Consumer goods goliath Unilever (ULVR) reported better-than-expected Q1 sales as strong emerging markets demand more than offset sluggish developed markets growth.
The Dove-to-Domestos maker also said it will launch a fresh €1.5 billion share buyback, which boosted the stock in early dealings.
While Q1 turnover fell 3.3% to €12.6 billion, underlying sales grew by a better-than-expected 3.8%. This included volume growth of 2.9% and price growth of 0.9%. Unilever’s Power Brands spearheaded the performance. The FTSE 100 giant also called out momentum in emerging markets, where incomes are rising and big brands sell well.
The Vaseline-to-Persil seller highlighted strong growth in India. The group also benefited from a return to volume growth in Latin America as well as ‘continued good progress’ in China and Indonesia.
Moving at speed
‘We continue to move at speed to build a simpler, sharper Unilever with a structurally higher growth profile and a brand portfolio fit for the future,’ insisted CEO Fernando Fernandez. Unilever is cutting costs and simplifying its portfolio in order to focus on faster-growing, higher margin core brands.
Last December, it spun out The Magnum Ice Cream Company (MICC), now listed as a standalone business in Amsterdam, London and New York.
Then in March, Unilever announced a deal to combine its foods business with US-based spices-to-sauces maker McCormick (MKC). The foods separation is expected to unlock value by shaping Unilever into a pure-play home and personal care company, while also creating a ‘global flavour powerhouse in foods’.
For FY26, Unilever is forecasting underlying sales growth at the bottom end of its multi-year guidance range of 4% to 6%. It also expects to deliver at least 2% volume growth and a ‘modest’ improvement in underlying operating margin.
Scooping up share
Unilever retains a minority stake in Magnum Ice Cream, whose shares surged today on news of a ‘solid’ start to the new year. Magnum also reaffirmed FY26 guidance for organic sales growth of between 3% to 5% despite the consumer uncertainty arising from the Iran war.
While reported revenue for Q1 softened 1.2% after a currency impact, Magnum’s organic sales fattened up 4.5%. The firm’s four leading brands – Magnum, Ben & Jerry’s, Cornetto and The Heartbrand – saw ‘good progress’ in the quarter.
CEO Peter Ter Kulve said: ‘We have had an encouraging start to 2026 and the ice cream category continues to grow. In Q1 organic sales grew across both volume and price, which is a testament to the breadth of our portfolio and our competitive execution.’
He added: ‘We are mindful of the heightened uncertainty in the global environment, particularly in the Middle East, albeit our direct regional exposure remains limited, and we are taking mitigating actions. More broadly, we are well set up for the summer season, and our focus remains on executing our growth strategy and productivity programme.’
Since the arrival of new CEO Fernandez, Unilever has sharpened its focus on faster-growing beauty and personal care brands whist implementing a major cost-cutting drive.
Not everyone is convinced by the decision to separate the foods business. But in truth, the Anglo-Dutch conglomerate has been pulling back from slower growing foods for the past decade.
Foods’ Q1 performance, with underlying sales growth of 2.2%, probably vindicates the decision. Home care generated the fastest growth at 6.1%, followed by personal care with 3.7% growth and beauty and wellbeing with growth of 3.6%.
Read the press release here: https://www.unilever.com/investors/regulatory-announcements/
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