Look, if you look back over the last couple of years and looking back at our volume track record and potentially what you’ve heard before. But I am very confident actually about the science and technology part of our business. This is one area where I — and I said that I think in the video, we have spent a disproportionate amount of time and what we’ve been particularly focused on is understanding what are the key differentiating technology platforms that we have, where we have deep knowledge and that will allow us to expedite a multiyear innovation program behind our top brands. And I know we have that. We have talked about that with the leadership and we’re going to unlock that. And I feel that with the bigger and the bolder choices that we’re making, the clear focus behind our top 30 brands initially, which will ensure a greater degree of delivery.
I do believe that this is going to be a sustained source of growth for us. I talked a bit about in the video about biome technology. I talked a bit about renewable packaging and about biotechnology type of platforms. And those are the ones that I believe were very strong at and are fueling most of our business.
Jemma Spalton: Our next question comes from Guillaume from UBS.
Guillaume Delmas: Two questions for me, please. Firstly, it’s on today’s strategy update and a point of clarification on your financial ambitions. And apologies if I missed it, but the line was breaking on the first question. So on underlying sales growth, you kept the 3% to 5% range. But since December of last year, Unilever was more guiding for the upper end of 3% to 5%. So just wondering, if there was any change there? And still on your financial ambitions in terms of operating margin expansion. So no change there still expected to be moderate. But I guess, does it mean that the vast majority of your gross margin recovery will be reinvested as opposed to flowing through to the EBIT line over the next few years. And I guess, to put it bluntly, I see consensus for 100 basis points operating margin improvement for the next two years.
Would you see that kind of magnitude as consistent with your financial ambitions? And then my second question is on your renewed focus on EPS growth. I was wondering, what’s your mindset here and whether you look at EPS growth in constant currency or on a reported basis? Because the flip side of deriving 60% of revenues from emerging markets is that foreign exchange tends to be, on average, a significant adverse impact. So curious to hear if this is something you’re taking into account and if you would actively pull some levers, I’m thinking pricing, I’m thinking savings to ensure consistent EPS growth year after year in euro terms.
Hein Schumacher: Let me take the first part, and then I’ll hand over to Graeme to comment a bit more on your EPS question. But first of all, on the financial ambition. So you’re right. I mean that in the first question, it was breaking up a bit, but let me reiterate the financial framework that we laid out, including the growth ambition of 3% to 5% is a medium-term goal. The guidance that we’ve provided for this year, which is to be above 5% still hold. So, there’s a this year guidance and then there’s a medium-term framework. Now if you talk about the medium term and the moderate margin expansion. I think you said is right. The focus will definitely be on expanding gross margin and bringing that back to pre-pandemic levels.
And we do see a path towards that. But as indicated in the action plan, I feel that there is opportunity for us to invest more behind our brands, and we will progressively do so. But obviously, only if we know for sure that some of these innovation platforms that I just talked about, as well as the superiority thinking and so forth are really taking hold, and we are sure that the increased spend will actually deliver returns. So we will see some progressive increases but it will differ a bit by business group and by brand. And the same goes for our increased investments in R&D. The plan projects us for R&D to accelerate investments there to just above the turnover growth levels. So yes, there will be part of that will be reinvested. But all in all, the algorithm is leading us to a moderate margin expansion.
Graeme, on the EPS side.
Graeme Pitkethly: Very interesting question actually. Thanks for asking it and pointing it out. What we do is we look at and measure both within the business, but we’re very aware of the fact that the real returns that we deliver to shareholders are denominated in current rates of growth, not constant rates of growth. So in the short term, what we can do as managers of the business is deliver constant rate earnings growth. But what is actual real value creation, of course, reflects what we can deliver in euros and dollars in hard currency. And as you point out, with 60% of our business in emerging markets, there’s usually quite a difference between those. Now when you go back and look at it over time, when we measure the difference between the two, it’s pretty much a sign curve.
That’s the way that currencies tend to operate on the translation of our results into euros when we report them every quarter. But if you go back and look at it over time, even though there are large differences like this year, as I think we guided to in the video, we expect the difference to be about 9% negative between constant EPS and current EPS for this year. That’s quite a big number actually relative to history. But there’s very much a sign curve effect. If you go back over time and take a longer-term view, usually, the difference between both in Unilever is about 1.5% to 2% on the average. And when we set our strategies and our financial plans when we talk to the Board, about EPS growth, we talk about constant. We also talk about current, and we size our plans with that 1.5% to 2% in mind.
And we obviously have to make sure that we are, for example, pricing for that in some of the economies where we have devaluing currencies.
Jemma Spalton: Our next question comes from Bruno at Bernstein. Bruno, please go ahead.
