Underlying Sales and Volume Improvement
Full-year underlying sales growth of 3.5%, with volumes up 1.5% and price contribution of 2.0%. Sequential improvement through the year with Q4 underlying sales growth of 4.2%, volumes 2.1% and price 2.0%.
Unilever
· UL
February 12th, 2026
Summary
- Earnings Call Date:
- 2026-02-12
- Change Since:
- -16.96%
- Next Earnings Date:
- 2026-07-28
Earnings Call Sentiment
PositiveThe call presented a predominantly positive operational story: broad-based sequential improvement, Power Brands and premium innovations delivering above-market growth, margin expansion, strong productivity progress, solid cash generation and a clearer, sharper portfolio following the Ice Cream demerger. Key challenges remain — notable FX headwinds that materially reduced reported turnover and EPS, regional softness in parts of Latin America and a flat China performance for the year, category-specific execution issues (hair care, deodorants in Brazil) and demerger-related cash impacts. Management provided constructive guidance (underlying sales ~4%, volumes at least 2%, modest margin improvement) and clear priorities (volume-led growth, reinvestment in Power Brands, productivity), suggesting confidence in continued improvement.
Company Guidance
Unilever guided 2026 underlying sales growth at the bottom end of its 4–6% multiyear range (c.4%), with underlying volume growth of at least 2% and a further modest improvement in underlying operating margin; management expects overall inflation to be lower than 2025 but selective commodity pressure (notably palm, canola and surfactants) and some currency headwinds. Capital allocation guidance included a new €1.5bn share buyback, continued sustained/growing dividends (maintaining a roughly 70:30 dividend:buyback balance), continued elevated brand & marketing investment (16.1% of turnover in 2025), CapEx at about 3.1% of turnover with >50% directed to productivity, and completion of the €800m productivity program in 2026 (c.€670m delivered to date, ~€130m remaining). Balance-sheet/ cash priorities were reiterated — having generated €5.9bn free cash flow in 2025 (100% cash conversion), with year‑end net debt €23.1bn and net debt/EBITDA ~2x — while the company reiterated its focus on volume-led growth, positive mix and gross‑margin expansion to drive hard‑currency EPS.
Power Brands Outperformance
30 Power Brands ( >78% of group turnover) grew underlying sales 4.3% for the year with volumes +2.2%. 2-year CAGR for Power Brands is 5% (including 3.4% volume growth). Q4 Power Brand growth was 5.8% with volumes +3.5%.
Strong Category Performance — Beauty & Wellbeing and Personal Care
Beauty & Wellbeing underlying sales +4.3% (volumes +2.2%, price +2.1%). Personal Care underlying sales +4.7% (price +3.6%, volumes +1.1%). Personal Care underlying operating profit EUR 3.0bn; margin improved 50 bps to 22.6%.
Home Care and Foods Profitability Gains
Home Care underlying sales +2.6% (volume-led +2.2%); Q4 growth accelerated to 4.7% with volumes +4.0%. Home Care underlying operating margin 14.9% (+40 bps). Foods delivered underlying sales +2.5% and a record underlying operating margin of 22.6% (+130 bps), underlying operating profit EUR 2.9bn.
Gross Margin and Overhead Improvement
Underlying operating margin expanded by 60 bps to 20.0% for the group. Gross margin up 20 bps to 46.9% (third consecutive year of gross margin expansion). Overheads reduced by 50 bps driven by productivity program.
Productivity Program Progress
Productivity program has delivered >EUR 670m of savings to date, ahead of schedule and on track for EUR 800m by 2026; overhead efficiencies contributing to margin expansion.
Cash Generation and Balance Sheet Strength
Free cash flow EUR 5.9bn (100% cash conversion); excluding demerger items free cash flow EUR 6.3bn. Net debt EUR 23.1bn, reduced by EUR 1.4bn year-on-year; net debt to underlying EBITDA ~2.0x.
Return on Invested Capital and Capital Returns
Underlying ROIC at 19% (top third of sector), benefited ~100 bps from Ice Cream demerger. Returned EUR 6.0bn to shareholders (EUR 4.5bn dividends, EUR 1.5bn buybacks) and announced new EUR 1.5bn buyback.
Portfolio Transformation and Strategic M&A
Rotated ~15% of the portfolio in 2025 (Ice Cream demerger + 10 transactions). Acquisitions like Minimalist, Wild and Dr. Squatch (and Magnum involvement) broaden exposure to premium, digitally-native and e-commerce-led brands.
Notable Brand Milestones and Innovation Traction
Liquid I.V. became a billion-dollar brand and achieved >18% U.S. household penetration; OLLY >$500m. Multiple brands delivered double-digit growth (Dove, Vaseline, Hellmann's flavored mayo becoming a EUR 100m platform). Brand & marketing investment increased to 16.1% of turnover (highest in over a decade).
Geographic Momentum — North America and Asia Pacific Africa
North America underlying sales +5.3% with volumes +3.8%. Asia Pacific & Africa underlying sales +4.6% with volumes +3.0%; Q4 APA accelerated to +6.9% (volumes +5.7%). Strong Indonesia recovery with Q4 growth of ~17%.
Guidance for 2026
Outlook: underlying sales growth expected at the bottom end of the 4–6% multiyear range, underlying volume growth of at least 2%, and a modest further improvement in underlying operating margin. Continued focus on volume-led growth and reinvestment into brands.
Fernando Fernandez
Hello, and welcome to Unilever's full year results announcement. Thank you for joining us. In a moment, Srini Phatak, our Chief Financial Officer, will take you through a detailed breakdown of Unilever results for 2025. But before that, I would like to share with you a few reflections on our performance last year. Let me start by saying that we have delivered a solid year, fully in line with our commitments despite challenging conditions. When I took over as CEO, I made clear that one of my biggest priorities was to ensure that in Unilever, we could both perform and transform. 2025 has demonstrated our ability to [ evolve ]. We delivered a good performance, delivering competitive volume growth, positive mix and gross margin expansion, with sequential improvement throughout the year.
We sharpened the portfolio. The successful demerger of Ice Cream combined with 10 deals, including acquisitions like Minimalist, Wild, and Dr. Squatch and the disposal of several nonstrategic brands means that we have rotated 15% of the total portfolio in 2025. We have significantly elevated the offering of our brands, stepping up their functionality, their aesthetics, their sensorials. Strong innovation plans and a decisive shift to social first demand generation models also contributed to a strong improvement in the [indiscernible] brand superiority scores of our brands, a key reason for our ability to outperform markets. This is empowered by another increase in our brand and marketing investment. We improved our execution, reflected by our continuing strength in developed markets and our imp...
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