Unilever (ULVR) H2 2025 earnings summary

Executive summary

• Achieved 3.5% underlying sales growth for 2025, led by volume improvements, premiumisation, and a sharper portfolio focus, including the successful demerger of the ice cream business and 10 portfolio transactions.

• Delivered sequential improvement in gross margin and operating margin, supported by €670 million in productivity savings and a 50bps reduction in overheads.

• Increased brand and marketing investment, driving measurable brand superiority and outperformance in key markets.

• Entered 2026 as a simpler, more focused business, better positioned for growth.

Financial highlights

• Underlying sales growth was 3.5% for the year, with volumes at 1.5% and price at 2%.

• Turnover was EUR 50.5 billion, down 3.8% year-over-year due to currency headwinds and net disposals; excluding currency, turnover increased by 2.3%.

• Underlying operating margin expanded to 20%, with productivity programs delivering ahead of plan.

• Underlying EPS rose to EUR 3.08, up 0.7% year-over-year despite an 8.8% negative currency impact; on a constant currency basis, EPS grew 9.5%.

• Free cash flow was EUR 5.9 billion (100% cash conversion); net debt reduced by EUR 1.4 billion post ice cream demerger.

• ROIC stood at 19%, benefiting from the ice cream demerger and ranking among the top third in the sector.

Outlook and guidance

• 2026 underlying sales growth expected at the bottom end of the 4%-6% multi-year range, with underlying volume growth of at least 2% and modest operating margin improvement.

• Announced a new EUR 1.5 billion share buyback and continued commitment to growing dividends.

• Capex expected above 3% of turnover, restructuring at around 1%, and net finance costs below 3% of average net debt.

• Underlying effective tax rate to remain around 26%, leverage at ~2x net debt/EBITDA, and currency impact expected to reduce turnover by ~3%.

• Inflationary pressures expected in select commodities, but overall inflation lower than 2025; pricing expected around 2% in 2026, with increased promotional activity in Foods.