Unilever has reported underlying sales growth of 3.4% in the first half of 2025, supported by balanced gains in volume and price, as the company prepares to demerge its Ice Cream business into a standalone listed entity.

The consumer goods group flagged confidence for the full year, underpinned by stronger momentum in developed markets and signs of improvement across key emerging markets.

According to CEO Fernando Fernandez, “Our continued outperformance in developed markets and the positive impact of our decisive interventions in emerging markets, accelerated our growth in the second quarter to 3.8%, with positive volume growth across all business groups.”

He also noted that strong gross margin and productivity gains ahead of plan fuelled increased investment in our brands and premium innovations.

“Our first half performance positions us well for the full year. In the second half, we expect further acceleration in emerging markets, particularly in Asia, and sustained momentum in developed markets.”

“We are on track to demerge Ice Cream by mid-November, with the operational separation now complete and competitive performance improving.

Financial performance

Turnover fell 3.2% to €30.1 billion, hit by adverse currency movements (-4.0%) and disposals net of acquisitions (-2.5%). Underlying operating profit dropped 4.8% to €5.8 billion, while the operating margin eased 30 basis points to 19.3%. Gross margin held at 45.7%, benefiting from procurement savings and productivity gains.

Underlying EPS declined 2.1% to €1.59, with diluted EPS down 3.7%. Free cash flow came in at €1.1 billion, reflecting lower operating profit, higher working capital and separation costs associated with Ice Cream. Marketing and brand investment rose 40 basis points to 15.5% of turnover, while overheads improved 10 basis points through tighter cost control. Operating profit was €5.3 billion, down 10.6% year-on-year, reflecting acquisition and disposal costs.

Business group performance

• Beauty & Wellbeing (21% of turnover): Sales grew 3.7%, with strong momentum in Wellbeing offset by subdued Beauty growth. Vaseline and Dove delivered double-digit gains, while TRESemmé and Clear lagged in China. Operating profit fell 3.7% as marketing spend rose.
• Personal Care (22%): Sales rose 4.8%, led by high single-digit growth from Dove. Deodorants and Oral Care delivered mid-single digit gains. Profit dropped 9.8%, reflecting disposals and higher brand investment.
• Home Care (20%): Sales were up 1.3%, with strength in Europe offsetting weakness in Latin America. Profit declined 11.2% as gross margins came off a strong prior-year base.
• Foods (22%): Sales grew 2.2%, led by Hellmann’s condiments and Knorr. Operating profit rose 2.8%, supported by productivity improvements.
• Ice Cream (15%): Sales climbed 5.9%, with Magnum, Cornetto and Bon Bons all delivering strong gains. Profit dipped 2.2% as cocoa cost inflation pressured margins.

Geographic performance

Developed markets, accounting for 44% of turnover, grew 4.3% with strong volume contributions from North America and Europe. Emerging markets rose 2.8%, with India up 4% and sequential improvement in China and Indonesia. Latin America was flat at 0.5%, with Argentina growth offset by weakness in Brazil and Mexico.

Ice Cream demerger

Ice Cream completed operational separation on 1 July and is on track to demerge in mid-November as The Magnum Ice Cream Company (TMICC), led by Peter ter Kulve (CEO) and Abhijit Bhattacharya (CFO). Unilever will retain a stake of less than 20% for up to five years before selling down. A Capital Markets Day is scheduled for 9 September in London, followed by formal shareholder documentation in October.

Unilever completed a €1.5 billion buyback by May and lifted its Q2 dividend 3% year-on-year to €0.4528 per share. Portfolio moves included the acquisition of India’s Minimalist and premium personal care brands Wild and Dr. Squatch, alongside the sale of The Vegetarian Butcher.

Outlook

Unilever reaffirmed full-year underlying sales growth guidance of 3% to 5%, with second-half growth expected to exceed first-half performance despite subdued markets. Margins are forecast to improve, with second-half operating margin expected at or above 18.5%. The group noted continued macroeconomic and currency uncertainty but pledged agility in execution.