Maker of Dove soap, Axe deodorant warns of small, 'frequent' price hikes due to war in Iran

Unilever said th it would leaven prices to soften the bump from higher-than-expected costs goaded by the  persia war, even as it reported first-quarter underlying sales growth that beat analysts' forecasts.

The London-listed maker of Dove soap and Axe deodorant kept its 2026 sales and profit margin forecasts unchanged, signalling it expects to weather the heightened economic uncertainty.

The increases will come in select markets and categories, notably crude oil-exposed home care, and mainly take effect in the second half of the year, finance chief Srinivas Phatak said on an analyst call.

He said parts of Asia, Africa and Latin America — where most of the inflation has been — will see the highest price increases, rather than North America, where Unilever's home-care business is smaller.

"It will be calibrated and it will be done in a competitive manner," Phatak said.

Consumer goods companies are navigating one of the most challenging cost environments in years due to surging commodity prices and supply chain disruptions from the U.S.-Israeli war with Iran, which are making everyday products more expensive.

Unilever said it expects full-year total cost inflation of about 750 million to 900 million euros ($1.2 billion to $1.4 billion Cdn), including higher logistics and factory costs.

"There will be frequent price increases but in small doses," Phatak said. He later told journalists that if inflation pressure continues, Unilever could raise prices at the higher end of the two per cent to three per cent range.

Bank of Canada holds interest rate steady, warns future hikes possible

The last time Unilever raised prices by three per cent was in the final quarter of 2024, when it was still coming down from highs reached in the wake of the COVID-19 pandemic and Russia's invasion of Ukraine.

Chris Beckett, consumer staples analyst at Unilever investor Quilter Cheviot, said Unilever must raise prices in a way that will still help it drive sales volumes.

"They're constrained in a number of markets, particularly developed markets in Europe," Beckett said. "There are limits to what they can do — it's not easy to take pricing."

According to a Reuters review of more than 200 company statements since the start of the war, 36 companies have signalled price hikes due to the conflict.

Unilever rivals from Nestlé to Procter & Gamble have warned of higher costs from the Iran war, with Reckitt flagging margin pressure, though French rival L'Oréal beat expectations as shoppers bought more premium products.

High price of imports driving food costs in Canada

Companies are also grappling with the possibility of softening demand as household budgets could get squeezed if oil prices remain elevated and the conflict drags on.

After the pandemic and Russia's invasion of Ukraine, Unilever raised prices sharply, passing commodity cost increases on to consumers and alienating many in the process who turned to cheaper private-label brands.

It has only recently started winning shoppers back by slowing the pace of price increases and investing in marketing and innovation.

The company's first-quarter sales growth was driven by stronger-than-expected volumes, particularly in its beauty and home business, even as pricing was softer than forecast. That marks a shift back to volume-driven growth after years of relying on price hikes.

"We have started the year well with volume-led growth driven by our Power Brands and a positive performance across all Business Groups," CEO Fernando Fernandez said in a statement, referring to its biggest brands including Dove, Axe and Dermalogica.

Fernandez was promoted from finance chief to CEO last year to speed up a years-long restructuring.

He is reshaping Unilever to focus on personal care and beauty after spinning off its ice cream business last year and announcing plans last month to hive off its food division and merge it with spice maker McCormick.

Unilever posted underlying sales growth of 3.8 per cent in the three months to March, ahead of the 3.6 per cent growth expected by analysts in a company-compiled consensus.

---

---