Unilever announced on Thursday its plan to increase prices to offset the impact of higher costs attributed to the Iran conflict, while also revealing a better-than-expected growth in first-quarter underlying sales. The company, known for brands like Dove soap and Axe deodorant, maintained its 2026 sales and profit margin projections unchanged, indicating confidence in navigating the current economic uncertainties.
The price adjustments will be implemented selectively in certain markets and product categories, particularly in segments exposed to crude oil prices, with the majority of changes expected in the latter part of the year, according to Srinivas Phatak, the company’s finance chief. Regions such as Asia, Africa, and Latin America, facing significant inflation pressures, are likely to experience the largest price hikes compared to North America where Unilever’s home-care business has a smaller footprint.
Phatak emphasized that the price increases will be strategic and competitive to mitigate the effects of rising costs. Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing elevated logistics and manufacturing expenses.
The company last raised prices by three percent in the fourth quarter of 2024 as it recovered from the aftermath of the COVID-19 pandemic and the Ukraine crisis. Analysts stress the importance for Unilever to carefully manage pricing strategies to maintain sales volumes, especially in constrained markets like Europe.
Amidst the challenging cost environment characterized by surging commodity prices and disruptions in the supply chain due to geopolitical tensions, Unilever’s rivals are also feeling the impact. Companies like Nestlé and Procter & Gamble have warned of increased costs, with Reckitt highlighting margin pressures. However, L’Oréal exceeded expectations as consumers showed a preference for premium products.
Unilever’s recent sales growth was primarily driven by higher volumes in its beauty and home care segments, marking a shift towards volume-driven growth after a period of relying on price hikes. CEO Fernando Fernandez expressed satisfaction with the performance, particularly praising the contribution of their flagship brands like Dove and Axe.
Fernandez, who took over as CEO last year, is leading Unilever through a restructuring phase focused on personal care and beauty products. The company reported a 3.8 percent growth in underlying sales for the first quarter, surpassing analysts’ expectations.
