Unilever announced on Thursday its decision to increase prices to counter the impact of higher costs attributed to the Iran conflict, while also surpassing analysts’ expectations with its first-quarter underlying sales growth. The company, known for brands like Dove soap and Axe deodorant, maintained its sales and profit margin forecasts for 2026, indicating its confidence in managing the current economic uncertainties.
The price hikes will be targeted at specific markets and product categories, particularly those exposed to crude oil prices in the home care sector, and are expected to be implemented mainly in the latter part of the year. According to Unilever’s finance chief, Srinivas Phatak, the price adjustments will be more pronounced in regions like Asia, Africa, and Latin America, where inflation has been most prominent, rather than in North America.
Facing challenging cost conditions due to rising commodity prices and disruptions in the supply chain caused by geopolitical tensions, consumer goods companies like Unilever are compelled to navigate through the current landscape. Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and production expenses.
In response to inflationary pressures, Unilever plans to implement incremental price increases in a measured approach. Phatak mentioned that if inflation persists, the company may opt for higher price adjustments within the two to three per cent range. Notably, the last time Unilever raised prices by three per cent was in late 2024, following the aftermath of the COVID-19 pandemic and the Ukraine conflict.
Industry analysts emphasize the importance for Unilever to strike a balance when raising prices to maintain sales momentum, especially in constrained markets like Europe. A review of corporate statements since the Iran conflict began shows that numerous companies, including Unilever’s competitors like Nestlé and Procter & Gamble, are also grappling with cost pressures.
Unilever’s sales growth in the first quarter was underpinned by robust volumes, particularly in its beauty and home segments, showcasing a shift towards volume-driven growth after a period of relying on price increases. CEO Fernando Fernandez highlighted the positive performance of key brands like Dove and Axe, attributing the growth to a volume-driven strategy and a strong showing across all business units.
As Unilever continues its strategic realignment towards personal care and beauty products, the company reported an underlying sales growth of 3.8 per cent for the three months ending in March, exceeding analysts’ expectations. Fernandez, who transitioned from the role of finance chief to CEO, is leading the transformation efforts to streamline Unilever’s focus and operations amid evolving market conditions.
