Unilever announced on Thursday its decision to increase prices in response to higher-than-anticipated costs attributed to the ongoing Iran conflict, alongside reporting stronger-than-expected first-quarter sales growth. Despite this, the company maintained its sales and profit margin forecasts 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, and are expected to be implemented in the latter half of the year, as outlined by Unilever’s finance chief, Srinivas Phatak, during an analyst call. The regions most affected by inflation, such as parts of Asia, Africa, and Latin America, are likely to witness the most significant price hikes, with a more moderate impact expected in North America due to the company’s smaller home-care business presence in that region.
Phatak emphasized that the price increases would be strategic and competitive in nature. Consumer goods companies are currently grappling with challenging cost environments marked by escalating commodity prices and disruptions in the supply chain stemming from geopolitical tensions, resulting in elevated prices for everyday products.
Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros ($1.2 billion to $1.4 billion Cdn) for the full year, attributing this to increased logistics and manufacturing expenses. Phatak indicated that the company plans to implement incremental price adjustments, with the possibility of higher increases if inflationary pressures persist.
The last instance of Unilever implementing a three percent price hike was in the fourth quarter of 2024, following the aftermath of the COVID-19 pandemic and the Ukrainian conflict. Analyst Chris Beckett from Unilever investor Quilter Cheviot noted the challenges Unilever faces in raising prices while maintaining sales volume growth, particularly in constrained markets like Europe.
Several companies, including Unilever’s competitors such as Nestlé and Procter & Gamble, have signaled price increases due to the Iran conflict. Unilever’s sales growth in the first quarter was primarily driven by volume growth, especially in its beauty and home segments, indicating a shift towards volume-driven growth after a period of relying on price hikes.
CEO Fernando Fernandez highlighted the positive start to the year, emphasizing volume-led growth driven by key brands like Dove and Axe. Unilever’s underlying sales growth of 3.8 percent in the first quarter exceeded analyst expectations, reflecting the company’s resilience amidst challenging market conditions.
