Unilever has warned it will raise prices this year as higher-than-expected costs linked to the Iran war put pressure on the consumer goods giant.
The London-listed maker of Dove, Axe and Dermalogica said it expected full-year cost inflation of around €750m to €900m (£658m to £789m), including higher logistics and factory costs.
Chief financial officer Srinivas Phatak said this was “about €350m to €500m higher” than the company had expected at the start of the year.
“There will be frequent price increases but in small doses,” Phatak told analysts.
He later told journalists that if inflationary pressures continued, Unilever could potentially raise prices at the higher end of two per cent to three per cent.
The increases are expected to be introduced across select markets and categories, with home care products exposed to crude oil prices likely to be among the most affected.
Phatak said the rises would mainly take effect in the second half of the year, with parts of Asia, Africa and Latin America set to see the largest increases, rather than North America, where Unilever’s home care business is smaller.
“It will be calibrated and it will be done in a competitive manner,” he said.
Unilever last raised prices by three per cent in the final quarter of 2024, as it continued to unwind from the sharp inflationary pressures that followed the pandemic and Russia’s invasion of Ukraine.
Consumer goods companies are facing renewed cost pressures as surging commodity prices and supply chain disruption linked to the US-Israeli war with Iran push up the cost of everyday products.
According to Reuters, 36 companies have signalled price hikes due to the conflict, while Unilever rivals including Nestlé and Procter & Gamble have warned of higher costs.
Reckitt has also flagged margin pressure, although L’Oréal beat expectations as shoppers continued to trade up to premium products.
Quilter Cheviot consumer staples analyst Chris Beckett said Unilever would need to tread carefully to avoid damaging sales volumes.
“They’re constrained in a number of markets, particularly developed markets in Europe,” he said. “There are limits to what they can do – it’s not easy to take pricing.”
Despite the cost warning, Unilever maintained its 2026 sales and profit margin forecasts, suggesting it expects to withstand the tougher trading environment.
The group posted underlying sales growth of 3.8 per cent in the three months to March, ahead of the 3.6 per cent expected by analysts in a company-compiled consensus.
The performance was driven by stronger-than-expected volumes, particularly across its beauty and home care divisions, while pricing was softer than forecast.
The figures mark a shift back towards volume-led growth after several years in which consumer goods groups leaned heavily on price increases to offset rising costs.
Unilever’s previous rounds of steep price hikes pushed some shoppers towards cheaper own-label alternatives, forcing the company to slow increases and invest more heavily in marketing and product innovation to win customers back.
Chief executive Fernando Fernandez said: “We have started the year well with volume-led growth driven by our Power Brands and a positive performance across all Business Groups.”
Fernandez, who was promoted from finance chief last year, is leading a wider reshaping of the business around personal care and beauty.
Unilever spun off its ice cream division last year and announced plans last month to hive off its food business and merge it with spice maker McCormick.
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