Unilever announced on Thursday its decision to increase prices in response to higher costs driven by the Iran conflict, despite surpassing analysts’ expectations with its first-quarter sales growth. The company, known for products like Dove soap and Axe deodorant, maintained its 2026 sales and profit margin forecasts, indicating confidence in navigating the current economic uncertainties.
The price adjustments will be targeted at specific markets and product categories, particularly those exposed to crude oil prices in the home care sector, and are expected to be implemented mainly in the latter half of the year. Unilever’s finance chief, Srinivas Phatak, mentioned that regions such as Asia, Africa, and Latin America, which have experienced significant inflation, will witness the highest price hikes, with a more moderate impact on North America due to the company’s smaller home-care business presence in that region.
Phatak emphasized that the price increases will be strategic and competitive. The company anticipates total cost inflation of approximately 750 million to 900 million euros for the full year, encompassing elevated logistics and production expenses. If inflationary pressures persist, Unilever may opt for higher price adjustments within the two to three percent range.
In the wake of ongoing supply chain disruptions and escalating commodity prices resulting from the U.S.-Israeli conflict with Iran, consumer goods firms are facing a challenging cost environment, leading to higher prices for everyday items. Unilever’s competitors like Nestlé and Procter & Gamble have also warned of increased costs due to the geopolitical tensions, with some experiencing margin pressure.
Unilever’s strategy includes balancing price increases to maintain sales volumes and address consumer demands, particularly in markets where pricing flexibility is limited. The company is striving to regain consumer trust by moderating price hikes and investing in marketing and innovation after a period of sharp increases following the pandemic and geopolitical events.
The company’s first-quarter sales growth was primarily driven by robust volumes in its beauty and home categories, indicating a shift towards volume-driven growth after relying heavily on price adjustments in recent years. Unilever’s CEO, Fernando Fernandez, highlighted the positive performance of its key brands like Dove and Axe, underscoring the company’s strategic focus on personal care and beauty following recent business restructuring initiatives.
Unilever reported an underlying sales growth of 3.8 percent in the first quarter, exceeding analyst expectations. Fernandez, who took over as CEO last year, is leading efforts to reshape Unilever’s business operations, emphasizing personal care and beauty segments following recent divestments and restructuring efforts.