Unilever announced on Thursday its decision to implement price hikes in response to rising costs attributed to the Iran conflict, despite surpassing analysts’ expectations for first-quarter sales growth. The company, known for brands like Dove and Axe, maintained its sales and profit margin forecasts for 2026, indicating confidence in navigating the current economic uncertainties.
The price adjustments will be targeted at specific markets and product categories, particularly those exposed to crude oil prices in the home care sector, with the changes expected to take effect predominantly in the latter half of the year. Unilever’s Chief Financial Officer, Srinivas Phatak, highlighted that regions such as Asia, Africa, and Latin America, experiencing the bulk of inflationary pressures, will witness the most significant price increases compared to North America.
Acknowledging the challenging cost landscape driven by soaring commodity prices and supply chain disruptions resulting from geopolitical tensions, consumer goods companies are grappling with the necessity of adjusting prices to offset escalating expenses. Unilever foresees a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and manufacturing costs.
Phatak emphasized a strategic approach to price adjustments, aiming for incremental raises to mitigate the impact of inflation. Notably, Unilever’s last substantial price increase of three per cent occurred in late 2024 post the COVID-19 pandemic and the Ukraine conflict. Analysts, like Chris Beckett from Quilter Cheviot, underscored the importance for Unilever to balance price adjustments to maintain sales volumes across constrained markets, especially in developed regions like Europe.
In a broader context, Unilever’s competitors, including Nestlé and Procter & Gamble, have also signaled challenges from the Iran conflict, with margin pressures highlighted by Reckitt. However, L’Oréal outperformed expectations as consumers showed a preference for premium products amidst the economic turmoil.
With concerns over potential softened consumer demand amid persistent high oil prices and geopolitical uncertainties, companies are strategically managing their pricing strategies to sustain growth. Unilever’s recent sales performance showcased growth driven by increased volumes, particularly in the beauty and home segments, indicating a shift towards volume-driven growth after a period of relying on price increases.
CEO Fernando Fernandez expressed satisfaction with the company’s performance, attributing the positive results to the strength of its key brands and a unified business approach. Under Fernandez’s leadership, Unilever has been undergoing strategic transformations, focusing on personal care and beauty sectors following divestments and mergers to streamline operations and drive sustainable growth.
Unilever’s underlying sales growth of 3.8 per cent in the first quarter exceeded analyst expectations, reflecting a resilient business strategy amid a complex economic landscape.
