Unilever announced on Thursday its decision to increase prices in response to higher costs attributed to the Iran conflict, despite exceeding analysts’ expectations in first-quarter sales growth. The company, known for products like Dove soap and Axe deodorant, maintained its 2026 sales and profit margin outlook unchanged, indicating confidence in navigating the current economic uncertainties.
The price adjustments will be implemented selectively in certain markets and product categories, particularly in areas exposed to crude oil prices, with the majority of changes expected in the latter half of the year, according to Unilever’s finance chief, Srinivas Phatak. The regions most affected by inflation, such as parts of Asia, Africa, and Latin America, will witness the greatest price hikes, with a focus on maintaining competitiveness.
Amidst soaring commodity prices and disruptions in the supply chain due to geopolitical tensions involving Iran, consumer goods companies are facing significant cost challenges, resulting in elevated prices for everyday goods. Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and production costs.
Phatak emphasized the likelihood of frequent but moderate price increases, with a potential shift towards the higher end of the two to three per cent range if inflation persists. Unilever’s previous price increase of three per cent occurred in late 2024 following the aftermath of the COVID-19 pandemic and the conflict in Ukraine.
Analysts, including Chris Beckett from Quilter Cheviot, highlighted the necessity for Unilever to balance price adjustments to support sales volumes, particularly in constrained markets like Europe. With numerous companies signaling price hikes in response to global conflicts, Unilever’s competitors such as Nestlé and Procter & Gamble have also expressed concerns over rising costs.
Unilever’s recent sales growth in the first quarter was primarily driven by increased volumes, especially in its beauty and home segments, marking a strategic shift back to volume-driven growth after a period of relying on price increases. CEO Fernando Fernandez emphasized the positive performance of Unilever’s key brands and highlighted the company’s focus on personal care and beauty following recent strategic changes.
Underlying sales growth for Unilever in the first quarter stood at 3.8 per cent, surpassing analysts’ expectations of 3.6 per cent, demonstrating the company’s resilience and strategic positioning in a challenging economic landscape.