Unilever's second-quarter growth accelerated significantly, and Bernstein maintains an Outperform rating

Overview

This report is Bernstein's review of Unilever's 1H/2Q26 results. It argues that after the disruptions of the past eighteen months from the CEO transition, the Ice Cream separation, and the Foods sale process, this quarter's results were clearly stronger than expected, especially the simultaneous acceleration in volume and organic sales growth, which could become a catalyst for investors to refocus on improving fundamentals.

Core views

The core view is that Unilever's second-quarter figures provide the evidence of volume improvement that consumer staples investors have long been waiting for: group organic sales growth was 5.8% and volume growth was 5.5%, both significantly faster than in the first quarter and well above consensus expectations. HPC was the main highlight, and this business will become an even more central retained business after the Foods divestment. The report also notes that Foods was the main blemish this quarter, and the market will also focus on whether the strong second-quarter growth can continue.

Analysis framework

The report mainly uses a framework comparing reported results with consensus expectations and Bernstein forecasts, breaking down sources of growth across the group, business divisions, and regions, and combining this with changes in management's full-year guidance to assess the investment implications. On valuation, the report uses an EV/EBITDA multiple method to set the ULVR.LN target price and translates the sterling target price into a euro target price for UNA.NA.

Methodology notes

• Earnings reviewReported results versus consensus expectations

  Comparison of organic sales growth, volume growth, revenue, margin, and EPS against market expectations

  The report compares key 2Q26 and 1H26 operating metrics with consensus expectations and Bernstein forecasts, using the degree of outperformance to judge fundamental improvement and the likely short-term share price reaction.

• Valuation methodEV/EBITDA valuation method

  Applying 12.8x EV/EBITDA to forward NTM+1 EBITDA estimates

  Bernstein applies a 12.8x EV/EBITDA multiple to EUR 12,015 million of forward NTM+1 EBITDA and adjusts for minority interests in certain emerging market businesses to derive a ULVR.LN target price of 5,800 GBp.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ULVR.LN

  Core covered asset, Unilever stock listed in London

  Strengths

  Second-quarter organic sales and volume growth significantly beat expectations, HPC was strong, and full-year volume guidance was raised.

  Weaknesses

  Foods performance may still raise questions, and the degree of margin and EPS outperformance was relatively modest.

  Comparison

  2Q26 organic sales growth was 5.8%, above the 4.1% consensus expectation; group revenue was 1.3% above consensus expectations.

  Risks

  Emerging market growth below expectations, the new structure failing to improve performance, rising restructuring costs, continued deterioration in competitiveness, or failure to improve as expected.

• UNA.NA

  Unilever stock listed in Amsterdam, representing the same company fundamentals

  Strengths

  Shares the improvement in Unilever group fundamentals and the rating view; the target price is translated from the ULVR.LN target price.

  Weaknesses

  The investment case depends on the same group fundamentals, while the Foods divestment and growth sustainability remain key variables.

  Comparison

  Bernstein translates the GBP 58.00 target price into EUR 66.90.

  Risks

  Exchange-rate translation, lack of sustained improvement in group operations, and the above-mentioned Unilever fundamental risks.

Key data

• RatingOutperformBernstein currently rates Unilever Outperform.
• Target priceULVR.LN 5,800.00 GBp / UNA.NA 66.90 EURThe UNA.NA target price is translated from GBP 58.00 into EUR 66.90.
• 2Q26 group organic sales growth+5.8%Consensus expectation was +4.1%, exceeded by 171 basis points.
• 2Q26 group volume growth+5.5%This accelerated significantly from +2.9% in 1Q26.
• 2Q26 group revenueEUR 13,046 million1.3% above the consensus expectation of EUR 12,880 million.
• HPCCo organic sales growth+7.6%HPC was the main growth driver this quarter, with organic volume more than 400 basis points above expectations.
• India growth+10%India stood out at the regional level.
• LatAm growth+8.9%Latin America delivered strong growth.
• 1H26 group revenueEUR 25,623 millionUp 0.5% year on year and 0.6% above consensus expectations.
• 1H26 underlying operating profitEUR 5,193 millionUp 0.9% year on year and 0.5% above consensus expectations.
• 1H26 underlying operating margin20.3%Up 8 basis points year on year, broadly in line with consensus expectations.
• 1H26 diluted underlying EPSEUR 1.61Up 1.3% year on year and 1.3% above consensus expectations.
• Full-year volume growth guidancearound +3%Management had previously guided to around +2%; this was raised in the current update.
• Valuation multiple12.8x EV/EBITDAUsed in the ULVR.LN target price calculation.

Impact & implications

The report argues that the sharp acceleration in second-quarter volume growth is exactly the signal consumer staples investors have been waiting for over the past two years and could drive a positive short-term share price reaction. More importantly, the growth mainly came from the HPC business, which will remain after the Foods divestment, helping investors look through the noise of asset sales and reassess the quality of Unilever's core business.

Risks

• Emerging market economic growth comes in below expectations.
• The new organizational structure fails to deliver performance improvement.
• The scale of exceptional charges or restructuring costs increases.
• Competitiveness continues to deteriorate or fails to improve as expected.
• Weak Foods performance could undermine market confidence in the quality of the group's improvement.
• The sustainability of strong second-quarter volume growth still needs to be validated in subsequent quarters.

What to watch

• Whether 2H26 growth can be maintained within management's expected 4%-5% range.
• The pace at which the roughly 3% full-year volume growth guidance translates into actual results.
• Whether the strong performance of the HPC business continues and remains the core driver of the retained business.
• Progress in the Foods sale process and its impact on investor sentiment and business reporting scope.
• Whether the recovery in North American volumes is sustainable.
• Whether high-growth regions such as India and LatAm can continue to support group growth.
• Changes in the cost environment and the margin impact of a second-half growth mix that tilts more toward pricing.