By Aimee Look
Unilever said underlying sales growth picked up in the fourth quarter, with an acceleration in Asia offsetting slower demand in the U.S. and Europe, as the consumer-goods giant bets on a shift to faster-growing categories.
The maker of Dove soap and Knorr stock cubes is in the midst of a strategic turnaround, while it slims down a portfolio that houses hundreds of brands. The company, which recently spun off its ice-cream business to form Magnum Ice Cream, is betting that a pivot to fewer, bigger brands will help it navigate a tough consumer backdrop.
Boss Fernando Fernandez, who took the helm last March, has been vocal in his efforts to shake up the legacy business. In September, he said Unilever would replace around a fourth of its leaders, after cutting around 18% of its white-collar workforce in the 18 months prior and embarking on a wider restructuring program.
In its first quarterly update since the Magnum spinoff, Unilever said Thursday that fourth-quarter turnover came to 12.6 billion euros ($14.96 billion), with underlying sales growth at 4.2%. Analysts expected 3.9% growth, according to company-compiled consensus estimates.
Unilever expects underlying sales growth to come in at the lower end of the 4% to 6% range this year due to slower market conditions.
Shares in Unilever fell more than 3% in early morning trade in Europe, but later pared back losses.
The company said underlying sales growth slowed to 1.7% in developed markets last quarter, as weaker demand in both the U.S. and Europe weighed on volumes. But a sales recovery in markets like China, India and Indonesia helped it make up for the slowdown in developed countries.
Unilever executives signaled the company wants to double down on growth opportunities in the beauty, wellbeing and personal-care segments, with the U.S. and India as anchor markets for the group.
Fernandez said last year he has been looking for ways to further slim down the group's portfolio of brands, particularly its foods in European divisions that don't align with the rest of the company.
It has sold a cluster of brands, particularly in Europe, such as the Vegetarian Butcher and Graze., while holding firmly onto brands like Knorr and Hellmann's. It has finished or announced 10 transaction since the beginning of 2025.
"The biggest issue in Europe has been foods," Fernandez said in a call with analysts.
Unilever's underlying sales growth in foods were driven by emerging markets, while developed markets were flat. Hellmann's mayonnaise remains a bright spot in Unilever's food portfolio, and was bolstered by flavored products across 30 markets, it said.
Specialty consumer food businesses have drifted as consumers, particularly in the U.S., have been squeezed for cash. Snacking giants have raised prices to account for higher labour, transportation and ingredients costs. At the same time, grocers have leaned into growing hype around own-label brands and seek to lure buyers with attractive promotions.
Higher costs and shifting consumer appetites are eating into profits, while consumers still think that food manufacturers are overcharging, according to a recent survey from economists at the University of Illinois and Purdue University.
For 2025 as a whole, Unilever said net profit climbed to 9.47 billion euros from 5.7 billion euros the year prior, mainly due to a 3.4 billion-euro gain on the Magnum demerger. Net profit from continuing operations rose 2.9% to 6.21 billion euros.
The company also announced a 1.5 billion-euro share buyback to start in the second quarter.
Write to Aimee Look at aimee.look@wsj.com
(END) Dow Jones Newswires
02-12-26 0529ET
