Unilever | Q3 2026 Trading Statement | Results | Webcast & Q&A - UNILEVER PLC

Financial Performance:

• Turnover reached €13.3 billion, up 6.7% year-over-year, driven by a 5.2% underlying sales growth.
• Volume growth for the quarter was 2.9%, accelerating to 3.3% for HPC and 3.8% for "Power Brands."
• Price growth accelerated to 2.3% in Q3 (up from 0.6% in H1) to offset commodity inflation.
• Full-year currency impact is expected to be -2% on turnover and -30bps on underlying operating margin.
• Food business revenue was flat (+0.1%), with volume down 1.1% but offset by price increases; US condiments underperformed.
• Emerging markets contributed significantly with 9.5% growth (6% volume), while developed markets declined 0.9%.

Guidance and Future Outlook:

• Upgraded 2026 outlook, now expecting full-year underlying volume growth of at least 3% and underlying sales growth within the 4-6% multi-year range.
• Second-half underlying sales expected to be around 5%, with H1 full-year sales at 4.9%.
• Confirmed commitment to delivering hard-currency earnings growth and a modest improvement in underlying operating margin for 2026.
• 2027 cost inflation guidance adjusted to a range of €700m–€1bn (2.5%–3.5% of cost base), with lower expected inflation in HPC and higher in Food.
• Anticipate pricing to be higher in 2027 than in 2026 to manage cost pressures and drive margin recovery.
• North America expected to return to growth in Q4; Europe remains subdued.

Business Segments and Product Lines:

• HPC (Highly Profitable Categories): Grew 7% in Q3 (4.1% volume), led by Home Care (+9.1% with double-digit volume in India/Brazil), Personal Care (+6.3%), and Beauty & Well-being (+5.7%).
• Power Brands: Represent ~79% of turnover and grew 5.8% (3.3% volume); 10 brands achieved double-digit growth including Domestos, Vaseline, Sunsilk, and Dove.
• Beauty & Well-being: Beauty grew strongly (7.5% in Q3) led by Vaseline (+double digit), Dove, and premium brands (Hourglass, Dermalogica). Well-being declined high single-digit (-1% YTD) due to channel rebalancing (Club/online) and Nutrafol challenges, but expected to improve in Q4.
• Home Care: Strong performance with "Wonder Wash" and "SIF Infinite Clean" scaling; SIF built in China via social commerce.
• Foods: Unilever Food Solutions grew low single-digits (led by US/China growth), but retail foods declined due to US condiment price competitiveness issues. Separation from McCormick is on track for H1 2027.

Market and Competitive Landscape:

• Emerging Markets: India grew 15% (7% volume), Brazil 8.5% (6.5% volume), and Indonesia 7%; unilever gaining share against local competitors who are reducing marketing spend.
• Developed Markets: Europe remains soft with promotional intensity in Home Care/Foods; US performance was mixed but expected to recover in Q4.
• Competitive Dynamics: Local competitors in HPC have reduced investments, allowing Unilever to gain share; US condiment market faces pressure from discount brands and new avocado-oil premium entrants.
• Market Trends: "Social first" demand generation and premium innovation are key growth drivers in emerging markets and Asia-Pacific.

Risks and Challenges:

• Cost Inflation: Full-year commodity and logistics inflation estimated at €900m; geopolitical risks and potential El Niño impacts on palm oil could affect 2027 costs.
• US Condiments: Hellmann's facing increased competition in premium segments and discount channels; corrective pricing and innovation actions are underway but will take time to impact.
• Well-being Portfolio: Structural shifts in channel mix (reducing reliance on Club/online) causing short-term volume/headline revenue pressure.
• Developed Market Volatility: Subdued consumer sentiment in Europe and tough prior-year comparators in the US.

Management Commentary and Tone:

• Tone is confident and optimistic regarding long-term execution, emphasizing "volume growth as the true measure of demand."
• Management reiterates that pricing is used judiciously to remain competitive, not solely to manage margins, while prioritizing a floor of 2%+ volume growth.
• Confident in the separation from McCormick and the transition to a focused HPC pure-play, to be detailed at the upcoming Capital Markets Day.
• Highlighted "brand superiority" scores, with over 60% of turnover showing stable or improving metrics.

Analyst Questions and Answers:

• Developed Markets Q4: Confirmed expectation for North America to return to growth in Q4; Europe remains challenged by promotional intensity and soft food demand.
• Inflation & Margins: 2027 inflation expected €700m-€1bn; HPC inflation lower than 2026, Food inflation higher; modest margin improvement confirmed despite mix headwinds from high-growth Home Care.
• Foods Separation: On track for H1 2027 completion; antitrust and TSA arrangements progressing well; food business to be handed over "in good shape" despite current underperformance in US.
• Emerging Markets: Strong momentum in India, Brazil, Indonesia, and China (driven by social commerce); Brazil's currency devaluation expected to have limited impact due to prior appreciation.
• Well-being: Decline attributed to short-term channel rebalancing; expected to outperform market by H2 2027.
• Board Resignation: Ruby Liu resigned for personal reasons after >5 years of service; no operational issues cited.

Other Key Points:

• Currency: Exchange rate headwinds eased significantly in Q3; neutral impact compared to -5.1% in H1.
• Acquisitions: Grunz and Dr. Squatch contributed 1.4% to turnover growth; Grunz to be included in underlying sales in June 2027.
• Debt: Net interest cost expected to average ~3% in 2026; long-term refinancing unlikely to be needed until 2028 following food transaction proceeds.
• Strategic Focus: Continued emphasis on "Desired at Scale" and sharpening execution to unlock value as a pure-play HPC company.