Unilever delivered its best quarter for volumes in over a decade and upgraded its annual forecast on Tuesday, as consumers reached for brands like Vaseline, Dove and Cif despite household budget concerns stemming from the Iran war. According to reports from Reuters, the consumer goods giant posted underlying sales growth of 5.8% for the quarter ended June 30, comfortably beating analysts' average expectation of 4.3%. The British company said second-quarter volumes rose 5.5%, powered by strength in key markets like India, Indonesia and Latin America. Reuters reports that these results were much stronger than expected, with analysts noting they seem likely to drive significant investor positivity. CEO Fernando Fernandez highlighted that "Our Power Brands continued to outperform, with all Business Groups delivering volume-led growth. Emerging markets showed momentum - India, Indonesia and Latin America all delivered strong growth - while North America again outperformed its market."
Unilever's shares, which have slid 16% since the conflict began, rose as much as 6.8% to £49.43 in early morning trading, according to Reuters. They were up 5.8% at £48.96 by 0745 GMT, on track for their best day in two years if gains hold. The positive market reaction reflects investor confidence in the company's strategic turnaround under CEO Fernando Fernandez, who was appointed last year to accelerate the turnaround strategy. Reuters analyst Callum Elliott noted that these stronger-than-expected results seem likely to drive a significant uptick in positivity and perhaps induce investors to look beyond the noise of the ongoing foods sale process. Bernstein analyst Callum Elliott said the results were "further evidence that Unilever's home and personal care portfolio can deliver growth well above many global staples peers."
In the first half of the year, Unilever reported a year-over-year decline in total net profit attributable to shareholders' equity to 3.32 billion euros from 3.51 billion euros. However, the company showed resilience with turnover for the comparable period increasing to 25.62 billion euros from 25.51 billion euros. The board declared a quarterly dividend of 0.4664 euro per share, in line with the first quarter and 3% higher compared with the prior-year period. The dividend will be paid on September 18 to shareholders on record as of August 7. This dividend increase reflects the company's confidence in its improved operational performance and cash generation capabilities. Underlying sales growth for the first half was 4.8%, with 4.2% from volume and 0.6% from price, accelerating in the second quarter to 5.8% USG, led by 5.5% volume. On a two-year average basis, volume growth in the first half was 2.7%.
The company is in the process of spinning off its slow-growth foods business into a £33.8 billion joint venture with US spice maker McCormick. According to Reuters, Tuesday's results underscore the company's motivation to sell the unit, with sales volumes for foods falling 0.1% and weighing on over 5% growth at each of its other three businesses. Unilever CFO Srinivas Phatak confirmed on an investor call that "We're on course to getting this merger finalised" and expects the separation to be completed by no later than mid-2027. The separation of its foods business is progressing well and expects it to be completed no later than mid-2027. In March 2026, Unilever announced an agreement to combine its Foods business with McCormick, unlocking value by shaping Unilever into a leading pureplay HPC company and creating a global flavour powerhouse in Foods. On 23 July 2026, McCormick announced the planned operating model and executive team of the combined company, along with the secondary listing location in London.
Unilever now expects underlying sales growth for 2026 to be within its multi-year forecast range of 4-6%, up from its earlier forecast of growth at the bottom end of that range. According to Reuters, it forecast sales growth of 4-5% in the second half, driven by higher pricing. The company anticipates 3% of underlying volume growth for the full year, with pricing expected to drive 4% to 5% underlying sales growth in the second half. Barclays analyst Warren Ackerman said the results were "further evidence that Unilever's home and personal care portfolio can deliver growth well above many global staples peers," with the company expected to deliver the best growth after L'Oréal post completion of the McCormick deal. While the Middle East conflict has saddled companies with higher costs this year, Unilever has softened the blow by raising prices. The company's €800 million productivity programme, launched in 2024 to simplify the business and remove stranded overheads related to Ice Cream, was completed ahead of schedule.
