Unilever (NYSE:UL) reported accelerating volume-led growth in the second quarter, prompting the consumer products company to raise its full-year outlook as it expects pricing to become a larger contributor in the second half.
Underlying sales rose 4.8% in the first half, including 4.2% from volume and 0.6% from price, Chief Financial Officer Srinivas Phatak said on the company’s results call. Second-quarter underlying sales growth accelerated to 5.8%, driven by 5.5% volume growth, which management described as Unilever’s strongest quarterly volume performance since 2010.
Power brands and home care drive growth
Unilever said its power brands, which account for 78% of turnover, grew 6% in the first half and 6.9% in the second quarter. Second-quarter power-brand volume growth was 6.8%, with 15 of the company’s 30 power brands posting double-digit growth.
Beauty and Wellbeing recorded first-half underlying sales growth of 5.9%, accelerating to 8.1% in the second quarter. Hair care grew 9% during the half, supported by Dove, Sunsilk and K18. Vaseline posted double-digit growth, while the prestige beauty portfolio also accelerated, with Paula’s Choice, Hourglass and Tatcha each delivering double-digit growth in the second quarter.
Personal Care grew 4.8% in the first half and 5.9% in the second quarter. Unilever said it regained market leadership in U.S. deodorants, supported by Dove, while Rexona returned to growth in Brazil after changes to format mix and shelf space.
Home Care was the company’s fastest-growing business group, with underlying sales up 7.6% in the first half and 9.1% in the second quarter. Nearly all first-half growth came from volume. The segment benefited from strong fabric-cleaning growth in India, Brazil and Indonesia, as well as continued momentum in fabric enhancers led by Comfort.
Foods grew 1.2% in the first half but slowed to 0.2% growth in the second quarter. Management cited weaker performance in North America and Europe, particularly in U.S. condiments, where it said increased competition in premium mayonnaise products using alternative oils, including avocado oil, hurt performance. The company said it is rolling out a Hellmann’s avocado line and adjusting pricing and distribution plans.
Emerging markets lead regional performance
Emerging markets continued to be a key growth driver. Asia Pacific Africa delivered 7.3% underlying sales growth in the first half, with 6.1% from volume, while Latin America grew 7.6%, including 5.7% volume growth.
India led the second-quarter performance, with 10% underlying sales growth. Management said the country achieved record market shares in laundry and hair care. China grew by a mid-single-digit rate, aided by digital and e-commerce channels, while Indonesia grew 7% on broad-based gains across business groups.
North America grew 2.7% in the first half, with 3.2% volume growth, and growth accelerated to 3.6% in the second quarter. The company cited gains in deodorants, skin cleansing, hair care and prestige beauty. Europe declined 0.9% in the first half amid a softer market environment, with the weakness concentrated in Foods.
Management said it had not seen a material divergence between sell-in and sell-out trends in the U.S. While some retailer destocking occurred in Foods, it was not material at the company level.
Margins rise despite inflationary pressures
Underlying operating margin expanded 10 basis points to 20.3% in the first half despite a 70-basis-point year-over-year decline in gross margin. Phatak said inflation, including commodity, controlled-cost and other pressures, totaled about €300 million in the first half and is expected to total about €550 million in the second half.
The company now expects full-year inflation of roughly €800 million to €900 million, centered around €850 million. Much of the inflation is concentrated in Home Care and emerging markets, according to Phatak.
Unilever maintained Brand and Marketing Investment at 16.1% of turnover, with additional spending directed toward power brands, innovation and FIFA World Cup activations. The company said overheads improved by approximately 70 basis points after completing an €800 million productivity program ahead of schedule.
Phatak said Unilever expects second-half gross margins to remain around first-half levels on an absolute basis as higher pricing reaches the income statement. The company expects some volume sensitivity as prices rise.
Outlook raised; portfolio changes continue
Unilever raised its full-year outlook and now expects underlying sales growth within its multiyear range of 4% to 6%, with approximately 3% volume growth for the year. It expects second-half underlying sales growth of 4% to 5%, led by pricing, and continues to target a modest improvement in underlying operating margin versus 2025.
The company expects currency headwinds to ease in the second half. Based on July spot rates, it projected a full-year currency impact on turnover of around 3%, compared with a 4.9% reduction during the first half.
On capital allocation, Unilever increased its second-quarter dividend by 3% and completed a €1.5 billion share repurchase program in June. It expects operating performance and proceeds from the Foods transaction to support €6 billion in share buybacks between 2026 and 2029.
Unilever also completed the acquisition of U.S. supplements brand Grüns in June. Management said the business complements its wellbeing portfolio and expands its exposure to premium, high-growth and digitally led consumer segments. The company said its planned combination of Foods with McCormick is progressing, with regulatory, tax, filing and integration work continuing.
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.
