Unilever Targets 4%-6% Sales Growth and Higher Margins After Foods Separation

Key Points

• Unilever is targeting 4%–6% annual underlying sales growth, including at least 2% volume growth, as it shifts its focus to beauty, personal care and home care after the planned Foods separation.
• The company aims to raise operating margins from about 19% to 22%–23% over several years through higher gross margins and efficiencies, while continuing to invest in growth. The Foods transaction with McCormick is expected to close in the first half of 2027, with €400 million–€500 million in anticipated stranded costs.
• Unilever plans to concentrate investment on its Power Brands, give local teams more commercial responsibility, and use AI and digital R&D to accelerate product development and marketing.

Unilever NYSE: UL set out a plan to grow annual underlying sales by 4% to 6%, with at least 2% volume growth, as it prepares to focus on beauty, personal care and home care following the planned separation of its Foods business.

At its capital markets day in New York, executives said they would concentrate investment on the company’s largest growth opportunities, use artificial intelligence to speed product development and marketing, and give local teams greater responsibility for commercial execution.

Fernando, who introduced himself as the event’s opening presenter, said the company wants more consistent performance across economic cycles. “We are very, very confident that we can deliver that in the 4%-6% range with at least 2% of volume,” he said.

He said volume growth could be closer to 3% when inflation is more moderate, while higher inflation could push it toward 2%. The remaining home and personal care business recorded average underlying volume growth of 3.3% over the past 11 quarters, he said.

Margin plan and Foods separation

Chief Financial Officer Srinivas Phatak said Unilever has a multi-year plan to increase its operating margin from about 19% to a range of 22% to 23%. The company expects to pursue that improvement through higher gross margins, supply-chain productivity and other efficiencies, while continuing to invest in brands and research.

“The model we really like is really a growth-led, modest margin expansion model,” Phatak said. He cautioned that closing the margin gap with peers would be a multi-year process rather than a short-term fix.

Phatak said inflation would likely mean more of Unilever’s growth in 2027 comes from pricing than volume. He also said the company expects stranded costs of approximately €400 million to €500 million from the Foods separation and plans to provide transitional services to McCormick for two to three years.

Fernando said the company expects to close its planned Foods transaction with McCormick in the first half of 2027. Phatak said the transaction was on track, though regulatory work remained, and that Unilever would seek to complete it sooner if possible.

Brands and local execution

Unilever’s 25 “Power Brands” account for 80% of revenue and delivered 4.4% volume growth over the past 11 quarters, Fernando said. He highlighted Dove and Vaseline as examples of older brands that have grown through product development, packaging and marketing, while identifying LUX and Rexona as brands that need stronger growth.

The company has reduced its portfolio to about 180 brands from 370 four years ago and sees approximately €1 billion of potential disposals among its non-Power Brands, Fernando said. Phatak said those remaining brands still have a role, particularly in serving different price points in emerging markets.

Under the revised operating model, global teams will retain control of strategy, portfolio decisions and brand management, while local organizations take greater responsibility for marketing, commerce and annual financial performance. Fernando said the structure is intended to help Unilever respond to the growing local importance of creators, media platforms and online commerce.

The company plans to organize the business around roughly 30 profit-and-loss units, including the U.S. and India as its two anchor markets. The new organization is expected to be fully operational after the Foods transaction closes.

AI, innovation and growth markets

Chief Research & Development Officer Richard Slater said Unilever is shifting R&D activity from predominantly physical work to more than 80% digital. Fernando said new product launches that once took three years can now be developed in eight to 12 months.

Chief Marketing Officer Leandro Barreto said AI has also helped the company produce 12 times more content than in 2024 at a 90% lower cost. Unilever is working with more than 500,000 creators, he said, and is making scientific information accessible to large language models as consumers increasingly use AI tools to discover products.

In India, Hindustan Unilever CEO Priya Nair pointed to opportunities in laundry liquids, beauty, hair care and deodorants. She said the business reaches nine out of 10 households through 9 million stores and is investing in faster-delivery commerce and more targeted distribution.

Reggie Ecclissato, president of 1 Unilever Markets, said the company’s frontier markets—Africa, Vietnam, Pakistan and Bangladesh—represent 9% of turnover and were growing at a combined 10% so far this year. Unilever plans to focus on a smaller number of brands and sharpen execution in those markets.

About Unilever (NYSE:UL)

Unilever PLC is a global consumer goods company headquartered in London, England. It develops, markets and sells branded products used in households and personal care, with operations serving consumers across developed and emerging markets worldwide.

The company's portfolio includes beauty and wellbeing products, personal care items, home care products, and foods and refreshments. Its brands include Dove, Vaseline, Axe, TRESemmé, Cif, OMO, Persil, Knorr, Hellmann's and Ben & Jerry's, although product offerings vary by market.

Unilever was formed in 1929 through the merger of British soap maker Lever Brothers and Dutch margarine producer Margarine Unie.

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