Unilever announced on Thursday its decision to increase prices in response to elevated costs attributed to the Iran conflict, alongside a better-than-expected growth in first-quarter sales. The London-based company, known for brands like Dove and Axe, maintained its 2026 sales and profit margin projections, indicating confidence in managing the current economic uncertainties.
The price adjustments, set to roll out later in the year primarily in regions like Asia, Africa, and Latin America, are targeted at specific markets and product categories, notably those linked to crude oil. Unilever’s CFO, Srinivas Phatak, assured that the price hikes would be strategic and competitive, with minimal impact on North America, where the company’s home-care segment is less prominent.
With escalating commodity prices and disruptions in the supply chain due to geopolitical tensions, consumer goods firms are experiencing significant cost pressures. Unilever anticipates a total cost inflation of approximately 750 million to 900 million euros for the year, encompassing increased logistics and manufacturing expenses.
Phatak emphasized a gradual approach to price adjustments to mitigate inflation effects. Notably, Unilever’s last significant price increase of three percent occurred in late 2024, following earlier market volatility related to the COVID-19 pandemic and geopolitical events.
Analysts like Chris Beckett from Quilter Cheviot highlighted the necessity for Unilever to balance price hikes with maintaining sales growth, especially in constrained markets like Europe. The Iran conflict has prompted numerous companies, including Unilever’s competitors like Nestlé and Procter & Gamble, to signal price hikes to counter rising costs.
Unilever’s recent sales growth, led by strong volumes in its beauty and home segments, indicates a shift towards volume-driven growth strategies. CEO Fernando Fernandez attributed the positive performance to the company’s Power Brands, such as Dove and Axe, signaling a successful return to volume-driven growth after a period of reliance on price adjustments.
Fernandez, who assumed the role of CEO after a restructuring phase, is steering Unilever towards a strategic focus on personal care and beauty. The company’s underlying sales growth of 3.8 percent in the first quarter exceeded analyst expectations, reinforcing its position in navigating the challenging market landscape.