Key Highlights
- Shares of Unilever surged more than 6% in London following second-quarter underlying sales growth of 5.8%, exceeding the consensus forecast of 4.3%
- The company recorded 5.5% volume expansion, marking its most robust quarterly volume performance in more than ten years
- Management raised its full-year underlying sales growth projection to 4%-6%, moving away from the lower end of that range
- The Home Care division topped all segments with 9.1% expansion; Foods segment posted minimal growth at 0.2%
- The anticipated merger of Unilever’s Foods division with McCormick continues to progress toward a mid-2027 completion target
Shares of Unilever (ULVR) surged as much as 6.8% to reach Ā£49.43 during Tuesday’s early London session, marking the stock’s highest point since March 6, following the consumer goods giant’s better-than-anticipated second-quarter performance and an upward revision to its annual sales guidance.
By mid-morning, the stock was trading 5.8% higher at Ā£48.96, positioning it for its strongest single-day performance in two years. The rally marks a recovery after shares had declined 16% following the onset of the Iran conflict.
The company reported underlying sales expansion of 5.8% during the second quarter, significantly surpassing the 4.3% analyst consensus estimate. Revenue totaled ā¬13.0 billion, representing a 3.8% increase, even as currency fluctuations created a 2.4% headwind.
The 5.5% volume expansion emerged as the headline figure. This represented Unilever’s most impressive volume quarter in over ten years, driven by robust performance in markets including India, Indonesia, and Latin America.
The company now projects full-year underlying sales growth within its 4%-6% multi-year target corridor, upgrading from previous guidance that indicated growth at the lower bound of that range. Management also elevated its volume growth expectation to approximately 3%, compared to the prior target of at least 2%.
Looking ahead to the second half, Unilever forecasts 4%-5% sales expansion, primarily driven by pricing initiatives. The company reaffirmed its projection for a moderate improvement in full-year underlying operating margin from the 20% level achieved in 2025.
Leading Brands Fuel Performance
Unilever’s Power Brands portfolio, representing 78% of overall revenue, generated 6% underlying sales growth during the first six months. This collection encompasses prominent names such as Axe, Vaseline, Dove, and Cif.
Marketing expenditure represented 16.1% of revenue in the second quarter, with increased spending linked to FIFA World Cup initiatives. CFO Srinivas Phatak emphasized during an investor call: “The days of underinvesting in our businesses are over.”
The Home Care segment emerged as the strongest performer, posting 9.1% underlying sales growth. Beauty & Wellbeing expanded 8.1%, while Personal Care contributed 5.9% growth.
The Foods division represented a notable underperformer. Sales growth registered just 0.2%, constrained by weaker performance in developed markets and intensifying competition in the U.S. condiments category. Volume in the Foods unit actually contracted 0.1%.
McCormick Transaction Progressing as Planned
Unilever is currently executing a plan to separate its Foods business and merge it with American spice manufacturer McCormick, creating a combined entity valued at approximately $65 billion. The transaction is anticipated to close by mid-2027 at the latest.
Barclays analyst Warren Ackerman described the results as “further evidence that Unilever’s home and personal care portfolio can deliver growth well above many global staples peers,” noting that confidence in post-transaction growth is strengthening.
Morgan Stanley characterized the results as an unambiguous “beat and raise,” highlighting that the 5.5% volume growth exceeded expectations by more than double. The firm noted that gross margin experienced some compression due to commodity inflation pressures.
Bernstein analyst Callum Elliott suggested the better-than-expected figures “seem likely to drive a significant uptick in positivity today.”
CFO Phatak provided reassurance that the Foods separation is advancing smoothly: “We’re on course to getting this merger finalised.”
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