Unilever H2 Earnings Call Highlights

Unilever (NYSE:UL) executives told investors the company delivered a “solid year” in 2025, meeting its commitments while continuing a broad transformation that included the demerger of its ice cream business, portfolio reshaping through acquisitions and disposals, and stepped-up brand investment.

All figures discussed on the call were presented on a continuing basis excluding ice cream, with comparative periods restated to reflect the separation.

2025 results: volume-led growth and margin expansion

Chief Financial Officer Srinivas Phatak said underlying sales growth for the full year was 3.5%, comprised of 1.5% volume growth and 2% price growth. Performance improved through the year, with fourth-quarter underlying sales growth of 4.2%, including 2.1% volume growth.

Unilever’s “30 Power Brands,” representing more than 78% of group turnover, grew faster than the overall business. Phatak said Power Brands delivered 4.3% underlying sales growth for the full year, including 2.2% volume growth, and accelerated to 5.8% growth in the fourth quarter, driven by 3.5% volume growth. Management said 100% of incremental brand and marketing investment in 2025 was allocated to Power Brands.

Turnover was EUR 50.5 billion, down 3.8% year over year, driven by a 5.9% foreign exchange headwind. Excluding currency, turnover rose 2.3%, supported by underlying sales growth and partially offset by portfolio actions. Unilever cited a net impact from acquisitions and disposals of -1.2%, with acquisitions contributing 0.6% (including Minimalist, Wild, and Dr. Squatch) and disposals contributing -1.8% (including the prior-year exits of Unilever Russia and the China water purification business, along with 2025 disposals such as Conimex, The Vegetarian Butcher, and Kate Somerville).

Underlying operating margin expanded 60 basis points to 20% in 2025. Gross margin rose 20 basis points and, following the ice cream demerger, was described as structurally higher at 46.9%. Brand and marketing investment increased 10 basis points to 16.1% of turnover, which management said was the highest percentage in over a decade and roughly 300 basis points higher than four years ago.

Underlying operating profit was EUR 10.1 billion, down 1.1% year over year, while underlying EPS rose 0.7% to EUR 3.08. Phatak said currency reduced underlying EPS by 8.8%, while on a constant-currency basis underlying EPS grew 9.5%. Unilever implemented an eight-for-nine share consolidation in December 2025 following the ice cream separation, with prior periods restated for comparability.

Business group performance highlights

Beauty and Wellbeing delivered 4.3% underlying sales growth, evenly split between volume (2.2%) and price (2.1%). Phatak said Dove, Vaseline, and premium brands delivered double-digit growth, and highlighted that Wellbeing delivered double-digit growth led by volume. Liquid I.V. reached “billion-dollar brand” status and achieved record U.S. household penetration above 18%, while Nutrafol also delivered double-digit growth and Olly delivered high single-digit growth and surpassed $500 million in size. Underlying operating profit for the group was EUR 2.5 billion and margin was 19.2%, down 20 basis points, which management attributed to higher brand and marketing investment offset by overhead efficiency.

Personal Care delivered 4.7% underlying sales growth, with price contributing 3.6% and volumes 1.1%. Phatak said momentum was driven by the United States and supported by premium innovations, particularly in Dove. Underlying operating profit was EUR 3.0 billion and margin increased 50 basis points to 22.6% on gross margin and overhead improvements. Management emphasized acquisitions of Wild and Dr. Squatch as enhancing exposure to premium segments over time.

Home Care delivered 2.6% underlying sales growth, primarily volume-led (2.2%). Performance improved through the year, with fourth-quarter growth of 4.7% driven by 4% volume growth. Management cited strong momentum in Europe, improved execution in India, and a return to growth in Brazil in the fourth quarter. Underlying operating profit was EUR 1.7 billion and margin rose 40 basis points to 14.9%, helped by overhead efficiencies and focused innovation investment, partly offset by a decline in gross margin.

Foods delivered 2.5% underlying sales growth, with 0.8% volume and 1.7% price. Hellmann’s posted mid-single-digit, volume-led growth, supported by flavored mayonnaise scaled across more than 30 markets and described as a EUR 100 million platform. Foods delivered what management called a “record year” for profitability, with underlying operating margin up 130 basis points to 22.6% and underlying operating profit of EUR 2.9 billion. In Q&A, management attributed the margin performance to portfolio rationalization, pack-price architecture and innovation (notably Hellmann’s), disciplined overhead control, and management of profitable accounts in Unilever Food Solutions.

Regional trends: developed markets resilient, emerging markets improving

Developed markets (41% of turnover) delivered 3.6% underlying sales growth, though growth moderated in the second half; fourth-quarter developed-market growth was 1.7%. North America was cited as a standout, with 5.3% underlying sales growth for the year and 3.8% from volume, supported by portfolio reshaping toward Beauty and Wellbeing and Personal Care, premium innovation, and retail execution. Europe delivered low single-digit growth for the year but was flat in the fourth quarter; management said softness in Foods weighed on the region, while Home Care and Personal Care remained strong.

Emerging markets (59% of turnover) delivered 3.5% underlying sales growth for the year, accelerating to 5.8% in the fourth quarter with 3.2% volume growth. Asia Pacific Africa grew 4.6% in 2025 and 6.9% in the fourth quarter, driven by 5.7% volume growth. Management pointed to operational “resets” in Indonesia and China, with Indonesia’s growth accelerating to 17% in the fourth quarter against a weak comparator and China improving to mid-single-digit growth in the fourth quarter after a flat full-year result.

Latin America grew 0.5% for the year as price (5.9%) offset a 5.1% volume decline, but the region returned to growth in the fourth quarter. In Q&A, CEO Fernando Fernandez said corrective actions in Brazil—pricing adjustments in Home Care and a format mix shift in deodorants toward aerosol—were starting to show results, and he expressed confidence that Latin America would contribute better in 2026, while acknowledging the macro environment remains challenging in Brazil and Mexico.

Cash flow, productivity and capital returns

Free cash flow was EUR 5.9 billion, representing 100% cash conversion. Management said free cash flow was about EUR 400 million lower than prior years due to ice cream demerger costs, including separation-related tax on disposals; excluding those items, free cash flow was EUR 6.3 billion. Year-end net debt was EUR 23.1 billion, down EUR 1.4 billion following the separation, and net debt to underlying EBITDA ended at 2x.

Unilever returned EUR 6 billion to shareholders in 2025, comprising EUR 4.5 billion in dividends and EUR 1.5 billion in share buybacks. Phatak reiterated a preference to maintain, “in principle,” a 70/30 balance between dividends and buybacks.

On cost savings, Phatak said the productivity program had delivered more than EUR 670 million of savings to date, ahead of schedule, and Unilever remains on track to complete the EUR 800 million program in 2026. He said most benefits are reflected in SG&A and general overheads, with some in supply chain overheads.

2026 outlook: slower markets, focus on volume and modest margin gains

For 2026, management guided to underlying sales growth at the bottom end of its multi-year 4% to 6% range, with underlying volume growth of at least 2%. The company expects a “modest” improvement in underlying operating margin, supported by gross margin levers and productivity, with continued reinvestment in brands.

In Q&A, Fernandez said he expects pricing to be “a bit lower” than the longer-run average and around 2% in 2026, noting some increase in promotional intensity in Foods but describing it as not dramatic. Phatak said commodity inflation in 2026 is expected to be concentrated in a few inputs—most notably palm kernel oil and surfactants—while some areas such as food-side commodities and crude-related inputs (including packaging) are seeing deflation, and wage inflation remains a factor.

Unilever also announced a new EUR 1.5 billion share buyback for 2026. Executives emphasized ongoing portfolio focus—particularly in Beauty and Wellbeing and Personal Care, premium segments, and e-commerce exposure—alongside investments in innovation and demand generation, including plans to activate personal care innovations around the FIFA World Cup 2026 sponsorship.

About Unilever (NYSE:UL)

Unilever PLC is a global consumer goods company with roots dating back to the early 20th century, formed from the merger of the British firm Lever Brothers and the Dutch company Margarine Unie. The company develops, manufactures and markets a broad portfolio of branded products in personal care, home care and foods and refreshments. Unilever’s corporate structure and listings reflect its long history in both the United Kingdom and the Netherlands, and it operates at scale across diverse consumer markets worldwide.

Unilever’s business is organized around major product categories—Beauty & Personal Care, Home Care and Foods & Refreshment—and includes numerous well-known consumer brands across those categories.