Unilever beats sales forecasts as home and beauty brands drive growth
Unilever’s Q1 Performance and Market Outlook
April 30 (Reuters) - Unilever's first-quarter underlying sales growth beat expectations on Thursday, driven by a return to volume-led growth in emerging markets and strong demand for its "power brands" including Dove and Vaseline as it wins back customers.
The London-listed consumer goods giant, with a market valuation of more than $120 billion, kept its 2026 sales and profit margin forecast unchanged, indicating the firm hopes to weather the impact of "heightened macroeconomic uncertainty".
Challenging Cost Environment
Consumer goods companies are navigating one of the most challenging cost environments in years due to surging commodity costs and supply chain disruptions from the Iran war.
CEO’s Statement on Growth Strategy
"We have started the year well with volume-led growth driven by our Power Brands and a positive performance across all Business Groups," CEO Fernando Fernandez said in a statement.
Reshaping the Business
Fernandez is reshaping Unilever to focus on personal care and beauty after spinning off its ice cream business last year and announcing plans last month to hive off its food division and merge it with U.S. spice maker McCormick.
Sales Growth Drivers
Unilever's sales growth in the quarter was driven by stronger-than-expected volumes even as pricing was softer than forecast, marking a shift back to volume-driven growth after years of relying on price increases.
The consumer major raised prices sharply during the Covid-19 pandemic and after Russia invaded Ukraine in 2022, passing commodity cost increases on to consumers, and has only recently started winning back customers by slowing the pace of increases and investing in marketing and innovation.
Power Brands Performance
The British company posted underlying sales growth of 3.8% in the three months to March, ahead of the 3.6% growth expected by analysts in a company-compiled consensus.
The volume rise was led by so-called power brands, which are its biggest brands including Dove, Axe and Dermalogica, which grew underlying sales by 5%, with 4% volume growth.
Industry Context and Future Risks
Peers from Nestle to Procter & Gamble have warned of higher costs from the Iran war, with Reckitt flagging margin pressure, though French rival L'Oreal beat expectations as shoppers bought more premium products.
Firms are also grappling with the possibility of softening demand as household budgets could get squeezed if oil prices remain elevated and the conflict drags on.
Reporting Credits
(Reporting by Yadarisa Shabong in Bengaluru and Richa Naidu in London; Editing by Mrigank Dhaniwala)
