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# Unilever PLC (UL) — Narrative, first half and second quarter of 2026
Unilever reports in euros. Every money amount on this page has been converted to US dollars: amounts for a period use that period's average exchange rate (Unilever's own published average where it gives one), while balances and amounts tied to a single date, such as a deal price, use the rate on that date. Percentage changes are the company's own, measured in euros or on its underlying basis, unless a sentence marks a change as being in US dollar terms. Per-share amounts are per Unilever PLC ordinary share. Figures for 2025, including the 2025 comparatives in the half-year report, exclude the Ice Cream business, which Unilever demerged in December 2025.
## Business
*Source: Annual Report on Form 20-F 2025 (fiscal year ended 31 December 2025), accession 0000217410-26-000007.*
Unilever sells branded everyday consumer products: shampoo and skin care, prestige beauty and wellbeing supplements, deodorants, soap and body wash, toothpaste, laundry detergents and household cleaners, and soups, bouillons, seasonings and mayonnaise. Its products are sold in about 190 countries, and the company says 3.7 billion people use them every day. Revenue ("turnover") is the value of goods sold to retail and distributor customers, including through digital commerce, and to food-service operators, after discounts, rebates and other customer incentives. No single customer accounts for 10% or more of turnover. In 2025 the company had turnover of $56.77 billion, about 96,000 employees and $939.66 million of research and development spending.
The business is organised into four Business Groups, which are its reporting segments. They are similar in size; 2025 turnover and underlying operating profit for each were:
- **Beauty & Wellbeing**: hair care, skin care, prestige beauty and wellbeing (vitamins, minerals and supplements). Turnover was $14.44 billion and underlying operating profit $2.78 billion. Its Power Brands are Dove, Sunsilk, TRESemmé, Clear, Nexxus, Vaseline, Pond's, Dermalogica, Hourglass, K18, Paula's Choice, Liquid I.V., Nutrafol and OLLY.
- **Personal Care**: deodorants, skin cleansing and oral care. Turnover was $14.79 billion and underlying operating profit $3.34 billion. Its brands include Dove, Rexona, Axe, Lux, Lifebuoy, Closeup and Pepsodent.
- **Home Care**: fabric cleaning, fabric enhancers and home and hygiene products. Turnover was $13.00 billion and underlying operating profit $1.93 billion. Its brands include Dirt Is Good, Surf, Comfort, Cif, Domestos, Sunlight and Radiant.
- **Foods**: cooking aids and mini-meals, condiments, and Unilever Food Solutions (food service). Turnover was $14.53 billion and underlying operating profit $3.28 billion. Its Power Brands are Knorr, Hellmann's and Horlicks.
By category, fabric products were the largest part of 2025 turnover at 17%. Hair care, skin cleansing and cooking aids were each 12%, deodorant 11%, condiments and skin care each 8%, and home and hygiene 5%. Power Brands made up 78% of turnover.
Emerging markets produced 59% of 2025 turnover. By region, Asia Pacific Africa was the largest, followed by the Americas and then Europe. The United States is the biggest single market, with turnover of $11.80 billion, followed by India at $6.99 billion, where the business operates through Hindustan Unilever. The top 24 markets account for about 85% of turnover. The remaining small and mid-sized markets are grouped under "One Unilever" and each manages its own profit and loss.
The strategy rests on three shifts. "Desire at Scale" means premium, science-led brands supported by social-first marketing and strong in-store and online execution. "Play to Win" is a performance culture. The third is an organisation "Fit for the AI Age". Alongside these, the company has named seven growth priorities: Beauty, Wellbeing, Personal Care, premium products, digital commerce, and its two anchor markets, the United States and India. Its medium-term financial framework has these parts:
- underlying sales growth of 4% to 6% a year, with at least 2% from volume
- a modest improvement in underlying operating margin, funded by gross margin
- cash conversion of about 100%
- net debt of about 2x underlying EBITDA and strong single-A credit ratings
- a dividend payout ratio of about 60%, with surplus cash returned through buybacks
- bolt-on acquisitions rather than transformational deals
The portfolio has been reshaped heavily. On 6 December 2025 Unilever completed the demerger of its Ice Cream business as The Magnum Ice Cream Company N.V. (TMICC), which is listed in Amsterdam, London and New York. Unilever kept a 19.85% stake, which it plans to sell down in an orderly way to pay demerger costs. Alongside the demerger, shareholders received 8 new shares for every 9 they held on 8 December 2025. In 2025 the company also made bolt-on acquisitions, including Dr. Squatch in North America, Minimalist in India and Wild in western markets, and sold non-core, mostly Foods brands. These included Conimex and The Vegetarian Butcher, and agreements were reached to sell Graze, Unox and Zwan. In March 2026, after the annual report was filed, Unilever agreed to combine its Foods business with McCormick & Company. If that deal completes, Unilever will be a pure-play home and personal care company built on Beauty & Wellbeing, Personal Care and Home Care (see *Current period*).
## Risk factors
*Source: "Our Principal Risks", Form 20-F 2025, accession 0000217410-26-000007. The half-year report of 28 July 2026 (accession 0000217410-26-000057) says the nature and potential impact of the principal risks are essentially unchanged for the second half of 2026.*
The company rates three risks as higher than a year earlier: information and cyber security, economic and geopolitical risk, and portfolio management. It rates business transformation risk as lower now that the Ice Cream demerger is complete. It merged several risks for 2025 and no longer treats treasury and tax as a principal risk.
- **Consumer and channel.** Demand depends on brands staying relevant while shopping shifts fast toward digital commerce and new retail formats. If Unilever misreads these changes, it could lose brand equity and market share.
- **Portfolio management (increased).** Growth and margins depend on where capital is allocated across Business Groups, markets and channels. Shifting consumer preferences, changing channels and economic uncertainty make these choices harder to get right and to carry out.
- **Economic and geopolitical (increased).** More than half of turnover comes from emerging markets, which exposes the company to currency swings, price controls and political instability. Armed conflict, protectionism and tariffs add to the risk. Currency is a recurring drag: it reduced reported turnover by 5.9% in 2025 and by 4.9% in the first half of 2026. A large cash shortfall could hurt the credit rating and access to funding.
- **Information and cyber security (increased).** The company depends on secure IT systems and relies more and more on third parties. Attackers are using AI to automate phishing and deepfake social engineering. Past attacks have not had a material impact, but a major incident could disrupt sales, supply chain and cash flow.
- **Business operations.** Geopolitical tension, trade restrictions, tariffs or problems at a key supplier could disrupt supply. Changes in commodity and material costs cannot always be passed on in prices. Commodity inflation cut gross margin in the first half of 2026.
- **Climate and nature.** Extreme weather can disrupt sourcing, factories and distribution. Carbon pricing, land-use rules and limits on greenhouse-gas-intensive ingredients could raise costs. Scarce water could constrain operations and reduce demand for products that need water to use.
- **Plastic packaging.** Rules such as extended producer responsibility schemes and packaging bans raise costs and compliance demands. New packaging formats must not compromise product performance or safety.
- **Safe, high-quality products.** Contamination, product defects or labelling errors could harm consumers and the brands. Changing rules on ingredients and nutrition could restrict sales in some markets.
- **Talent.** The new operating model depends on attracting and keeping people with the right skills and on building a high-performance culture quickly.
- **Business transformation (decreased).** Unilever is starting a major programme to simplify core processes, modernise its digital foundations and use generative AI. Poor design choices could build in complexity and raise long-term costs, and greater use of AI brings operational, reputational and compliance risks.
- **Legal and compliance.** Unilever is subject to laws on product safety, competition, anti-bribery, sanctions, data privacy, environmental reporting and human-rights due diligence. Breaches could bring fines, enforcement action and reputational damage.
- **Pending Foods–McCormick transaction.** The half-year report names the risks that the deal may not close on the expected terms or timetable, or at all, and that the combined company may not deliver the expected synergies.
**Contingent liabilities.** At 31 December 2025 Unilever disclosed $5.86 billion of contingent liabilities, of which $5.28 billion related to Brazilian tax matters. The largest, about $4.17 billion, comes from tax assessments challenging a 2001 corporate reorganisation in Brazil. The original 2004 notice over that reorganisation was resolved in the courts in Unilever's favour, but a new assessment was raised in 2013, and further notices on the same grounds followed in 2014 and between 2017 and 2025. The group also faces litigation over alleged asbestos contamination in talcum powder products made and sold decades ago; provisions are made where a settlement is probable and can be estimated. Separately, non-underlying items in the 2026 half-year results include a charge for settlements reached with plaintiff law firms, and an estimate for possible future claims, over products the group no longer makes or sells.
## Management's discussion of 2025
*Source: Strategic Report and Group Financial Review, Form 20-F 2025, accession 0000217410-26-000007.*
Turnover was $56.77 billion, down 3.8% in euro terms and 0.3% in US dollar terms. Underlying sales growth (USG) of 3.5% was more than offset by currency (−5.9%) and net disposals (−1.2%). The currency drag came mainly from Latin American currencies, the Indian rupee, the US dollar and the Turkish lira, all of which weakened against the euro. USG was made up of 1.5% volume and 2.0% price, and the company has now reported 12 consecutive quarters of volume growth. Power Brands grew 4.3%, with 2.2% from volume.
- **Beauty & Wellbeing**: USG 4.3% (2.2% volume). Wellbeing (Nutrafol, Liquid I.V.), Vaseline and Dove grew double-digit, while price execution problems held back volume in the Americas. Underlying operating margin fell 20 basis points to 19.2% as heavier brand investment absorbed overhead savings.
- **Personal Care**: USG 4.7%, mostly price (3.6%), helped by premium innovation such as whole-body deodorants and commodity-driven price rises. Underlying operating margin rose 50 basis points to 22.6%.
- **Home Care**: USG 2.6%, driven by volume (2.2%, rising to 4.0% in the fourth quarter). Liquid detergents, including Wonder Wash, grew double-digit, while powders declined in Brazil and South Africa. Underlying operating margin rose 40 basis points to 14.9%.
- **Foods**: USG 2.5% (0.8% volume), led by emerging markets while developed markets declined. Underlying operating margin rose 130 basis points to 22.6%.
By market, developed markets (41% of turnover) grew 3.6%. North America grew 5.3% and Europe 1.5%. Emerging markets grew 3.5%: India 4.0%, Indonesia 4.0%, China flat, and Latin America only 0.5% as price rises were largely offset by lower volumes. The Chair called it a disappointing year for Latin America, which required corrective pricing action and changes to format mix.
Gross margin rose 20 basis points to 46.9%, helped by supply-chain savings, volume leverage and mix. Brand and marketing investment rose to 16.1% of turnover, and overheads fell 50 basis points as a share of turnover because of the productivity programme. Underlying operating margin rose 60 basis points to 20.0%. Underlying operating profit was $11.33 billion, down 1.1% in euro terms because of currency. Reported operating profit rose 2.4% in euro terms to $10.16 billion, helped by lower restructuring costs and smaller losses on disposals. Net profit was $6.98 billion. Diluted EPS was $2.91, up 6.2% in euro terms. Underlying EPS was $3.46, up 0.7% in euro terms after an 8.8% currency drag. Underlying return on invested capital was 19.0%.
Free cash flow was $6.66 billion, down 6.1% in euro terms and 2.7% in US dollar terms. Taxes linked to the Ice Cream demerger more than offset better working capital, and cash conversion was 100%. Unilever returned $6.70 billion to shareholders: $5.01 billion in dividends and $1.70 billion in share buybacks. The Ice Cream business is reported as a discontinued operation. Up to the demerger it had turnover of $8.64 billion, and the discontinued profit after tax of $4.27 billion mainly reflects the gain on the demerger.
In the annual report the company guided to 2026 underlying sales growth at the bottom end of its 4% to 6% range, with at least 2% volume growth and a modest improvement in underlying operating margin.
## Current period: first half and second quarter of 2026
*Source: 2026 First Half Results, Form 6-K furnished 28 July 2026 for the period ended 30 June 2026, accession 0000217410-26-000057.*
**Growth accelerated and was driven by volume.** First-half USG was 4.8%: 4.2% from volume and 0.6% from price. In the second quarter USG rose to 5.8%, with 5.5% from volume, which the CEO called Unilever's best volume quarter in more than a decade. Power Brands grew 6.0%, with 5.4% from volume. First-half turnover was $29.90 billion, up 0.5% in euro terms and 7.8% in US dollar terms. Net acquisitions added 0.7% and currency took off 4.9%. Second-quarter turnover was $15.17 billion, up 3.8% in euro terms, with a smaller currency drag of 2.4%. Second-quarter price growth was only 0.2%, held down by three factors the company calls temporary: tough Personal Care price comparisons, planned FIFA World Cup 2026 promotions, and the carryover of 2025 Home Care actions to restore competitive price gaps in Brazil. Management expects pricing to pick up in the second half as commodity-driven price rises take effect.
The company gave the following first-half results by Business Group, with USG for the half and for the second quarter:
- **Beauty & Wellbeing**: first-half USG 5.9% (4.5% volume) and second quarter 8.1%. Dove, Sunsilk and Vaseline grew double-digit, K18 grew strongly, and Paula's Choice, Hourglass and Tatcha accelerated. Wellbeing grew only low-single digit; Nutrafol is working to win new customers, including by positioning it alongside GLP-1 treatments. Underlying operating margin was 19.5%, up 10 basis points. Second-quarter turnover was $3.96 billion.
- **Personal Care**: first-half USG 4.8% (4.1% volume) and second quarter 5.9%, with price down 0.9% in the quarter because of World Cup promotions and tough comparisons. Deodorants and skin cleansing grew mid-single digit, and US deodorants regained market leadership. Underlying operating margin was 22.2%, up 10 basis points. Second-quarter turnover was $4.11 billion.
- **Home Care**: first-half USG 7.6% (7.4% volume) and second quarter 9.1%. India grew double-digit and reached its highest-ever Home Care share, and Brazil grew high-single digit. Commodity and currency pressure lowered gross margin, but underlying operating margin still rose 30 basis points to 15.8%. Second-quarter turnover was $3.5 billion.
- **Foods**: first-half USG 1.2% and second quarter only 0.2%, below the company's expectations. Developed markets were soft and Unilever lost share in the premium and avocado segments of US mayonnaise; India, helped by Horlicks, and Unilever Food Solutions grew. Underlying operating margin was flat at 23.3%, and underlying operating profit fell 4.3% in euro terms. Second-quarter turnover was $3.60 billion.
Emerging markets (60% of turnover) grew 7.0%, and 8.3% in the second quarter. India grew 8% (10% in the second quarter), Indonesia 7%, China mid-single digit and Latin America 7.6%. Brazil returned to strong, volume-led growth after corrective actions taken last year, and Argentina grew strong double-digit. Developed markets grew 1.5%. North America grew 2.7% (3.6% in the second quarter), ahead of its market, while Europe fell 0.9%, with declines in Germany and Eastern Europe.
**Margins and earnings.** Underlying operating profit was $6.06 billion, up 0.9% in euro terms, and underlying operating margin rose 10 basis points to 20.3%. Gross margin fell 70 basis points to 46.8% because of commodity inflation, deliberately measured pricing and the World Cup promotions. That was offset by brand and marketing investment slipping 10 basis points to 16.1% of turnover and by overheads falling 70 basis points. The company finished its productivity programme ahead of schedule. Launched in 2024 and sized at $913.36 million at the 30 June 2026 exchange rate, it was designed to simplify the business and remove overheads left behind by the Ice Cream demerger. Reported operating profit was $5.70 billion, up 2.6% in euro terms, helped by restructuring costs falling to $152.88 million.
Non-underlying costs also included $114.37 million for separating the Foods business. Net finance costs were $352.43 million, or 2.5% of average net debt. The reported tax rate rose to 30.3% from 26.3% because of tax effects from the 2025 Ice Cream separation, while the underlying rate was 26.0%. Net profit from continuing operations was $3.84 billion, down 3.5% in euro terms. Diluted EPS from continuing operations was $1.61, down 2.5% in euro terms. Underlying EPS was $1.88, up 2.4% in euro terms despite a 6.0% currency drag; the buyback added 0.7%. Discontinued operations included a $348.93 million gain on selling the remaining Indian and Portuguese ice cream businesses to TMICC.
**Cash and balance sheet.** Free cash flow was $1.81 billion, up 42.9% in euro terms and 53.3% in US dollar terms, thanks to slightly higher operating profit and better working capital, partly offset by higher tax payments and capital spending. Net debt was $29.64 billion at 30 June 2026, compared with $27.08 billion at 31 December 2025. The increase reflects dividends and the buyback, and net debt was 2.3x underlying EBITDA. Cash was $5.40 billion. Unilever had undrawn 364-day bilateral revolving credit facilities of $5.2 billion and $2.97 billion, and it signed a further $2.28 billion of such facilities in June. A $591.1 million 0.750% note matured and was repaid in February. The pension plans were in surplus by $4.28 billion.
**Capital returns.** The second-quarter dividend is the same per share as the first quarter's and up 3.0% on a year earlier; the company states it as $0.5305 per American Depositary Receipt. The $1.75 billion buyback ran from 30 April to 5 June 2026 and bought back 30,703,780 shares. Unilever expects cash from the Foods separation plus operating performance to fund $6.91 billion of buybacks in total over 2026–2029, at the exchange rate on the 31 March 2026 announcement date.
**Portfolio moves in the first half.** The company describes its first-half deals as aimed at its priority growth areas and at focusing on fewer, bigger and more scalable brands. On 1 June Unilever bought 80% of Grüns Nutrition, a fast-growing US greens-supplement company, for $891.56 million, with provisional net assets of about $569.58 million, and recorded a liability for buying out the remaining 20%. Hindustan Unilever bought the remaining 49% of OZiva, a plant-based wellness brand. Disposals, for which no prices were disclosed, were Graze in the UK, the SariWangi tea business in Indonesia, the Central America and Caribbean Home Care business, and the 99.8% stake in Unilever Côte d'Ivoire. On 1 April the Indian (Kwality Wall's) and Portuguese ice cream businesses, whose transfer had been delayed at the demerger, were sold to TMICC. Sales of the Colombia and Ecuador laundry businesses, agreed in January 2026, are expected to close during 2026.
**Foods combination with McCormick.** In March 2026 Unilever agreed to combine its Foods business with McCormick & Company to create a global flavour company. This would leave Unilever as a pure-play home and personal care company. The financial terms were published in the 31 March 2026 announcement furnished on Form 6-K (accession 0000217410-26-000019). According to that filing, McCormick will file a registration statement on Form S-4 including its proxy statement, and a Unilever Foods entity will file a Form 10 registration statement for the spin-off of Unilever Foods from Unilever. Teams are working on carve-out financials, tax, antitrust, synergies and integration. Completion is expected by mid-2027 at the latest, subject to McCormick shareholder approval, regulatory approvals and other customary conditions, and works-council consultation must be completed first.
**Outlook (upgraded).** For 2026, Unilever now expects:
- underlying sales growth within its 4% to 6% range with about 3% volume growth, up from the earlier guidance of the bottom end of the range with at least 2% volume
- second-half underlying sales growth of 4% to 5%, led by pricing
- a modest improvement in underlying operating margin from 20.0%
- second-half gross margin broadly similar to the first half
- an underlying tax rate of about 26%
- net finance costs below 3% of average net debt
- restructuring costs of about 1% of turnover
- cash conversion of about 100%
- net debt of about 2x underlying EBITDA
The company warned that Brazilian tax reforms, expected to lower prices from the start of 2027, may lead some retailers to cut stock temporarily in the fourth quarter.
## Subsequent events
*Source: note 11 and the narrative sections of the half-year report, accession 0000217410-26-000057.*
The half-year report says there were no material events after 30 June 2026 other than those it describes elsewhere. Those are:
- **McCormick update (23 July 2026).** McCormick announced the planned operating model and executive team of the combined flavour company, and London as its secondary listing location. The transaction remains pending.
- **Second-quarter dividend.** The Board declared the dividend, $0.5305 per ADR as stated by the company, on 28 July 2026. The ADR ex-dividend date was 7 August, the record date 7 August, and payment was due on 18 September 2026.
- **Pending disposals.** The sales of the Colombia and Ecuador laundry businesses had not closed by the report date and are expected to complete during 2026.
- **Upcoming dates.** The third-quarter dividend announcement and trading statement are scheduled for 28 October 2026, with the dividend payable on 18 December 2026. An investor event is planned in New York on 4 November 2026.
The report identifies no acquisition, disposal or financing completed between 30 June 2026 and its 28 July 2026 date.