Unilever announced on Thursday its intention to increase prices in response to escalating costs due to the Iran conflict, despite reporting better-than-expected first-quarter sales growth. The company, known for products like Dove soap and Axe deodorant, maintained its 2026 sales and profit margin outlook, 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, with implementation expected in the latter half of the year. Unilever’s CFO, Srinivas Phatak, highlighted that regions such as Asia, Africa, and Latin America, which have experienced higher inflation rates, will witness more significant price hikes compared to North America.
Amid rising commodity prices and supply chain disruptions stemming from the conflict with Iran, consumer goods firms face a challenging cost environment. Unilever anticipates total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing increased logistics and manufacturing expenses.
Phatak emphasized the need for incremental price adjustments, indicating a willingness to adopt further increases within the range of two to three percent if inflationary pressures persist. The last time Unilever raised prices by three percent was in late 2024, following peak levels post-COVID-19 and the Ukraine crisis.
Analysts, including Chris Beckett from investor Quilter Cheviot, underscored the necessity for Unilever to strike a balance between price hikes and maintaining sales volumes, particularly in constrained markets like Europe. The company’s competitors, such as Nestlé and Procter & Gamble, have also signaled cost pressures from the Iran conflict.
Unilever’s sales growth in the first quarter was primarily driven by robust volumes, particularly in the beauty and home segments, signaling a shift towards volume-driven growth after a period of relying on price increases. CEO Fernando Fernandez highlighted the positive performance of key brands like Dove and Axe, reflecting a strategic emphasis on personal care and beauty following recent business restructuring efforts.
Unilever’s underlying sales growth of 3.8 percent in the first quarter outpaced analysts’ expectations, demonstrating resilience amidst challenging market conditions.