As Unilever sheds complexity, it's keeping more profit from each sale — and turning almost all of it into real cash.
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✦ The bottom line
Unilever's underlying operating margin rose to 20.0% — up 60 basis points — and it generated €5.9B of free cash flow at 100% cash conversion. One honest wrinkle: reported operating profit (€9.0B) sits below the underlying figure (€10.1B), because of the cost of the restructuring it's paying for now.
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✦ Teach me
Free cash flow & cash conversion
Free cash flow is the cash left after running the business and maintaining its factories — the money available for dividends, buybacks, and debt.
Cash conversion asks: of the profit the company reports, how much actually showed up as cash? Unilever's was 100% — every euro of profit turned into a euro of cash. That's a sign of clean, high-quality earnings.
Wall Street calls this
FCF / cash conversion
Profit is an opinion; cash is a fact. 100% conversion means Unilever's reported profits aren't an accounting mirage — they're real money in the bank.
Underlying operating margin · fiscal year 2025
20.0
%
Up 60 basis points. Of every €1 of underlying sales, 20¢ is operating profit — and that slice is growing as Unilever simplifies. (For comparison, US rival P&G runs ~24%.)
Real cash after running the business — at 100% cash conversion, meaning essentially all reported profit became actual cash. This is what funds the dividend.
Notice the two different profit numbers. Underlying operating profit was €10.1B; reported was €9.0B. The €1.1B gap is mostly the cost of the productivity programme — redundancies and restructuring Unilever is paying for now to be leaner later. 'Underlying' shows the engine; 'reported' includes the one-time bill for fixing it up.
✓
Strong & improving
Margins up to 20%, free cash flow €5.9B at 100% conversion. The leaner company is visibly more profitable — restructuring costs aside.
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Chapter 2 · FINANCIAL HEALTH
Leaner, and It Shows
you now read: real cash left over (free cash flow)