Unilever PLC

Unilever reported first-half turnover of EUR 25.6 billion, up 0.5% year over year. Underlying sales growth was 4.8% in the first half, with 4.2% from volume and 0.6% from price; in Q2, underlying sales growth was 5.8% with volume growth of 5.5%. Underlying operating profit was EUR 5.2 billion, up 0.9%, and underlying EPS rose 2.4% to EUR 1.61. Underlying operating margin increased 10 basis points to 20.3%, while gross margin declined 70 basis points year over year. Free cash flow was EUR 1.5 billion, up EUR 0.5 billion. For the full year, management now expects underlying sales growth to be within 4% to 6%, around 3% volume growth, and a modest improvement in underlying operating margin versus 2025; second-half growth is expected to be 4% to 5% and led by pricing.

Fernando Fernandez framed the quarter as proof that Unilever’s ‘desire at scale’ strategy is working, emphasizing that the company is simultaneously performing and transforming. He highlighted strong volume growth, broad-based share gains in emerging markets, and the role of power brands, innovation, and culturally relevant marketing, including the FIFA World Cup activation. His tone was confident and upbeat, but he also acknowledged pressure points in U.S. condiments and some legacy skincare brands.

Srinivas Phatak emphasized that growth quality was strong, with Q2 underlying sales up 5.8% and volume up 5.5%, and that the first half was supported by execution across all three HPC business groups. He cited first-half underlying operating profit of EUR 5.2 billion, EPS of EUR 1.61, and free cash flow of EUR 1.5 billion, while noting that gross margin was down 70 basis points year over year due to inflation and calibrated pricing. He said the EUR 800 million productivity program was completed ahead of schedule, brand and marketing investment was 16.1% of turnover, finance costs were 2.5% of average net debt, and the company expects full-year finance cost below 3%, tax around 26%, and a EUR 6 billion share buyback program between 2026 and 2029.

Analysts pressed on whether the strong volume performance reflected sell-in versus sell-out, retailer destocking in the U.S., the sustainability of volume once pricing rises, and whether FIFA and Amazon Prime Day created one-offs. Management said destocking was not material at group level, that there was no significant difference between sell-in and sell-out, and that Amazon Prime Day contributed only a phasing benefit of about $25 million to $30 million. They also said FIFA was a major activation with broad execution benefits, but it was intended to build brand equity rather than drive a short-term one-off, and they stressed that second-half volume guidance already assumes some pricing sensitivity.