Unilever Stock Slides as 2026 Growth Outlook Disappoints

Unilever (LON: ULVR) shares are trading down approximately 1.3% following the release of its full-year 2025 results, as the company projects 2026 underlying sales growth to be at the lower end of its 4% to 6% guidance range due to anticipated slower market conditions.

Despite a solid performance in 2025, the cautious outlook has tempered investor enthusiasm.

Full-year turnover reached €50.5 billion, a decrease of 3.8% year-over-year, impacted by adverse currency movements and net disposals. However, underlying sales growth (USG) stood at 3.5%, with volume growth of 1.5%, signaling an improving trend throughout the year, culminating in a strong fourth quarter with USG of 4.2% and volume up 2.1%.

Underlying operating profit declined slightly by 1.1% to €10.1 billion, primarily due to currency headwinds. Yet, the underlying operating margin expanded by 60 basis points to 20.0%, driven by disciplined overhead management and structural improvements in gross margin. Diluted earnings per share increased by 6.2% to €2.59.

The company's focus on “Power Brands,” which constitute 78% of turnover, is yielding positive results, with these brands showcasing a 4.3% USG and a 2.2% increase in volume. Unilever's productivity program is also ahead of schedule, delivering approximately €670 million in cumulative savings by the end of 2025. A new share buyback program of €1.5 billion has been announced, indicating confidence in the company's financial position.

The demerger of the Ice Cream business was completed in December 2025, creating a simpler Unilever with a clearer strategic focus. This move, along with other portfolio transformations involving acquisitions and disposals, aims to reshape Unilever towards higher-growth categories like Beauty & Wellbeing and Personal Care.

Chief Executive Officer Fernando Fernandez stated, “In 2025 we became a simpler, sharper, and faster Unilever, delivering our commitment to volume growth, positive mix and strong gross margin.” Fernandez added that despite slowing markets, the company's sharper focus and disciplined execution underpin confidence for 2026 and beyond.

Unilever anticipates a modest improvement in underlying operating margin for 2026 compared to the 20.0% achieved in 2025. The company's outlook suggests a cautious approach, acknowledging the impact of slower market conditions on its growth trajectory.

The announced share buyback and increased dividend provide some support for the stock, signaling management's belief in the company's long-term value. However, the muted growth outlook for 2026 may limit significant upside in the near term.