential goods and trusted brands across the spectrum of price points. Financially, we're extremely stable, and we have taken appropriate measures to preserve cash and to ensure that we're able to pay our dividends. We have an experience base that shows that crisis in emerging markets usually favors Unilever's business, and we're working to our 5 fundamentals, important principles, which we've seen remain relevant throughout this crisis and beyond it. And so those are the ways that we're dealing with this enhanced level of risk and uncertainty. And with that, back to you, Nils.

Thank you, Alan. And we now come to the final COVID-19-related questions, and it comes from Henk Rienks and is as follows. He points out that the press release of 23rd of April 2020 states that now that the hospitality industry has closed large parts of the world, sales of our ice cream have shrunk enormously. How do you assess the impact on your ice cream plants? Are you applying for government support for these factories, if that is possible? Finally, are you taking the opportunity for a reorganization of ice cream production, fewer but bigger factories? Over to Alan again, please?

Actually, Nils, I'd like to start by addressing the second point of the question first, which is we are not applying for government support for our factories or workers at this time. In relation to the impact on our ice cream factories specifically, whilst we've seen negative impact on our out-of-home business, we have seen positive signs of growth on our in-home consumption parts of the ice cream portfolio. Now the overall positive impact is around 15%. But we've seen 25%-plus decreases in out-of-home. Now the situation is very different in different markets. And while we haven't seen a major impact in North America, we're seeing a huge impact in Europe. So we're continually balancing supply to the forward-demand signals so that we can meet consumer requirements as consumption behavior changes. We've also been creating considerable flexibility in our manufacturing operations for some years. Almost all of our ice cream factories produce for both in-home and out-of-home. And although the current change is more dramatic than in previous years, we're used to that type of flexibility. Now having said that, it is worth considering that the high season for ice cream in the Northern Hemisphere is July and August, and it's still to come. So right now we're preparing for a higher proportion of volume to come from our in-home business, and we're seeing people still want to enjoy ice cream at home. And we're making the necessary changes to adapt. So to your final point around would we be looking to reorganize our factories, the short answer is that it's way too early to be making decisions about changing our strategic manufacturing footprint. Back to you, Nils.

Thank you, Alan, and let's hope that we -- that people really want ice cream when they come -- we come out of this crisis, so we can sell lots and lots out-of-home. So this concludes the section on COVID-19. And we'll move next to remuneration-related questions. Vittorio Colao, Chair of Unilever's Compensation Committee, will take these questions. Because these questions are around a similar topic, let me read them both to you first. And then you will hear -- and then we hear your answer, Vittorio. First, from Eumedion. Unilever will propose a new remuneration policy at the AGM of 2021. Are you aware the revisit -- are you aware that the revisited Shareholder Rights Directive and its implementation in the Dutch context require 75% approval of the AGM and requires companies to incorporate how they take societal considerations into account? So a, could you reflect on how Unilever plans to organize the needed support? And two, is the total height of the executive compensation, sometimes referred to as quantum, something that Unilever considers part of the societal consideration? The second question asked is from VEB. It's similar. It -- namely, that this year's AGM agenda does not include an agenda item with respect to a binding vote on the directors' remuneration policy. However, the recently implemented Shareholder Rights Directive in the Netherlands require companies to put the remuneration policy to vote at the 2020 AGM. Unilever is the only Dutch-listed company that has not included this item on the AGM agenda, indicating it wants to maintain the 3-year cycle for renewal of the remuneration policy. Why would this 3-year cycle as referred to prevent Unilever from putting the remuneration policy to a vote already this year? Also in the VEB's view, enabling shareholders to vote on the current remuneration policy this year does not prevent Unilever from putting a potentially revised policy to vote next year. The Compensation Committee refers to an extensive consultation with investors and representative bodies. Could the committee elaborate on the feedback received by investors, among others, with respect to the performance measures and a vote of the -- on the remuneration policy in the 2020 AGM? Vittorio, it's several questions, and there are 2 questions with some variations to it. Could you please respond?

Thank you, Nils. Let me try to respond to the main blocks of the questions. So I will start with the Eumedion one. Later this year, we will reach out to our stakeholders for future guidance in light of the remuneration policy renewal that we have to pass in 2021. And I would say, as always, we welcome further input into this process, including on the matter that -- of the quantum matter that Eumedion refers to. We will further investigate how we can best approach the level of support in society for our policy renewal. We will also look at what is best practice in the Netherlands specifically and how other companies have approached this topic in light of their own policy renewals. In general, as I said in many meetings with investors, we look at all aspects of our policy to see what works in the context where we are and what doesn't and, therefore, what needs to be amended. And of course, in reply to the Eumedion question, we will look at all elements of the policy. Now you need to take into consideration that our policies do not only apply to the executive directors, but also to all of our 14,000 employees, managing employees. Therefore, the society considerations are deeply embedded into our process of setting up a new remuneration policy. Let me give you an example. From the lower work levels, we received some concerns that the current long-term incentive plan, what we call the MCIP, is linked to the annual bonus, and it's solely linked to it. Therefore, we are now looking if delinking would be a possibility for such work levels. In response to the VEB question, the Netherlands has implemented the Shareholder Rights Directive with effect from 2020. And the new reporting requirements actually more closely align the Dutch Regulation with what we already report under U.K. Regulations and the U.K. Corporate Governance Code. Therefore, the key provisions of the SRD were already in place at Unilever, including the annual advisory vote on the implementation of our remuneration policy for the N.V. shareholders. Our policy already complies with the SRD, and we have taken into account the views of our employees and the level of support in society in our current remuneration policy. For example, the Unilever Sustainable Living Plan is an integral part of our corporate purpose as it's set out in the governance of Unilever. Through the USLP, which I remind you, was established in 2010, and our values of integrity, respect, responsibility and pioneering, Unilever has established a strong multi-stakeholder model and a track record of taking societal consideration into account in everything we do, so not just in remuneration. The cornerstone USLP, the Unilever Fair Compensation framework, which forms part thereof, are explicitly reflected in the remuneration policy. The use of the employees are captured through the SLP living wage level goals, the internal Unilever survey and through the new reward framework consultation. And the sustainability progress indents strengthens the link between remuneration policy and Unilever identity strategy and value as it has been made a key performance metric of our MCIP plan, the weight is 25%. So in our view, the element of societal support forms part and parcel of the current remuneration policy. And so there is no need to table the policy for a vote to the 2020 AGM. But it's also, I think, important that we maintain the 3-year cycle in both the NV and the PLC, so the shareholders will have a vote to -- an opportunity to vote at the 2021 AGMs in both companies. To the second part of the VEB question, the consultation we had with shareholders represented 14.5% of the combined share capital of Unilever NV and PLC. The invitation were based on the size of their position in Unilever and also their level of focus and interest on the topic of remuneration. And the consultation process also included the proxy advisory agencies. In terms of feedback, investors were positive about the consultation. They appreciated and supported the topics being raised, among others, the change in measurement of performance measures and the vote on the remuneration policy in the 2020 AGM. Over to you, Nils.

Thank you very much, Vittorio. We will now move to sustainability-related questions, and we also have a -- gender pay gap-related questions will cluster here. The first comes from Eumedion and is -- and the remainder of the questions come from VBDO. Through the last years, there's a high variability to the extent to which Unilever's nonperformance -- nonfinancial performance targets were met. The targets that Unilever has more influence are beyond -- are being met quite well, like the target on, for example, nutrition, where other targets more outside of your influence stay behind, like the target on GHG per consumer use. What does Unilever do to increase influence on the sustainability targets that you have set? Do you consider your current nonfinancial targets as logical and feasible? Do you see a need to change the targets next year, for example, by changing the nature of the targets to targets that are more within your influence? Alan, could you please explain or respond to these questions?

With pleasure, Nils. So it's a good question. And it's true that we have some targets that are directly in our control and some that we only have indirect control on. And where a target falls outside of our direct control, we do work together with others to try to accelerate action and this can take the form of direct advocacy to governments through coalitions like We Mean Business on climate change and also partnerships where we develop and deploy solutions to specific problems, such as the Tropical Rainforest Alliance's work on deforestation. On the second part of the question, the USLP included a number of targets, such as the target to halve greenhouse gases used per consumer use of our products, and those cut right across the value chain. And delivery there is not entirely within Unilever's control, and this was deliberate. We believe in several areas like climate change that the world now needs to see transformational change at total systems-level and a characteristic of systems change is that no single actor in the economy or society can drive that change alone. And the UN Global Compact, together with the World Resources Institute and the We Mean Business Coalition, have developed this concept of ambition loops, where different stakeholders combine ambitious targets and public policy advocacy that will help government to raise their own climate action. So yes, sometimes, this means we don't show as much progress on targets like greenhouse gas emissions as we would like, but it's also a reflection of the fact that the world has been slow to act on climate change over the last decade. And our belief is that we must all take collective responsibility for that, lean in and address it. There's no point in being a successful business in a failing world. Of course, we have subsidiary targets to support our headline targets, such as the percent of our palm oil bought through sustainable sourcing and a percent of electricity bought for our factories from renewable sources. Not all of these are reported in the annual report and accounts, but rather through our online Sustainable Living Report. Retaining targets that span our whole value chain has allowed us to remain connected to the bigger picture, to prioritize our advocacy efforts such as supporting the UN COP negotiations and to make calls for faster climate action. So we believe, in aggregate, that our targets are more or less the right ones. And over the longer term, they're feasible, recognizing that systemic issues often move a bit more slowly and the connection between advocacy actions and real-world results sometimes is not immediately invisible -- is not immediately visible in the year-on-year reporting of, say, the decarbonization of the energy grid. But we have no plans to change our approach of having targets within our control and targets that require system change at the present time. Nils, back to you.

Thank you, Alan. And let me add that environmental and social responsibility is really part of the Unilever identity. And the Board and Supervisory Board spent significant time on working with the targets and working with how the targets are measured and how the reporting can be audited best possibly. So it is a real company overarching part of our work. To begin the questions from VBDO, we have the following. In 2019, Unilever procured 70% of its products in line with the provision under the Responsible Sourcing Policy. Important features in that policy are that suppliers are not only audited, but capacity development and continuous improvement is strived for together with Unilever. In the Corporate Responsibility Committee's report, in the annual report, it can be understood that Unilever began preparation for a new approach, Responsible Sourcing Policy before purchase order. Meaning that a supplier must first be compliant with the RSP before Unilever can purchase goods. While this would ensure Unilever reaches its target to source 100% responsible, it could mean that suppliers with a large potential to change are now left without a buyer for their products. Did Unilever assess how many suppliers will not be purchased from? And how will Unilever continue to build the capacity of suppliers who fail to comply with Responsible Sourcing Policy to ensure better working conditions for all? Alan, could you please respond to this?

Well, I think that's a very responsible question, if I may say, about our responsibility policies. We have embarked on a sourcing journey. And we certainly don't -- never saw our Responsible Sourcing Policy as the end of that journey. We're going to continue to work with all of our suppliers to find new and improved approaches to existing challenges that arise within our supply chain. We're going to respond to the ever-changing and ever-challenging environment that we operate in. This RSP, Responsible Sourcing Policy, before a purchase order approach does make our suppliers aware of some of the nonnegotiable and preliminary requirements that they need to meet in order to do business with Unilever. It also allows us to identify gaps and where capacity building is needed in what is a cooperative and proactive way. So we're always monitoring the performance of our suppliers against the requirements of our Responsible Sourcing Policy through a dashboard, and that dashboard is available to all of our procurement managers. It can be analyzed at a global level or right down to an individual supplier at a local level. We also provide suppliers themselves with a console that shows their Responsible Sourcing Policy status, alongside their performance on other metrics like quality, value and service delivery. And to answer the question bluntly, we do work collaboratively with our suppliers on this issue. Actually, it's in both Unilever's and the suppliers' interests to work towards remediating issues that will lead to any purchase order being blocked and to continue to work with an existing supplier, ensuring that we've got both better working conditions for their employees and a better ongoing business relationship. And so it's our opinion that improving the working conditions for employees in our suppliers does lead actually to a more profitable and sustainable business for them. So the short answer is it's not binary, we don't shut suppliers off immediately, we give them continuous feedback, and we have an intelligent and collaborative approach to helping our suppliers meet our responsibility code. Back to you, Nils.

Thank you, Alan. On the gender pay gap, VBDO asked -- or actually notes that they would like to congratulate Unilever with reaching gender balance in management positions. And they also recognize Alan Jope's words in the annual report that this is a job still half-done. And they note that, among others, gender balance is not reached in higher management and executive levels. In addition, Unilever does not publish its gender pay gap nor has it equal paternity leave for parents. These are all actions to ensure the parity between men and women, and here comes the question. Is Unilever willing to assess and publish its gender pay gap on 3 levels: workforce, management and executive level in the annual report or sustainability report of 2020? Alan, could you please answer these questions -- or actually 1 but 3 levels?

Well, first, thanks for recognizing the progress that we've made on ensuring that women are properly represented throughout Unilever. And I'm sure it won't have escaped your attention that of the 10 nonexecutives that are up for election at this AGM, it's 5 men and 5 women. The gender pay gap measure is largely a matter of female representation. And we know that there's work to be done on increasing female representation at the most senior management levels inside the business. That is my priority. On the flip side, we also have many countries where we've got a very positive pay gap in favor of women because they're underrepresented at the lower-paid manufacturing roles. What we know from our own internal study of the matter is that the gender pay gap tends to neutralize when we get equal representation of men and women across the workforce, and that's really the primary goal that we've been working to for many years. In terms of publishing our figures in the way you suggest, actually, the numbers are impossible to compare across countries. Each has a discrete labor and pay market and organizational unit within Unilever. But it's something that we're actively reviewing for our top 10 or 15 countries because we want to address and be open on the more equal representation of men and women in our workforce at all levels. Back to you, Nils.

Thank you very much. And the next question from VBDO relates to climate change. And I look to Graeme to answer this one. And they start by complimenting Unilever. Thanks for that. And here it comes. It continued to implement the TCFD's recommendation by conducting a climate change scenario analysis for black tea under 2°C and 4°C global warming scenarios. In addition to the already published soybean analysis in both scenarios, sourcing prices go down from Europe, and there's no impact identified for product availability by 2030. While price impact and product availability are interesting from a financial point of view, they are not from a sustainable point of view. Is Unilever -- here comes the question. Is Unilever willing to start analyzing next to the financial impact of climate change a real-world impact of climate change, e.g., the impact on livelihoods for its smallholder suppliers under various scenarios and add this information to the TCFD disclosures? Graeme, could you respond to this, please?

Certainly, Nils, and thanks to VBDO for the question in the important area of TCFD reporting and indeed scenario analysis. Now the intended purpose of Unilever's TCFD reporting is to provide climate-related financial disclosures to Unilever's stakeholders. And it is, of course, possible that climate change, under any temperature scenario, could have impacts, including adverse effects on smallholder farmers. But unless those impacts also result in a financial impact for Unilever, for example, through a risk to our continuity of supply, they would not necessarily be picked up in our TCFD analysis, and that is really just a feature of the way in which the TCFD requirements are structured. But as your question implies, this does not, of course, mean that these impacts are unimportant and shouldn't therefore be better understood. However, challenges to farmers, including smallholder farmers, from rising global temperatures are unlikely to be specific to Unilever's own value chain. Therefore, we may well seek to rely on independent third-party assessments of this generic risk. For example, the IPCC assessment reports on climate impacts would help, and we would use those to inform both our policy and our practice. Back to you, Nils.

Thank you, Graeme. Here's a little bit more for you. These -- the next 2 questions are from VEB and also directed to Graeme. Firstly, in the risk paragraph included in the 2019 Annual Report, Unilever no longer mentioned its pension liabilities with respect to the defined pension benefit plan as a part of its principal risk factors. Current market turbulence with lower investment returns as well as lower expected returns on planned assets change Unilever opinion on this risk factor. Please explain. And that was the first one. Secondly, does Unilever expect the pension deficit to increase further this year compared to year-end 2019? What measures can Unilever take to mitigate this risk and stabilize the defined benefit plan? Could this be in form of additional cash funding provided to the pension plans? Graeme, could you please respond to these questions?

Certainly, Nils. And thanks to VEB for picking up the important subject of our pensions. Ensuring that appropriate funding is available to meet pension cash funding requirements is indeed a risk given the movements in pension assets and liabilities can be quite volatile. So this needs to be carefully managed, and that's what we do. In the past, the potential amounts of funding that might have been needed were significant. And so at that time, we highlighted the pension risk as one of our principal risks. Over the last few years, however, a combination of sound management of our pension plans and economic returns have meant that the situation has improved. And therefore, there were other business risks that were more significant and so pension liabilities were effectively downgraded from being one of our principal risks. Now of course, markets have been extremely turbulent recently, and we have seen significant ups and downs since just the year-end. As of today, for example, the pension assets have decreased in value, but the estimate of the pension liability has also decreased. Our defined benefit funds are very long-term investors and short-term market fluctuations do not immediately impact the long-term investment strategies that we and our trustees of the plans have set. Now we have agreements with most of our funds, and that provides for periodic reviews of the cash funding. They are generally yearly or 3 yearly reviews, and the timing of those are not impacted by market movements. Therefore, as we stand today, we would not regard the current situation as needing us to upgrade our pension risks to one of our principal risks, but obviously, that situation can change. And so we'll be keeping this matter under close review. Now we're unable to forecast what the market will do and what the investment performance will be. And that means that we cannot really estimate what the deficit or surplus for pensions will be at the end of the year. None of our big funds are due to be valued for contributions -- cash contributions payable this year. So it's unlikely that there will be any unforeseen cash contributions during 2020. Back to you, Nils.

Thank you, Graeme. And secondly, Graeme, and also from VEB is the following. In its report, the Audit Committee mentions that during this year, the U.K. Financial Reporting Council, the Netherlands through the Autoriteit Financiële Markten and the U.S. SEC, Securities and Exchange Commission, regulators ask Unilever to respond to a number of technical disclosure questions. Could Unilever provide some more details into the specific inquiries made by these regulators? As example, what technical disclosure did these regulators have? The AFM inquiry has not yet been closed. These -- this is the Netherlands Authority. What does this inquiry relate to? Graeme, over to you again.

Thanks, Nils. I think the first thing to say is that we have a very, very constructive relationship with all 3 of the regulators, such as the FCA (sic) [ FRC ], the AFM and the SEC. And as part of their usual procedures, these regulators, they periodically review the annual reports of all listed companies, including those of Unilever. During 2019, we received so-called comment letters from all 3 of the regulators. None were particularly long, but they inquired about certain technical disclosure matters, for example, our segmental reporting choices and the rationale behind those choices. The specific AFM inquiry that the VEB question references also related to segmental reporting. And I'm pleased to note that the AFM inquiry has recently been closed. Examples of the disclosure changes that we will make are to provide a turnover split between developed and emerging markets and to split our Americas segment turnover out between North and Latin America. Back to you, Nils.

Thank you. Moving on to business performance. We have further questions from VEB, and I'll ask Alan to respond to these. The Prestige beauty portfolio is predominantly exposed to the U.S. What has hinted Unilever so far from extending the footprint of the Prestige business in -- more into Europe, China and North Asia? And what are the growth opportunities in these regions? What actions need to be taken so that Prestige beauty products can be increasingly sold through e-commerce channels? Alan, can you please respond?

Sure. Thanks, Nils. Well, first of all, a reminder that our Prestige beauty business is still a young business for Unilever. We've only been in this segment for a few years, and it's been very successful. About 1/3 of the Prestige portfolio currently is outside the U.S. and for some brands, it's much more than that. At the moment, we've made the decision not to fully enter China because of the animal testing rules that are currently in place. And that's in line with the principles of cruelty-free status of many of the Prestige brands and of Unilever overall. Therefore, we only use the cross-border e-commerce route into China, which these rules do not apply to. Now there is some draft legislation which has been published in China on changing animal testing rules. When that change is made and we can operate our brands in China as truly cruelty-free, then of course, we'll reevaluate those opportunities. It may also -- I think it's not insignificant that the 2 examples of portfolio acquisitions that I made earlier in the presentation are: Garancia, a French-based prestige luxury beauty brand; and Tatcha, which is Japanese-inspired beauty. Now e-commerce is already a very, very strong channel for our prestige brands and during the current coronavirus times, we've already seen improved sales and actually a marked shift in that business towards e-commerce consumption. So good question, and I hope I give you a sense of the direction of travel, both geographically and channel-wise for our Prestige business. Back to you, Nils.

Right. Thank you, Alan. And another question from VEB is the following, and it's -- well, a lot of questions were related to the specific area of the wellness -- our new focus area, of the wellness and personalized nutrition segment, meaning vitamins, minerals and supplements. And here comes the questions. Unilever is one of the FMCG companies that is actively pursuing M&A in this segment. At the same time, one might argue that Unilever is somewhat late in identifying the attractiveness of this segment. Could you please comment on this timing aspect? B, could Unilever elaborate on the progress made and possibly setbacks encountered since Equilibra and OLLY were acquired? C, what does Unilever consider to be the critical success factors for acquisitions in this segment in order to deliver attractive returns on our investments? What is the critical mass Unilever expects to need in this segment in order to be able to realize economic profit? And finally, does Unilever expect valuations in the personalized nutrition segment to become more attractive in the coming period? So quite a number of questions related to this segment. Alan, over to you.

Yes. Thanks, Nils. Let me try to put some of the parts to this question together and give a holistic answer. We were very public on the criteria that we've been using to evaluate our portfolio. And those criteria cover things like where there's a potential for high growth. Secondly, is it big enough? Is it a big category for Unilever to potentially play in? Thirdly, is it future-facing? Is there emerging market growth potential? And is it technology- and marketing-sensitive, in other words, not commoditized? And lastly, is it unconsolidated where Unilever might have a right to play in the space? Now vitamins, minerals and supplements really fits the criteria of the type of business that we're looking at in that it's high growth, it's technology- and market-sensitive, and it's a very, very large category. Having made some initial moves to learn through the OLLY acquisition in the United States and Equilibra in Italy, we do believe the time is right to look in a wider way at vitamins, minerals and supplements. And I should add that in contrast to the question asked about what setbacks we've had, actually, we're absolutely delighted with the progress that OLLY and Equilibra have been making. And that only goes further in current crisis situation where the nutrition and wellness benefits of these brands seem to be particularly relevant for people. So we're thinking about the potential of VMS in the same way that we were thinking about Prestige a few years ago. And of course, we will assess all potential acquisitions through our lenses of strategy and our disciplined valuation models when we put together the business case. So thanks for the question. And back to you, Nils.

Thank you again, Alan. And VEB's final question in this segment is as follows. Portfolio changes form an important part of Unilever's growth strategy. However, according to the annual report, some acquisitions in recent years haven't performed as well as expected. Could Unilever elaborate on the root causes why several acquisitions like Blueair and Murad have fallen short of expectations? And more, Unilever also realized -- mentioned -- recently mentioned that several interventions were needed to improve performance of certain acquired businesses. Could you please provide some more details on this? In what specific ways has Unilever applied the lessons learned from less successful acquisitions, both with respect to its acquisition process and framework for evaluating potential acquisition candidates as well as for unlocking a company's potential after the acquisition has been completed? Alan, could you please respond?

Well, we certainly welcome this question from VEB. But let's just step back a moment. We've made 35 acquisitions since 2015 and 11 disposals. So that's an overall portfolio change of around EUR 22 billion, which is, of course, quite significant. At our Capital Markets Day, our investor event in November, we said there would be a slower pace of acquisitions and that we would be more active and strategic in making disposals where we find ourselves operating in structurally lower growth segments. Our evolving portfolio has been taking us into higher growth segments. And in making 35 acquisitions, of course, it's no surprise that we've had some absolute standout successes and others that have been at the other end of the spectrum have been less successful. So Blueair, our air purification business, was negatively impacted by -- actually a positive thing, which was the improving air quality in China. And we, of course, wholly support the actions of the Chinese authorities to improve air quality. We had to adapt our business model, and I'm pleased to report that actually, Blueair is now back en route good growth. Murad was very dependent in the United States on selling through the infomercial television channels, and that's turned out to be a slower growing channel. But Murad, by contrast, is doing well in big retailers like Ulta and Sephora. More generally, let me make the point that -- about interventions that we make when we acquire a business. Sometimes, we fully integrate them. And other times, we leave the businesses to run as more stand-alone or separate units, but we always have strong oversight mechanisms for our acquisitions. As with any other -- any business, sometimes these oversight mechanisms, the people who are keeping an eye on the acquisitions, need to play a bigger role in helping the acquired business to define that strategy for the future. Now in terms of lessons learned, we're clear on which types of businesses, what business models and what acquisition integration strategies work and which ones work less well. But there are multiple models. So for example, Prestige, which is not integrated into our mass market operating companies, but which has an overall layer of management looking across all of our Prestige brands, has been working really, really well. And the other end of the spectrum, Quala, which we acquired in Latin America, but was fully integrated into, especially our North Latin American business, that full integration model has worked well. So it's not one size fits all. We will take an intelligent, nuanced approach to how we acquire and what -- how we integrate businesses. Back to you, Nils.

Thank you, Alan. And then we have another performance-related question, this time from Henk Rienks. And he starts with pointing out that we say in our press release of January 30, 2020, that growth was weak in hair care with high competitive intensity in the growth hotspot of the U.S. Furthermore, there was continued pressure from local players in China. So that's the context. And here comes the question. Is it a solution to try to take over one or more of these local players in China? Or could a significant price cut help win the battle in that country? Or is it perhaps wiser to leave the market for hair care in China? The problem in the U.S. states -- or in the United States, what solutions do you think they are? And third, how is your hair care in Europe doing? Do you have the desired growth there? And these are all questions for you, Alan. Please give your best shot.

Well, thanks, Henk. Of course, this is the excitement of consumer products that things ebb and flow. And in China, there was one particular local brand that had been gaining share from Unilever and from other multinationals. However, I want to underscore that we remain a very, very strong player in the Chinese hair care market. We have no intention of backing down. And we're focused on building and supporting our big brands there such as Lux and Clear and, of course, Dove hair care. And we're also supporting actually the launch of a new brand, Love Beauty and Planet, into the Chinese market. In the U.S., we remain the market leader in hair care. We've seen tremendous competitive intensity in this market with more investment and innovation in the last 9 months or so. The market share losses that we were seeing in the middle of 2019 have stabilized. We even started to see market share gains across our portfolio of great brands like Suave, TRESemmé, Dove hair care again and Sundial. Now Europe is actually one of the smaller hair care businesses for Unilever. And there are brands like TRESemmé, VO5 Styling, TIGI, Dove and Sunsilk are doing fine. We're satisfied with the progress there. It's a small business, but it did deliver good volume growth in 2019. Back to you, Nils.

Okay. Thank you, Alan. And Henk Rienks has also submitted a question related to our -- to The Vegetarian Butcher. And he starts with quoting us, you say you are proud to report that the collaboration between the Unilever teams for the development and sale of products and this company, acquired last year, has already led to success in a short period of time. And here comes the question. Does this also apply to Unox vegetarian products? Do you keep selling these? How is the Breda factory doing? Will it remain open? Will it be expanded? Or do you opt for production in other Unilever factories or outsourced -- outsourcing, for example, to Zwanenberg? How big do you consider the opportunities for these products outside Europe? Is the United States and key emerging markets such as China and India, are they potentials? And also here, Alan, a question for you.

Well, let me answer the first part of the question very directly. Yes, this does apply to Unox' vegetarian products. We've got 11 of these on the market, including things like smoked pork sausage, patties, stews, vegetarian meatballs, the Unox Knaks. They're all successful, and we will continue to sell them. In relation to Breda, this is a beautiful factory where a significant part of our vegetarian -- vegetable products are made. Fortunately, the strict measures that we've imposed in the current coronavirus context have proven to be effective. All our people there are healthy and safe and the factory continues to run well. For the Rebel Whopper, which we began selling in Burger King last year, we do use a third-party manufacturer in Europe. And just to add, it's now being sold in 26 European countries and we're more than happy with the performance of the Rebel Whopper. To the last part of the question, more and more people are acknowledging the health and environmental benefits of a more plant-based diet. And we can see if you ponder upon that, there's an appetite for our products in many countries outside of The Vegetarian Butcher's home market in Europe, but also many countries even outside Europe like Korea and Japan. Now Jaap Korteweg, the founder of The Vegetarian Butcher, has always said that he has this wonderful, huge ambition to become the biggest butcher in the world. And I'm happy that we at Unilever can now help him make his wish come true step by step. Nils?

That would be great. And for the next couple of questions, I'd like to hand over to the Chair of Unilever's Audit Committee, John Rishton, he'll ask the questions and discuss with KPMG as well. Over to you, John.

Thank you, Nils. We now have 2 final questions from the VEB, which are intended for KPMG. We invited Jurgen te Nijenhuis, partner at KPMG to respond. The first question relates to how management override of controls as a fraud risk was addressed by KPMG in its audit procedures. Jurgen, can you please respond?

Thank you, John. Good morning, ladies and gentlemen. My name is Jurgen te Nijenhuis, and I'm the independent external auditor who signed the auditors' report on the 2019 financial statements on behalf of KPMG. First of all, I would like to thank you for the questions you raised. In accordance with the Dutch auditing standards, we are responsible for obtaining a reasonable assurance that the financial statements, taken as a whole, are free from a material misstatement that are caused by fraud or by error. We do note that the audit is based on procedures described in line with the applicable auditing standards and are not preliminarily designed to detect fraud. Based on the auditing standards, we addressed 2 fraud risks that were relevant to our audit. The first one is revenue recognition, and the second one is management override of controls. Based on our analysis of fraud risk factors, we have not identified any additional fraud risks. Our procedures included an evaluation of the design, implementation as well as the operating effectiveness of internal controls relevant to mitigate these risks. We also performed substantive audit procedures. These include detailed testing of high-risk journal entries and the procedures included within our response to revenue recognition. Examples of these high-risk journal entries are journal entries posted by or on behalf of management and journal entries at the consolidated level. As described in our key audit matter on revenue recognition, we also critically assessed manual journals posted to revenue. And we do that to identify unusual or irregular items and we obtained underlying documentation for those journal entries. Through these procedures, we did not identify any material actual or suspected incidences of fraud. In determining the audit procedures, we made use of the group's evaluations relating to fraud risk management, including the setup of ethical standards to create a culture of honesty. As part of our audit and specifically as part of the assessment of Unilever's control environment, we also have considered tone at the top. Amongst others, we observe the interaction between the Audit Committee and the executive management team, and between the executive management team with other layers of management, and we do that with respect to culture, values, code of conduct and actions if violation of the aforementioned occur. If considered necessary, any findings in this regard would be included in our reports to the Board and to the Audit Committee. Back to you, John.

Thank you. And to conclude the Q&A, the VEB's second question relates to whether KPMG thinks that Unilever would benefit from implementing additional controls following the COVID-19 pandemic as this might put additional pressure on management to achieve certain performance targets. Jurgen?

Thank you, John. KPMG was engaged to perform an audit of the Unilever's internal control of financial reporting as of the 31st of December 2019. And that is integrated with the audit of Unilever's consolidated financial statements for the year ended 31st of December 2019. This is referred to as an integrated audit. During our 2019 audit, we did not identify any material weaknesses. With respect to 2020, management and we will certainly evaluate the effect of COVID-19 on the internal control environment. Back to you, Mr. Chairman.

Thank you very much. And these were really all the questions we're covering today. Once again, thank you for -- to those of you who sent in questions. We hope we have answered them to your satisfaction. And to those -- or anyone who has any questions after the meeting, please feel free to submit them in writing and we'll endeavor to answer them to the extent we're able. We'll now show the results of the voting based on the proxy votes that were submitted before the deadline, as I said, earlier on Monday. And Ms. Irma Kroon, the notary, supervises the voting process as an independent notary. Our Group Secretary, Ritva Sotamaa, will now give you the overview of how many votes have been cast. Ritva, over to you.

Thank you, Nils. And the shares represented today have a total nominal value of EUR 143,839,752, which is good for 898,998,453 votes, and this represents 61.28% of our share capital. Back to you, Nils.

Thank you, Ritva. And I will now walk you through the resolutions and tell you whether they've been carried. They'll come up on the screen. Yes, here they are. Resolutions 2 to 5, relating to the approval of the annual accounts 2019, the remuneration report and the discharge of executive and nonexecutive directors are carried. Resolutions 6 to 9 related to the reappointment of myself, Laura Cha, Vittorio Colao and Judith Hartmann are also carried. And the Resolutions 10 to 13 relating to the reappointment of Alan Jope, Andrea Jung, Susan Kilsby and Strive Masiyiwa are carried. Resolutions 14 to 17 related to the reappointment of Youngme Moon, Graeme Pitkethly, John Rishton and Feike Sijbesma are carried. Resolution 18 to 21 relating to the reappointment of KPMG as auditors of the company, the authorization of the Board to issue shares, to authorize the Board to restrict or exclude preemption rights for general corporate purposes and for acquisition purposes are carried. And the final resolutions, 22 and 23, to authorize the Board to have the company purchase its own shares and to authorize the Board to reduce its share capital are also carried. I confirm that these final -- these results are final, and they'll be announced to Euronext Amsterdam and displayed on our website. And this concludes our meeting today. I want to thank everybody participating, everybody preparing for the meeting, very much for being here. Thank you for your attendance, and goodbye. We look forward to seeing you physically next year. Thank you very much.