Unilever plc 2026 Q3 Earnings Call

Good morning, and thank you for joining us for Unilever's third quarter trading statement. I am joined today by Srini Phatak, our Chief Financial Officer. In a moment, Srini will take you through the details of the quarter, and I will come back at the end to sum up before we take your questions. Let me start by setting this quarter's performance in the context of our continued progress. I have said consistently that volume growth is a true measure of demand, a key indicator of the underlying strengths of our business. Since 2024, Unilever's volume growth has averaged 2.7%, ahead of our medium-term ambition of over 2%. Volume growth has been even stronger for our HPC business, at 3.3%, and for our Power Brands at 3.8%. Year to date, our performance is even stronger. That is not the result of one quarter, one category, or one market.

It comes from continued progress against our strategic priorities with stronger brands, superior innovation, and sharper execution, driving increasingly consistent performance. We are delivering this performance while we are transforming our portfolio. Let me summarize what I see as the key elements of this quarter's result. A strong performance continued in the third quarter in an environment that remains demanding, input costs are higher while consumer conditions remain mixed across markets. Underlying sales grew 5.2%, with volume up 2.9%. Our Power Brands continue to lead, growing 5.8% with 3.3% from volume. Ten Power Brands grew double digit in the quarter, including Dove, our largest brand, as well as Vaseline, Sunsilk, Clear, and Cif. Growth was broad based across our HPC businesses at 7%, with 4.1% from volume. Home Care, Personal Care, and Beauty & Wellbeing each grew volume about 3%. Home Care and Personal Care were particularly strong.

Home Care grew 9.1% with double-digit volume growth in India and Brazil. Personal Care grew 6.3%, and we further strengthened our deodorant leadership in the U.S. Emerging markets were again a key driver, growing 9.5% with volume up 6%. Our largest emerging market, India, stood out with growth of 15% and a strong momentum across all four business groups, and we saw continued strength in Latin America and Southeast Asia. This continues to reflect the evolution of our emerging markets portfolio towards higher growth segments, social first demand generation, and improvements we have made to our go-to-market capabilities. Developed markets were soft, and performance also reflected tougher prior year comparators. Europe remains subdued, and in North America, good growth in Personal Care and Beauty was offset by Wellbeing and Foods. In Foods, growth was flat overall.

Our emerging market business and Unilever Food Solutions continued to grow but were offset by a decline in developed market retail. In U.S. condiments, performance was below our expectations, and we need to strengthen our competitiveness. We are taking action on innovation and restoring price competitiveness state by state. It will take some time to see the full impact, but the actions are in place, and Srini will cover this in a moment. Volumes remain strong in a quarter in which we also step up pricing to 2.3%. Along with productivity initiatives, this helped to offset the impact of higher commodity costs, and we are pricing with a clear focus on staying competitive. Overall, this was another strong quarter, and with nine months of strong performance, we have upgraded our outlook for 2026.

I will hand over to Srini to take you through the quarter and our outlook in more detail.

Thank you, Fernando. Let me start with the growth profile in the quarter. Underlying sales grew 5.2%, with 2.9% from volume and 2.3% from price. On a 2-year basis, volume growth was 2.3%. For the first 9 months, underlying sales grew 4.9% with volume up 3.8%. The three HPC business groups led delivery in the quarter with Beauty & Wellbeing, Personal Care, and Home Care, each growing volume above 3%. On a 2-year CAGR basis for the first 9 months, our HPC growth was 4.9%, with volume growth of about 3.2%. Price growth stepped up from 0.6% in the first half as we responded to higher commodity costs and normalized promotions in Personal Care following the FIFA World Cup. Price growth was most notable where we see the largest impact from inflation, that is in emerging markets and in Home Care.

We have taken a calibrated approach, market by market and category by category, to stay competitive, and volumes have held up well. Our Power Brands continue to outperform, which reflects their equity strengthening and the value of concentrating our investment behind our biggest growth opportunities. These brands, which represent around 79% of our turnover, grew 5.8% with 3.3% from volume. Our unmissable brand superiority scores are strong, with over 60% of turnover being stable or improving. Beauty & Wellbeing grew 5.7% with 3.6% from volume and 2.1% from price. Hair care keeps accelerating and grew double digit, led by volume with Dove, Sunsilk, Clear, and K18 all growing double digit. Dove continues to benefit from the strength of its premium innovation ranges. Sunsilk and Clear are outperforming in Latin America, and K18 delivered another quarter of very strong growth. Skincare grew mid-single digit. Vaseline delivered another quarter of double-digit growth with double-digit volumes and broad-based strength across both emerging and developed markets.

Earlier this year, we extended the brand's Gluta-Hya range into lip care with the new Gluta-Hya Lip Serum, which continues to perform well. We also saw good performances from Hourglass, Paula's Choice, and Dermalogica. Wellbeing declined high single digit in the quarter, partly driven by shipment timings that benefited the second quarter. We compete in wellbeing segments in which the market is growing high single digit. Year to date, wellbeing is down 1%, reflecting conscious choices to rebalance revenues and relative pricing between direct-to-consumer, club, pure play online, and omnichannels. Across our brands, the picture is mixed. Liquid I.V. grew year to date with gains in mass retail, online, and international. Year to date, OLLY also grew mid-single digit as it lapped last year's distribution gains.

Nutrafol declined year to date as the measures to improve customer acquisition remain at an early stage. Grüns, which we acquired earlier this year, delivered very strong growth in its first full quarter with Unilever. It will enter our underlying sales growth measure next year in June. We expect sequential improvement in wellbeing's performance versus the third quarter. Personal care delivered another very strong quarter, growing 6.3%, with 3.8% from volume and 2.4% from price. Growth was broad based with high single-digit growth in emerging markets and mid-single digit growth in the U.S. Price growth stepped up in response to higher commodity costs as well as normalized promotional environment. Dove grew double digit with strong volumes in both deodorants and skin cleansing. Deodorants grew mid-single digit led by volume.

In the U.S., continued momentum was supported by strong brand equity and further strengthening of our market leadership following the FIFA World Cup. Latin America grew double digits. Dove and Dr. Squatch both grew double digits in the quarter. Skin cleansing grew high single digit with balanced volume and price. Growth was broad based with double-digit emerging markets growth and mid-single digit growth in both North America and Europe. Dove was strong as it continued to premiumize the category with skincare led body care ranges. Lux grew well supported by new botanical ranges in China. Oral care declined low single digit as growth in Southeast Asia and India was offset by a decline in Europe. Home care grew 9.1% with 5.4% from volume, another quarter of strong volume led growth. Price growth stepped up to 3.6% as planned in response to higher commodity costs.

On a two year CAGR basis, our volume growth was 3.9%. Growth was led by emerging markets with double-digit growth in both Asia Pacific Africa and Latin America, and double-digit volume growth in our largest home care markets, India and Brazil. We continue to gain share across value and volume in vast majority of our markets, given the strength of our brands, our R&D capabilities, and supply chain resilience. By category, fabric cleaning grew double digit with high single digit volume. Home and hygiene and fabric enhancers grew mid-single digit led by Comfort. We have started to build Cif in China through social commerce, as well as launching Comfort's perfume inspired fabric enhancers in the market. Our multi-year innovation platforms, Omo Wonder Wash and Cif Infinite Clean, continue to scale successfully across markets and expand with new variants.

Wonder Wash is now present in over 40 markets, and we have rolled out range extensions in Southeast Asia in the quarter. Cif Infinite Clean is now available in eight markets. Foods grew 0.1% with volume down 1.1% and price up 1.3%. Emerging markets continue to grow well across both Latin America and Asia Pacific Africa. Unilever Food Solutions grew low single digit led by its second largest market, North America, where it accelerated to mid-single digit growth on the strength of our premium customer propositions. China, its largest market, continued to grow low single digit. Growth in emerging markets and Unilever Food Solutions was offset by a decline in developed markets retail, in particular in U.S. condiments, where our performance was below our expectations. Hellmann's brand continues to be strong and leads the category.

However, as we said in July, we have seen increased competition in the fast-growing premium segments of the market, such as avocado oil mayonnaise, and with discount brands gaining distribution nationally. We are taking targeted actions to improve competitiveness, including bringing additional innovation to market and corrective pricing actions. Hellmann's 100% avocado oil mayonnaise is building distribution with more to come over the next few quarters. We are confident in the actions we are taking while recognizing that it will take some time for these to take effect. Turning to our geographies, emerging markets, which are around 60% of our turnover, grew 9.5% with 6% from volume. Developed markets declined by 0.9%. Asia Pacific Africa grew 10.1% with 5.8% from volume and 4.1% from price, with broad-based growth across the business groups and markets.

India, our largest emerging market, grew 15% with 7% from volume continuing the momentum of the first half and lapping a GST-led lower prior year comparator. Growth was broad-based. Home care and Beauty & Wellbeing grew strong double digit. Premiumization and innovation accelerated our growth with premium hair care and fabric cleaning liquids outperforming. We delivered high single digit growth in foods and personal care where market development actions in body wash continue to build penetration. Indonesia grew 7% led by volume supported by stronger execution, innovation, and digital activation. All business groups grew in the quarter, including mid-single digit growth in foods, which was led by local brands. China grew low single digit with mid-single digit volume, including volume contribution from all business groups and strong performance from social commerce.