Unilever announced on Thursday its decision to implement price increases to mitigate the impact of elevated costs attributed to the Iran conflict, alongside a strong performance in first-quarter sales growth surpassing analysts’ expectations. The company, known for products like Dove soap and Axe deodorant, maintained its 2026 sales and profit margin outlook, indicating confidence in managing the prevailing economic uncertainties.
The price adjustments will be targeted in specific markets and product categories, particularly in areas affected by rising crude oil prices, with the changes expected to take effect predominantly in the latter part of the year. Unilever’s CFO, Srinivas Phatak, highlighted that regions such as parts of Asia, Africa, and Latin America, experiencing significant inflation, will witness the most substantial price increases, while adjustments in North America will be more limited due to the company’s smaller presence in the home-care sector there.
Managing escalating commodity costs and supply chain disruptions resulting from geopolitical tensions, consumer goods companies are navigating a challenging cost environment. Unilever anticipates total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and manufacturing expenses. Phatak emphasized a strategy of incremental price hikes, with the possibility of larger adjustments if inflationary pressures persist.
The last time Unilever raised prices by three percent was in late 2024, following the aftermath of the COVID-19 pandemic and the conflict in Ukraine. Analysts note the need for Unilever to balance price increases effectively to sustain sales volumes, particularly in constrained markets like Europe. In response to the ongoing conflict, several companies, including Unilever’s competitors like Nestlé and Procter & Gamble, have signaled potential price hikes to counter increased costs.
Unilever’s sales growth in the first quarter was primarily driven by robust volumes, particularly in its beauty and home segments, demonstrating a shift towards volume-led growth after a period of relying on price adjustments. CEO Fernando Fernandez highlighted the positive performance of Unilever’s key brands like Dove and Axe, underscoring a strategic focus on personal care and beauty following recent business restructuring initiatives.
Unilever’s underlying sales growth of 3.8 percent in the first quarter outpaced analysts’ expectations, reflecting a promising start to the year under Fernandez’s leadership, who assumed the CEO role last year. The company continues its transformation efforts, including the recent divestment of its ice cream business and plans to separate its food division for a potential merger, as it adapts to evolving market dynamics.
