Unilever’s focus on core ‘power brands’ has helped insulate the fmcg giant from slowing markets to win 3.5% underlying sales growth (USG) from a 1.5% rise in volumes.
Making up 78% of turnover, power brands led growth with 4.3% USG and volumes up 2.2%.
Overall revenues at Unilever fell 3.8% to €50.5bn, as a strong euro knocked money received by 5.9% and disposals shrank sales 1.2%, and Unilever sold or spun out brands including The Magnum Ice Cream Company and Graze.
Gross margin improved 20 basis points to 46.9% in the year to 31 December 2025, with underlying operating margin improving 60bp to 20%. Underlying operating profit fell 1.1% to €10.1bn.
“In 2025 we became a simpler, sharper, and faster Unilever, delivering our commitment to volume growth, positive mix and strong gross margin,” said CEO Fernando Fernandez, who took the reins at Unilever at the start of 2025 with a remit to streamline the company.
Underlying sales growth was strongest in the fourth quarter, at 4.2%, as the company landed a “strong innovation plan, drove improvements in key emerging markets and successfully completed the ice cream demerger”.
“We are moving at speed to build a business that drives desire at scale in our brands, execution excellence across all channels and cost discipline,” said Fernandez.
“We have set clear priorities for growth – building a brand portfolio for the future, with more beauty, wellbeing and personal care, prioritising premium segments and digital commerce, and anchoring our growth in the US and India.”
Growth in 2025 was led by Unilever’s personal care segment at 4.7%, driven by “market share gains, premium innovations, and commodity-driven price increases”; beauty and wellbeing’s 4.3% growth also outstripped more modest growth in homecare (2.6%) and food (2.5%).
The group now expects full-year growth for 2026 to fall at the lower end of its 4%-6% mid-term guidance, with at least 2% volume growth.
That is a “spicy” target, according to RBC analyst James Edwardes Jones, who called the guidance “a big ask”.
”Results were bang in line with consensus expectations, with a new €1.5bn share buyback programme announced, to start in Q2,” he said.
“What intrigues us is the guidance. It’s in line with mid-term guidance, but nonetheless feels spicy for 2026: 4%-6% organic sales growth (albeit towards the bottom end) with at least 2% volume growth and modest margin improvement. That’s a big ask.”
Bernstein’s Callum Elliott, however, said 4% “should be eminently achievable” in the year.
“Management have spoken consistently about driving an acceleration and wanting to be closer to 5% in the medium-term, post ice-cream spin-off. This acceleration now seems to be pushed back beyond FY26, with a promise of ‘jam tomorrow’. Over two years now into the Unilever turnaround, the question on our minds is: how much patience will investors have to wait another year?”
Unilever has announced 10 transactions since the start of 2025 in its efforts to reshape its portfolio towards more lucrative personal care markets. In April and September 2025, it acquired Wild and Dr Squatch for its premium personal care portfolio; in April it also sold Conimex; September and November saw the sale of The Vegetarian Butcher and the Kate Somerville skincare brand; and Unilever started the new financial year with the sale of its Indonesian tea business and its Colombian and Ecuadorian homecare business in January.
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