Unilever: From Grocer to Groomer

Unilever shifts its centre of gravity to beauty and wellbeing and is beginning to show signs of discipline. In its third-quarter results, the consumer goods giant reported underlying sales growth of 3.9%, respectable if unspectacular, but what stood out was not the headline number. Rather, it was the quiet shift in tone: margin-led growth, cost containment, and sharper focus under new chief executive Fernando Fernandez. Beauty and wellbeing led the charge, volume returned in key markets. The Unilever of tomorrow may be smaller in scope, but it is starting to look more deliberate.

Revenue fell 3.5% year-on-year to €14.7bn, pulled down by a 6.1% currency drag and 1% hit from disposals. But strip those out, and the underlying picture was firmer: volume up 1.5%, pricing up 2.4%. When excluding the company's soon-to-be-spun-off ice cream division, growth looked slightly rosier at 4.0%.

Notably, all five business groups managed underlying sales growth above 3%. Beauty & Wellbeing, now the jewel in Unilever's portfolio, grew 5.1%, led by double-digit performances from Dove Hair, Liquid I.V., Vaseline, and Nutrafol. Personal Care, which includes deodorants, oral care and skin cleansing, rose 4.1%, supported by premium launches and brand extensions. Home Care delivered 3.1%, Foods 3.4%, and Ice Cream posted a 3.7% rise entirely through pricing. Volume in the latter was flat, though that reflects a tough comparator.

Source: Unilever

Performance was uneven across geographies. Developed markets, which now account for 44% of turnover, grew 3.7%, led by 5.5% growth in North America. That expansion was largely volume-driven, bolstered by strong results in personal care and beauty. Europe, less buoyant, managed just 1.1%. In emerging markets, 56% of group turnover, growth stepped up to 4.1%, but mostly through price increases (3.5%), with volume still sluggish at 0.6%.

India, a key growth engine, posted a modest 2% rise, impacted by Goods and Services Tax reforms that temporarily disrupted trade flows but are expected to support demand from November onwards. Indonesia roared back with 12.7% growth, helped by a full-scale commercial reset. China returned to positive territory, albeit tentatively. Latin America remained Unilever's headache: sales fell 2.5%, dragged by macro headwinds and volume declines, despite market share gains in several categories.

Cream rises, fat falls

The most significant transformation underway is structural. Unilever is preparing to spin off its Ice Cream business, home to Magnum, Cornetto, and Ben & Jerry's, into a standalone entity called The Magnum Ice Cream Company. The demerger, delayed by the recent U.S. government shutdown, is still expected to complete by year-end. Unilever will retain a 19.9% stake for up to five years, to be sold down gradually. Shareholders will receive one TMICC share for every five Unilever shares held. A share consolidation will follow to preserve earnings and dividend comparability.

Post-demerger, Unilever hopes to present a cleaner, higher-margin profile to investors. In that spirit, the firm's ongoing productivity programme, unveiled last year and designed to deliver €800m in savings, remains ahead of schedule. Around €650m is expected by the end of 2025, with the balance arriving in 2026. Restructuring costs, previously pegged higher, are now forecast at just 1.2% of turnover.

Other initiatives underline a sharper focus. Unilever completed the acquisition of Dr. Squatch, a male-focused personal care brand, while offloading The Vegetarian Butcher, a plant-based meat brand that never quite found mass appeal. Capital expenditure is running above 3% of turnover. Guidance remains for a full-year underlying sales growth of 3–5%, with stronger performance in the second half and margins above 18.5% (or 19.5% excluding Ice Cream). The firm's leverage ratio is steady at around two times EBITDA, and the underlying tax rate hovers near 26%.

Up for the win

The market welcomed these figures with cautious optimism. Unilever shares rose 1.4% in London on the day of the announcement. Few expect fireworks from a legacy multinational with sprawling brands and mature categories. But there is also a sense that the company is no longer spinning its wheels.

Analysts broadly welcomed Unilever’s steady third-quarter, though few shifted stance. Citi saw a small positive from better-than-feared developed market growth, led by North America and beauty, offsetting Latin America softness. RBC called the update "reassuring", noting improving trends in China and Indonesia. Barclays praised the North American beat and Indonesia rebound, describing the results as better than feared.

Chief executive Fernando Fernandez, who took over in March, sounded upbeat but restrained. "We're setting Unilever up to win," he said, summing up a strategy that now favours clarity over complexity, premium over volume, and margin over mere growth.

None of this is revolutionary. But in a world where many consumer giants are still struggling to reprice, restructure, and refocus, doing the basics well is perhaps radical enough.