TIDMULVR TIDM0NXN
RNS Number : 8484C
Unilever PLC
22 October 2020
UNILEVER TRADING STATEMENT THIRD QUARTER 2020
Performance highlights
Underlying performance GAAP measures
vs 2019 vs 2019
============================ ========= ========== ========== ========
Third quarter
Underlying sales growth
(USG) 4.4% Turnover EUR12.9bn (2.4)%
============================= ========= ========== ========== ========
Nine months
USG 1.4% Turnover EUR38.6bn (1.8)%
Quarterly dividend payable in November 2020 EUR0.4104 per share
Third quarter highlights
-- Underlying sales growth of 4.4%, with 3.9% volume and 0.5% price
-- Emerging markets underlying sales growth 5.3% and developed markets 3.1%
-- Turnover decreased 2.4%, with a negative impact from currency of 7.7%
-- Quarterly shareholder dividend maintained at EUR0.4104 per share
Alan Jope: Chief Executive Officer statement
"We have delivered a strong performance this quarter. Volume-led
growth shows the resilience of our portfolio and our agility in
responding to rapidly changing dynamics across consumer segments,
geographies and channels.
We continue to progress our strategic change agenda. Our
proposals to simplify Unilever's dual-headed legal structure have
received strong support from both NV and PLC shareholders, and we
have set out our Clean Future strategy in Home Care, to eliminate
fossil fuel derived carbon from our cleaning products by 2030.
The environment we are operating in will remain unpredictable in
the near term, so we will continue to maintain the speed and
agility of our response. Our focus remains volume-led competitive
growth, delivering absolute profit and free cash flow."
22 October 2020
THIRD QUARTER OPERATIONAL REVIEW
Third Quarter 2020 Nine Months 2020
========================= =============================
Turnover USG UVG UPG Turnover USG UVG UPG
(unaudited)
========================= ======== === === ===== ======== === ===== =======
EURbn % % % EURbn % % %
========================= ======== === === ===== ======== === ===== =======
Unilever 12.9 4.4 3.9 0.5 38.6 1.4 1.1 0.3
========================= ======== === === ===== ======== === ===== =======
Beauty & Personal Care 5.3 3.8 3.5 0.4 15.9 1.1 1.3 (0.2)
Home Care 2.6 6.7 8.5 (1.6) 7.9 4.4 4.8 (0.4)
Foods & Refreshment 5.0 3.7 1.8 1.8 14.8 0.1 (1.1) 1.2
======== === === ===== ======== === ===== =======
Our markets: Covid-19 continues to influence consumer behaviours
and channel dynamics in our markets. In North America, market
growth continued to be driven by elevated demand for foods consumed
at home. European markets saw a mixed picture on growth and a
challenging pricing environment. In China, growth improved slightly
compared to the second quarter. After a strict lock-down earlier in
the year, India saw a pick-up in economic activity, even though
cases of Covid-19 continued to increase. In Indonesia and Latin
America markets contracted in the third quarter.
Unilever overall performance: We continued to respond with
agility to the changing consumer and channel dynamics that have
come about as a result of the Covid-19 pandemic, focusing on
driving execution against the five growth fundamentals we set out
earlier this year.
Underlying sales growth accelerated compared to the second
quarter. Elevated levels of growth for hand and home hygiene
products continued, as well as for food consumed at home. Our food
service and out of home ice cream businesses continued to decline,
however at lower levels compared to the second quarter. Performance
also improved in our other categories, with declines lessening in
deodorants and skin care, while laundry and hair returned to
growth. Online channels continued to grow, and our e-commerce
business grew 76%.
Emerging markets grew 5.3%, as China's recovery continued, and
India and Brazil returned to growth. Developed markets grew 3.1%,
led by ongoing strength in North America. In Europe, volumes grew
despite a negative impact from out of home ice cream and food
service, although this was more than offset by increased pressure
on price, driven by a step up in promotional intensity.
Turnover decreased 2.4%. There was a positive impact of 1.3%
from acquisitions net of disposals and a negative impact of 7.7%
from currency.
Beauty & Personal Care
Beauty & Personal Care underlying sales grew 3.8%, with 3.5%
from volume and 0.4% from price.
Demand for hand hygiene products remained high, albeit slightly
below levels seen in the second quarter, and skin cleansing
delivered underlying sales growth of 19.9%. Growth was supported by
innovations including Dove's entry into the antibacterial segment,
and the extension of Lifebuoy into new formats and channels across
several European markets. Skin care declined high-single digit and
deodorants declined low-single digit. Both categories were
negatively impacted by restricted living conditions, although
improved compared to the second quarter as many countries eased
lockdowns. Hair grew overall, as a decline in styling was offset by
growth in wash and care products. Our Prestige business grew as the
health and beauty channel reopened, although footfall remained
subdued.
Home Care
Home Care underlying sales grew 6.7%, with 8.5% from volume and
negative pricing of -1.6%.
Consumer demand for household cleaners to combat the spread of
Covid-19 continued. Our home and hygiene brands delivered
high-teens underlying sales growth, with germ-killing and
antibacterial benefits particularly sought after. We launched
Domestos in China, as well as extending the brand to bleach-based
spray and wipe formats. Fabric solutions grew low-single digit,
although price declined as we passed on reduced commodity costs
particularly in European and South East Asian markets. In Latin
America, our six-times concentrated Omo laundry liquid, designed to
be diluted at home, was a growth driver. Fabric sensations grew
low-single digit, and we launched new Comfort fragrance boosters in
China, dual-colour beads with luxury-inspired fragrances .
Foods & Refreshment
Foods & Refreshment underlying sales grew 3.7%, with 1.8%
from volume and 1.8% from price.
Our retail foods business grew double digit and tea saw
mid-single digit growth as in home eating occasions continued at
elevated levels. Hellmann's grew mid-teens, with Hellmann's Vegan
now available in 30 markets. Sales of ice cream grew, driven by
both volume and price. Mid-teens growth of in home ice cream, led
by brands including Ben & Jerry's and Magnum , more than offset
the decline in out of home ice cream sales. The food service
channel remained fully or partially closed in many markets and food
service sales declined by over 20%, however trends continue to
improve with China now returning to growth. We have made good
progress in integrating the Horlicks business and we continue the
work to implement the separation of our tea businesses.
THIRD QUARTER OPERATIONAL REVIEW: GEOGRAPHICAL AREA
Third Quarter 2020 Nine Months 2020
--------------------------- -------------------------------
Turnover USG UVG UPG Turnover USG UVG UPG
(unaudited)
========================== ======== ===== === ===== ======== ===== ===== =======
EURbn % % % EURbn % % %
======== ===== === ===== ======== ===== ===== =======
Unilever 12.9 4.4 3.9 0.5 38.6 1.4 1.1 0.3
========================== ======== ===== === ===== ======== ===== ===== =======
Asia/AMET/RUB 6.0 4.5 3.7 0.7 17.8 (0.4) (0.7) 0.4
The Americas 4.0 8.0 5.9 2.0 12.2 6.0 4.7 1.3
Europe 2.9 (0.8) 1.3 (2.1) 8.6 (1.5) (0.2) (1.3)
======== ===== === ===== ======== ===== ===== =======
Third Quarter 2020 Nine Months 2020
------------------------- -----------------------------
(unaudited) Turnover USG UVG UPG Turnover USG UVG UPG
======================== ======== === === ===== ======== === ===== =======
EURbn % % % EURbn % % %
======== === === ===== ======== === ===== =======
Emerging markets 7.4 5.3 3.7 1.5 22.2 0.5 (0.5) 1.0
Developed markets 5.5 3.1 4.1 (1.0) 16.4 2.6 3.4 (0.7)
======== === === ===== ======== === ===== =======
North America 2.5 9.1 8.6 0.5 7.7 7.9 8.0 (0.1)
Latin America 1.5 6.5 2.1 4.2 4.5 3.5 0.2 3.3
======== === === ===== ======== === ===== =======
Asia/AMET/RUB
Underlying sales grew 4.5% with 3.7% from volume and 0.7% from
price, as lock-down restrictions eased across much of the region
compared to the first half of the year. India grew low-single
digit, driven by growth in foods & refreshment and hygiene.
China grew double digit led by beauty and personal care categories
and a return to growth in food service, as the out of home eating
channel returned to full capacity. Turkey grew, with easing of
lockdown restrictions. Indonesia declined low-single digit and in
Thailand, heightened promotional intensity led to a price-driven
decline in underlying sales.
The Americas
Underlying sales growth in North America was 9.1% with 8.6% from
volume and 0.5% from price. This growth includes the negative
impact of around 1.5% from our food service business which was
impacted by channel closures. Sales of foods and refreshment for
consumption in the home continued to be a driver of growth,
alongside hand and home hygiene. Clean and green Home Care brand
Seventh Generation, along with acquired health and wellness brand
Olly, contributed strong double digit underlying sales growth.
Latin America grew 6.5% with volume growth of 2.1% and positive
pricing of 4.2%. Brazil returned to growth, with high-single digit
underlying sales growth led by Foods & Refreshment. Demand was
stimulated by emergency pandemic cash payouts to citizens. In
Argentina, home and personal care categories drove volumes,
including strong growth from our newly launched dilutable laundry
liquid. Growth was helped by a softer comparator due to trading
disruption as a result of currency devaluation and the
implementation of price rises in the prior year.
Europe
Underlying sales declined 0.8% with 1.3% from volume and a
decline of 2.1% from price. Price declines were driven by a step up
in promotional intensity across the region, as the depth and volume
of promotions increased. Out of home ice cream declined,
particularly in countries reliant on summer tourism such as Italy
and Spain, which contributed to double digit decline in both
countries. The food service business also continued to decline
albeit less sharply than in the previous quarter. Demand for retail
foods remained elevated and home care grew across most markets,
helped by heightened demand for home hygiene products. Growth in
both categories contributed to mid-single digit growth in the
UK.
UNIFICATION UPDATE
In this quarter, our proposals to simplify Unilever's
dual-headed legal structure have received strong support from both
NV and PLC shareholders. When we issued the Unification shareholder
circular in August we noted that on 10 July 2020, a member of the
Dutch Parliament for GroenLinks (a Dutch opposition party) had
proposed a private members bill which sought to impose an exit tax
on companies leaving the Netherlands in certain circumstances.
We announced on 9 October 2020 that the GroenLinks initiative
bill had been tabled in the Dutch Parliament. The tabled bill
contains a number of amendments to the previous proposals dated 10
July and 18 September 2020 including:
-- to provide for automatic (as opposed to conditional) deferral
of the exit tax assessment. As described in our shareholder
circular, deferral would allow the exit tax assessment to be paid
over time to the extent that the acquiring company: (i)
subsequently makes distributions of reserves on the new shares
issued to the former Dutch company's shareholders ("Relevant
Shares"), including by way of distributions of profits in any form,
deemed distributions and certain share buy-backs; and (ii) pays an
amount to the Dutch revenue equal to the withholding tax that would
have been payable by the acquiring company in respect of such
distribution had it been tax resident in the Netherlands ("Deemed
Withholding Tax"); and
-- a provision which seeks to provide the acquiring company with
a right of recourse to withhold the Deemed Withholding Tax from
holders of Relevant Shares at the time of each distribution.
Despite this provision, in the context of Unification as proposed,
PLC would have no enforceable means (either legally under English
law or practically) to exercise this right of recourse and to
withhold the Deemed Withholding Tax. If the company is not able to
exercise this right of recourse, shareholders would not be able
claim a corresponding credit for the Deemed Withholding Tax borne
by the company.
Despite the amendments made Unilever has received legal advice
that, if the bill were enacted in its current form with retroactive
effect and were applied to Unification, it should infringe the
Dutch UK tax treaty, other tax treaties which the Netherlands has
concluded with states in which shareholders of Unilever PLC or
Unilever NV reside, primary and secondary EU law and the First
Protocol to the European Convention on Human Rights.
It is not clear when, or indeed if at all, the bill will be
enacted, or in what form. As previously stated, the Boards intend
to proceed with their proposals provided that Unification, in the
Boards' view, remains in the best interests of Unilever, its
shareholders and other stakeholders as a whole.
The Boards will continue to update shareholders as
appropriate.
The Court hearing to approve the Cross-Border Merger is
scheduled to take place on 2 November 2020, and the time of the
hearing will be announced by the Court the business day before the
hearing. Shareholders of both PLC and NV have the opportunity to
attend and to be heard at this hearing, which is expected to be
held by electronic means. If a shareholder wishes to attend or make
representations at the Court hearing they can register their
interest in advance via shareholder.services@unilever.com, and
Unilever will provide further details once this information is made
available by the Court. Alternatively, shareholders can contact the
Court's listing office via chanceryjudgeslisting@justice.gov.uk
.
COMPETITION INVESTIGATIONS
As previously disclosed, Unilever is involved in a number of
ongoing investigations and cases by national competition
authorities, including those within Italy, Greece and South Africa.
These proceedings and investigations are at various stages and
concern a variety of product markets. Where appropriate, provisions
are made and contingent liabilities disclosed in relation to such
matters.
Ongoing compliance with competition laws is of key importance to
Unilever. It is Unilever's policy to co-operate fully with
competition authorities whenever questions or issues arise. In
addition the Group continues to reinforce and enhance its internal
competition law training and compliance programme on an ongoing
basis .
DIVIDS
The Boards have determined to pay a quarterly interim dividend
for Q3 2020 at the following rates which are equivalent in value
between the two companies at the rate of exchange applied under the
terms of the Equalisation Agreement:
Per Unilever N.V. ordinary share: EUR 0.4104
Per Unilever PLC ordinary share: GBP 0.3746
Per Unilever N.V. New York share: US$ 0.4845
Per Unilever PLC American Depositary Receipt: US$ 0.4845
The quarterly interim dividends have been determined in euros
and converted into equivalent sterling and US dollar amounts using
exchange rates issued by WM/Reuters on 20 October 2020.
US dollar cheques for the quarterly interim dividend will be
mailed on 20 November 2020 to holders of record at the close of
business on 30 October 2020. In the case of the NV New York shares,
Netherlands withholding tax will be deducted.
The quarterly dividend calendar for the remainder of 2020 will
be as follows:
Announcement Ex-Dividend Record Date Payment Date
Date Date
================= ============= ============ ============
Q3 2020 Dividend 22 October 29 October 30 October 20 November
2020 2020 2020 2020
============= ============ ============ =============
SEGMENT INFORMATION - DIVISIONS
(unaudited)
Third Quarter Beauty & Foods & Total
Personal Home Refreshment
Care Care
========= ====== ============
Turnover (EUR million)
2019 5,574 2,704 4,976 13,254
2020 5,348 2,591 4,991 12,930
Change (%) (4.1) (4.2) 0.3 (2.4)
Impact of:
Acquisitions (%) 0.2 0.2 3.5 1.4
Disposals (%) - (0.3) (0.3) (0.2)
Currency-related items (%), of which: (7.8) (10.1) (6.3) (7.7)
====== ============ ======
Exchange rates changes (%) (7.9) (10.4) (6.7) (8.0)
Extreme price growth in hyperinflationary
markets* (%) 0.1 0.3 0.4 0.3
====== ============ ======
Underlying sales growth (%) 3.8 6.7 3.7 4.4
================================================ ====== ============ ======
Price* (%) 0.4 (1.6) 1.8 0.5
Volume (%) 3.5 8.5 1.8 3.9
================================================ ========= ====== ============ ======
Nine Months Beauty & Home Foods & Total
Personal Care Refreshment
Care
========= ===== ============
Turnover (EUR million)
2019 16,273 8,095 14,957 39,325
2020 15,948 7,912 14,762 38,622
Change (%) (2.0) (2.3) (1.3) (1.8)
Impact of:
Acquisitions (%) 0.9 0.2 2.3 1.3
Disposals (%) - - (0.4) (0.2)
Currency-related items (%), of which: (3.9) (6.5) (3.3) (4.2)
===== ============ ======
Exchange rates changes (%) (4.1) (6.8) (3.6) (4.5)
Extreme price growth in hyperinflationary
markets* (%) 0.2 0.3 0.3 0.3
===== ============ ======
Underlying sales growth (%) 1.1 4.4 0.1 1.4
================================================ ===== ============ ======
Price* (%) (0.2) (0.4) 1.2 0.3
Volume (%) 1.3 4.8 (1.1) 1.1
================================================ ========= ===== ============ ======
* Underlying price growth in excess of 26% per year in
hyperinflationary economies has been excluded when calculating the
price growth in the tables above, and an equal and opposite amount
is shown as extreme price growth in hyperinflationary markets .
Turnover growth is made up of distinct individual growth
components namely underlying sales, currency impact, acquisitions
and disposals. Turnover growth is arrived at by multiplying these
individual components on a compounded basis as there is a currency
impact on each of the other components. Accordingly, turnover
growth is more than just the sum of the individual components.
SEGMENT INFORMATION - GEOGRAPHICAL AREA
(unaudited)
Third Quarter Asia / The Europe Total
AMET / Americas
RUB
======== ========== =======
Turnover (EUR million)
2019 6,068 4,198 2,988 13,254
2020 5,987 3,994 2,949 12,930
Change (%) (1.3) (4.9) (1.3) (2.4)
Impact of:
Acquisitions (%) 3.0 0.2 - 1.4
Disposals (%) (0.1) (0.3) (0.1) (0.2)
Currency-related items (%), of which: (8.3) (11.8) (0.3) (7.7)
======== ========== ======= ======
Exchange rates changes (%) (8.4) (12.3) (0.3) (8.0)
Extreme price growth in hyperinflationary
markets* (%) 0.2 0.5 - 0.3
======== ========== ======= ======
Underlying sales growth (%) 4.5 8.0 (0.8) 4.4
=============================================== ======== ========== ======= ======
Price* (%) 0.7 2.0 (2.1) 0.5
Volume (%) 3.7 5.9 1.3 3.9
=============================================== ======== ========== ======= ======
Nine Months Asia / The Europe Total
AMET / Americas
RUB
======= ========= ======
Turnover (EUR million)
2019 18,263 12,284 8,778 39,325
2020 17,788 12,200 8,635 38,622
Change (%) (2.6) (0.7) (1.6) (1.8)
Impact of:
Acquisitions (%) 1.9 1.0 0.3 1.3
Disposals (%) (0.1) (0.2) (0.2) (0.2)
Currency-related items (%), of which: (4.0) (7.2) (0.3) (4.2)
======= ========= ====== ======
Exchange rate changes (%) (4.1) (7.8) (0.3) (4.5)
Extreme price growth in hyperinflationary
markets* (%) 0.1 0.7 - 0.3
======= ========= ====== ======
Underlying sales growth (%) (0.4) 6.0 (1.5) 1.4
=============================================== ======= ========= ====== ======
Price* (%) 0.4 1.3 (1.3) 0.3
Volume (%) (0.7) 4.7 (0.2) 1.1
=============================================== ======= ========= ====== ======
* Underlying price growth in excess of 26% per year in
hyperinflationary economies has been excluded when calculating the
price growth in the tables above, and an equal and opposite amount
is shown as extreme price growth in hyperinflationary markets .
NON-GAAP MEASURES
In our financial reporting we use certain measures that are not
defined by generally accepted accounting principles (GAAP) such as
IFRS. We believe this information, along with comparable GAAP
measurements, is useful to investors because it provides a basis
for measuring our operating performance, and our ability to retire
debt and invest in new business opportunities. Our management uses
these financial measures, along with the most directly comparable
GAAP financial measures, in evaluating our operating performance
and value creation. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP. Wherever appropriate
and practical, we provide reconciliations to relevant GAAP
measures. The non-GAAP measures used in this announcement are
underlying sales growth, underlying volume growth and underlying
price growth (see below).
Underlying sales growth (USG)
Underlying sales growth (USG) refers to the increase in turnover
for the period, excluding any change in turnover resulting from
acquisitions, disposals, changes in currency and price growth in
excess of 26% in hyperinflationary economies. Inflation of 26% per
year compounded over three years is one of the key indicators
within IAS 29 to assess whether an economy is deemed to be
hyperinflationary. We believe this measure provides valuable
additional information on the underlying sales performance of the
business and is a key measure used internally. The impact of
acquisitions and disposals is excluded from USG for a period of 12
calendar months from the applicable closing date. Turnover from
acquired brands that are launched in countries where they were not
previously sold is included in USG as such turnover is more
attributable to our existing sales and distribution network than
the acquisition itself. The reconciliation of changes in the GAAP
measure turnover to USG is provided on pages 6 and 7.
Underlying price growth (UPG)
Underlying price growth (UPG) is part of USG and means, for the
applicable period, the increase in turnover attributable to changes
in prices during the period. UPG therefore excludes the impact to
USG due to (i) the volume of products sold; and (ii) the
composition of products sold during the period. In determining
changes in price we exclude the impact of price growth in excess of
26% per year in hyperinflationary economies as explained in USG
above. The measures and the related turnover GAAP measure are set
out on pages 6 and 7.
Underlying volume growth (UVG)
Underlying volume growth (UVG) is part of USG and means, for the
applicable period, the increase in turnover in such period
calculated as the sum of (i) the increase in turnover attributable
to the volume of products sold; and (ii) the increase in turnover
attributable to the composition of products sold during such
period. UVG therefore excludes any impact on USG due to changes in
prices. The measures and the related turnover GAAP measure are set
out on pages 6 and 7 .
CAUTIONARY STATEMENT
This announcement may contain forward-looking statements,
including 'forward-looking statements' within the meaning of the
United States Private Securities Litigation Reform Act of 1995.
Words such as 'will', 'aim', 'expects', 'anticipates', 'intends',
'looks', 'believes', 'vision', or the negative of these terms and
other similar expressions of future performance or results, and
their negatives, are intended to identify such forward-looking
statements. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and
other factors affecting the Unilever Group (the 'Group'). They are
not historical facts, nor are they guarantees of future
performance.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by
these forward-looking statements. Among other risks and
uncertainties, the material or principal factors which could cause
actual results to differ materially are: Unilever's global brands
not meeting consumer preferences; Unilever's ability to innovate
and remain competitive; Unilever's investment choices in its
portfolio management; the effect of climate change on Unilever's
business; Unilever's ability to find sustainable solutions to its
plastic packaging; significant changes or deterioration in customer
relationships; the recruitment and retention of talented employees;
disruptions in our supply chain and distribution; increases or
volatility in the cost of raw materials and commodities; the
production of safe and high quality products; secure and reliable
IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political
risks and natural disasters; financial risks; failure to meet high
and ethical standards; and managing regulatory, tax and legal
matters. A number of these risks have increased as a result of the
current Covid-19 pandemic. These forward-looking statements speak
only as of the date of this document. Except as required by any
applicable law or regulation, the Group expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statement is based. Further details of potential risks and
uncertainties affecting the Group are described in the Group's
filings with the London Stock Exchange, Euronext Amsterdam and the
US Securities and Exchange Commission, including in the Annual
Report on Form 20-F 2019 and the Unilever Annual Report and
Accounts 2019 .
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations
Team
+44 78 2527
3767
UK +44 77 7999 lucila.zambrano@unilever.com
or 9683 JSibun@tulchangroup.com
NL +31 10 217 4844 els-de.bruin@unilever.com +44 20 7822
or +31 62 375 8385 marlous-den.bieman@unilever.com 6830 investor.relations@unilever.com
There will be a web cast of the results presentation available
at:
www.unilever.com/investor-relations/results-and-presentations/latest-results
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