Unilever Q1 Earnings Call Highlights

Key Points

• Volume‑led Q1: Unilever delivered underlying sales growth of 3.8% in Q1 driven by volumes (+2.9%) and pricing (+0.9%), with Home Care a standout (volumes +6.2%) and strong emerging‑market growth while Europe lagged (-0.9%).
• FX hit and capital action: Reported turnover was €12.6bn, down 3.3% as foreign exchange reduced sales by ~7.7%; the company announced a €1.5 billion share buyback and reiterated 2026 guidance at the bottom of its 4–6% underlying sales range and at least 2% volume growth.
• Higher inflation and strategic moves: Full‑year inflation is now expected at about €750–900 million (≈€350–500m higher than prior), prompting selective pricing—notably in Home Care—plus mitigation actions, and Unilever confirmed plans to separate Foods and combine it with McCormick to create two more focused businesses.

Unilever NYSE: UL reported a “good start” to 2026, delivering underlying sales growth of 3.8% in the first quarter, led by 2.9% volume growth and 0.9% pricing, according to CEO Fernando Fernandez. CFO Srini Phatak said the quarter extended a volume-led growth profile that Unilever has sustained across recent periods, with average volume growth of 2.5% over the last nine quarters.

Fernandez said growth was “broad based across categories,” highlighting Home Care as a standout with volumes up 6.2% in the quarter, supported by innovation and strong performances in India and Brazil. He also emphasized continued momentum in Unilever’s Power Brands, which represent around 78% of turnover and grew 5% in the quarter with volumes up 4%.

Segment performance led by Home Care volumes

Phatak said Home Care delivered 6.1% underlying sales growth, driven almost entirely by volume (6.2%) with pricing broadly flat. He highlighted double-digit volume growth in Brazil and high single-digit volume growth in India, including double-digit growth in liquids and “record market share in powders.” Fernandez added that Home Care strength was broad-based across fabric cleaning, home and hygiene, and fabric enhancers, pointing to Cif growth of around 15% and Domestos at high single-digit growth.

Phatak said Beauty & Wellbeing posted 3.6% underlying sales growth, with 1.9% volume and 1.6% pricing. Hair delivered “high single-digit growth,” led by double-digit growth in Dove Hair and K18, while skin grew low single-digit with strength in Vaseline. Wellbeing declined low single-digit against a “very strong” prior-year comparator, though Phatak noted OLLY delivered double-digit growth and management expects improvement from the second quarter driven by Liquid I.V. and Nutrafol.

Personal Care delivered 3.7% underlying sales growth, driven by 1.1% volume and 2.5% pricing. Phatak said Dove led results, including double-digit growth in deodorants and high single-digit growth in skin cleansing, supported by North America and premium innovation rollouts. Oral care was flat, with growth in Asia Pacific Africa offset by softer performance in Europe.

Foods grew 2.2% on an underlying basis, with 2.4% volume and slightly negative pricing. Phatak said Hellmann’s delivered mid single-digit volume growth, supported by premium innovations and strong execution, while cooking aids grew low single-digit with strength in Asia Pacific Africa but softer conditions in developed markets, “notably Europe.” Unilever Food Solutions also grew low single-digit, supported by improving away-from-home consumption trends, particularly in China.

Emerging markets momentum; Europe subdued

Emerging markets again contributed meaningfully. Phatak said Asia Pacific Africa delivered 5.9% underlying sales growth with 5% volume growth, and India accelerated to 7% with 6% volume growth. He described the improvement as “broad-based,” reflecting sharper portfolio choices, “fewer bigger growth bets,” and better execution, including e-commerce and modern trade outperforming the core business.

China delivered another quarter of mid single-digit growth, with Phatak citing premium innovation, improved go-to-market execution, and progress in social and digital channels. Indonesia grew 4%, which Phatak framed as an improved and “more sustainable” trajectory following a reset, with market shares stabilizing and “around half the business now gaining share.” Fernandez said he was pleased with improvements in China’s food service channel and noted Indonesia’s run rates have improved for five consecutive quarters.

Latin America delivered 6.2% underlying sales growth, combining 2.6% volume and 3.5% pricing. Phatak said momentum improved across the region, supported by Brazil laundry following “corrective pricing actions” and Mexico Personal Care driven by operational improvements.

Developed markets were mixed. North America delivered 2.1% underlying sales growth, driven by 2.2% volume, while Europe declined 0.9% with volume down 1.2% and price up 0.3%. Fernandez attributed European softness to subdued consumer demand and increased promotional pressure in Foods. He said Unilever expects “a slight recovery” in Europe as the year progresses and is “banking” on a strong second quarter in Personal Care tied to FIFA activations.

FX headwinds, buyback, and unchanged outlook

Reported turnover for the quarter was EUR 12.6 billion, down 3.3% year-over-year. Phatak said underlying growth was “more than offset by currency headwinds,” with foreign exchange reducing reported turnover by 7.7%. Based on April spot rates, Unilever expects the full-year FX impact on turnover to be around minus 3%.

Portfolio changes contributed a net positive 0.9%, with acquisitions adding 1.4%—Phatak cited Dr. Squatch, Wild, and Minimalist—partly offset by a 0.5% impact from disposals, primarily related to foods and the tea business in Indonesia.

Unilever reiterated its outlook for 2026, expecting underlying sales growth “at the bottom end” of its 4% to 6% multi-year guidance range and at least 2% underlying volume growth for the year. Fernandez told analysts he was confident in delivering above 2% volume growth, citing a strong start to the second quarter, strengthening brand equities, and a robust innovation and activation plan, including FIFA sponsorships in Personal Care.

On capital returns, Phatak announced a new EUR 1.5 billion share buyback, expected to be completed toward the end of the first half. Fernandez said the company chose to accelerate the buyback due to market valuation weakness and management’s confidence in Unilever’s future valuation and performance.

Inflation expectations rise; pricing to increase, especially in Home Care

Phatak said Unilever now expects full-year inflation of about EUR 750 million to EUR 900 million, including both material and non-material costs such as logistics and factory operations. He said this is roughly EUR 350 million to EUR 500 million higher than prior expectations, based on a working assumption of crude at around EUR 100.

Phatak said about 50% of Unilever’s net inflation is expected to come through Home Care, with 70% of that concentrated in emerging markets. While Unilever will pursue mitigation actions—including competitive buying, commodity covers, formulation flexibility, packaging interventions, SKU focus, and productivity—he said “pricing will be needed in selected markets and categories, notably Home Care.” Pricing will be “calibrated” and executed “in small doses,” he said, adding that management expects pricing to play a bigger role as the year progresses, particularly in the second half.

Fernandez said Unilever’s focus will be on volume growth, price competitiveness, and disciplined management of costs, emphasizing that “the times of being uncompetitive in Unilever in any driver of demand are gone.” Management said it has not seen any material retailer stocking ahead of anticipated price increases.

Foods separation with McCormick and “Desire at Scale”

Fernandez also addressed Unilever’s announced plan to separate its Foods business and combine it with McCormick, describing the deal as a “growth-led separation” designed to create “two businesses with improved growth profiles.” He said the transaction would result in a simpler, more focused Unilever as a pure-play Home and Personal Care business, alongside a scaled “global flavor powerhouse” within Foods, citing strategic fit through complementary geographic footprints and a stronger combined presence across retail and foodservice.

Fernandez said Unilever has dedicated teams working alongside McCormick and that “all work streams” to separate and integrate Foods are underway. He added that transitional service agreements are intended to ensure continuity and provide time to remove stranded costs before they affect profit and loss statements.

Across the wider business, Fernandez said Unilever is pursuing three interconnected priorities:

• Elevating brands through its “Desire at Scale” model
• Improving operational excellence and execution
• Taking “decisive portfolio actions” to unlock value

In examples of brand-building, he cited Dove—“close to a EUR 7 billion brand,” with more than 6% growth for 14 consecutive quarters—and Vaseline, which he said has delivered double-digit growth over the last five years. He also pointed to Wonder Wash, which he described as having around EUR 200 million of annualized turnover, and Hellmann’s flavored mayonnaise, which he said has reached EUR 100 million of annualized turnover across 35 markets.

Unilever plans to provide more detail at a Capital Markets Day on Nov. 4, Fernandez said.

About Unilever NYSE: UL

Unilever PLC is a global consumer goods company with roots dating back to the early 20th century, formed from the merger of the British firm Lever Brothers and the Dutch company Margarine Unie. The company develops, manufactures and markets a broad portfolio of branded products in personal care, home care and foods and refreshments. Unilever's corporate structure and listings reflect its long history in both the United Kingdom and the Netherlands, and it operates at scale across diverse consumer markets worldwide.

Unilever's business is organized around major product categories—Beauty & Personal Care, Home Care and Foods & Refreshment—and includes numerous well-known consumer brands across those categories.

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