Unilever's Volume-Led Resurgence: Best Quarter in 15 Years, but H2 Pricing to Test Resilience
Q2 2026 volume growth of 5.5% and an upgraded outlook mask looming commodity inflation and U.S. share losses in condiments.
UNA.AS · Earnings Call · 2026-07-28
Unilever's second-quarter 2026 results are a testament to the power of its "desire at scale" operating model. The company reported underlying sales growth of 5.8%, with volume up 5.5%—its best quarterly volume performance since 2010. Strong volume was broad-based, led by the HPC business groups and a resurgent emerging market portfolio. As CEO Fernando Fernandez stated, “This is Unilever's best quarterly volume performance since 2010.” — Fernando Fernandez, CEO · 2026-07-28
The company's Power Brands, now 78% of turnover, grew 6.9% in Q2, with volume up 6.8%. Power Brands continue to outperform, supported by premium innovation across Dove, Vaseline, and K18. CFO Srinivas Phatak noted, “We have upgraded our full year outlook. We expect underlying sales growth to be within a multiyear range of 4% to 6% and with around 3% UVG for the full year.” — Srinivas Phatak, CFO · 2026-07-28
Emerging markets remain the growth engine, with high growth in India (10%) and Latin America (8.9%). The World Cup activation was a pivotal moment, with 50,000 creators and 180 limited-edition products across 120 markets. Unilever also regained market leadership in U.S. deodorants. However, as Fernandez acknowledged, “We don't cause a prebuy... we are not carried away by a quarterly result.” — Fernando Fernandez, CEO · 2026-07-28 The company prefers to focus on 10-quarter trends, which show 2.7% average volume growth—a consistent trajectory.
Challenges persist. U.S. condiment share losses in avocado-oil mayonnaise, oral care weakness, and a drag from Asian legacy skincare brands like Fair & Lovely and Ponds. Commodity inflation—estimated at EUR 850 million for the year—will require pricing actions in H2, which could temper volume growth. As Fernandez explained, “In the second half, our sequential inflation will be in the territory of EUR 500 million.” — Fernando Fernandez, CEO · 2026-07-28
The company is also executing its portfolio transformation, with the Foods-McCormick merger progressing well. This move aligns with the strategic pivot toward a pure-play HPC company, increasing exposure to premium and higher-growth segments.
From a historical perspective, this call marks a decisive shift. In the February 2026 call, Fernandez emphasized emerging market strength: “We consider our strength in emerging markets a significant long-term competitive advantage.” — Fernando Fernandez, CEO · 2026-02-12 That advantage is now materializing. Yet, as with its peers, Unilever faces a fragile consumer and rising input costs. The commitment to hard currency earnings, as Srini reaffirmed in October 2025, remains a guiding principle: “The commitment to hard currency earnings for us is a multiyear priority.” — Srinivas Phatak, Acting Chief Financial Officer · 2025-07-31 The question is whether H2 pricing will erode the volume momentum. Despite the risks, the upgraded guidance and record volume performance justify cautious optimism.
We have delivered a strong volume-led first half and an accelerating 1 with the best volume quarter at Unilever in over 15 years. Importantly, this performance is not a one-off. It reflects ... good sustained performance with an average 3% volume growth over the last 4 quarters.