Unilever announced on Thursday its decision to increase prices in response to elevated costs triggered by the Iran conflict, despite surpassing analysts’ predictions for first-quarter sales growth. The company, known for products like Dove soap and Axe deodorant, will maintain its sales and profit margin forecasts for 2026 to navigate the current economic uncertainties.
The price adjustments will be targeted at specific markets and product categories, particularly those exposed to crude oil fluctuations in the home care sector, and are anticipated to be implemented in the latter half of the year. According to Unilever’s finance chief, Srinivas Phatak, regions such as Asia, Africa, and Latin America, experiencing significant inflation, will witness the highest price hikes compared to North America.
Phatak emphasized that the price increases will be strategic and competitive in nature. The company, along with other consumer goods manufacturers, is grappling with mounting cost pressures stemming from soaring commodity prices and disruptions in the supply chain due to the conflict between the U.S., Israel, and Iran.
Unilever foresees a total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and production expenses. Phatak noted that incremental price adjustments will be made, with the possibility of larger increases if inflation persists.
The last time Unilever raised prices by three percent was in the final quarter of 2024, following the aftermath of the COVID-19 pandemic and Russia’s incursion into Ukraine. Analysts suggest that Unilever must strike a balance between price increments and maintaining sales volumes, especially in constrained markets like Europe.
Several companies, including Unilever’s competitors like Nestlé and Procter & Gamble, have signaled impending price hikes due to the ongoing conflict. Unilever’s first-quarter growth was bolstered by robust volumes in its beauty and home divisions, indicating a shift towards volume-driven expansion after a period of relying on price adjustments.
CEO Fernando Fernandez highlighted the company’s positive performance in the first quarter, driven by its Power Brands such as Dove and Axe. Fernandez, who assumed the role of CEO after serving as the finance chief, is leading Unilever’s strategic realignment towards a stronger focus on personal care and beauty products.
Unilever reported an underlying sales growth of 3.8 percent in the first quarter, outperforming analysts’ expectations. The company’s restructuring efforts, including spinning off its ice cream business and plans to merge its food division with McCormick, reflect its commitment to adapting to evolving market conditions.