Unilever announced on Thursday its decision to increase prices in response to elevated costs stemming from the Iran conflict. Despite this challenge, the company reported better-than-expected sales growth for the first quarter of the year. Unilever, known for brands like Dove and Axe, maintained its sales and profit margin projections for 2026, indicating confidence in navigating the current economic uncertainties.
The price adjustments will be targeted at specific markets and product categories, particularly those linked to crude oil. These changes are anticipated to roll out predominantly in the latter half of the year, with a focus on regions like Asia, Africa, and Latin America, where inflationary pressures have been most pronounced. Unilever’s CFO, Srinivas Phatak, assured that the price increases would be strategic and competitive.
Consumer goods companies are grappling with significant cost challenges due to soaring commodity prices and disruptions in the supply chain caused by geopolitical tensions, such as the conflict between the U.S., Israel, and Iran. Unilever expects total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and production expenses.
To address ongoing inflationary pressures, Unilever may implement periodic price adjustments, potentially at the higher end of the two to three per cent range, if necessary. The company last raised prices by three per cent in late 2024, following the aftermath of the COVID-19 pandemic and the Ukraine conflict. Market analysts emphasize the importance for Unilever to balance price increases with maintaining sales volumes, especially in constrained markets like Europe.
Competitors of Unilever, including Nestlé and Procter & Gamble, have also signaled challenges related to heightened costs from the Iran conflict. Despite these obstacles, Unilever’s recent sales growth was primarily driven by increased volumes, particularly in its beauty and home segments. The company aims to sustain this momentum by focusing on its key brands and strategic business initiatives.
Unilever’s CEO, Fernando Fernandez, highlighted the positive performance of the company’s key brands and expressed satisfaction with the volume-driven growth in the first quarter. Under his leadership, Unilever is undergoing strategic transformations, concentrating on personal care and beauty segments. The company’s underlying sales growth of 3.8 per cent in the first quarter exceeded analyst expectations, showcasing resilience amid challenging market conditions.
