Unilever announced on Thursday its decision to increase prices in response to elevated costs attributed to the Iran war, while also revealing better-than-expected first-quarter sales growth. The company, known for products like Dove soap and Axe deodorant, maintained its sales and profit margin forecasts for 2026, indicating resilience against heightened economic uncertainties.
The price adjustments will be targeted at specific markets and product categories, particularly in oil-exposed home care segments, with the implementation expected in the latter part of the year. Unilever’s CFO, Srinivas Phatak, specified that regions such as Asia, Africa, and Latin America, experiencing the bulk of inflation, will witness the most significant price hikes compared to North America.
Consumer goods firms are grappling with a challenging cost environment due to surging commodity prices and disruptions in the supply chain resulting from the ongoing conflict between the U.S. and Iran. Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and factory expenses.
Phatak mentioned that price adjustments would be gradual and competitive, with the potential for further increases if inflationary pressures persist. Unilever’s last significant price hike of three percent occurred in the fourth quarter of 2024, following the aftermath of the COVID-19 pandemic and the Ukraine crisis.
Analysts, such as Chris Beckett from Quilter Cheviot, emphasized the necessity for Unilever to balance price increases with maintaining sales volume, particularly in constrained markets like Europe. Several companies, including Nestlé and Procter & Gamble, have signaled price hikes due to the ongoing conflict with Iran, impacting the industry at large.
Unilever’s revenue growth in the first quarter was primarily driven by robust volumes, notably in its beauty and home segments. CEO Fernando Fernandez highlighted the positive performance of their key brands and expressed satisfaction with the volume-driven growth, a departure from previous reliance on price hikes for revenue growth.
Fernandez, who transitioned from CFO to CEO in the previous year, is leading Unilever through strategic transformations, focusing on personal care and beauty products. The company achieved an underlying sales growth of 3.8 percent in the first quarter, surpassing analyst expectations of 3.6 percent.