Unilever reported stronger-than-expected sales growth in the third quarter, although its chief executive warned of challenging negotiations with European retailers amid ongoing price pressures tied to the conflict in Iran. The company’s underlying sales increased by 5.2% during the quarter, surpassing analyst expectations of 4.8%, driven by robust demand for personal and home care products.

Fernando Fernández, Unilever’s CEO, highlighted that discussions with retailers in Europe have become difficult due to intensified promotional pressure and significant inflation in commodity costs. He noted that mainland Europe is experiencing more tension than the UK, where relationships with retailers remain largely constructive. These challenges are linked to earlier announced price rises caused by the war in the Middle East, which has disrupted supply chains and increased costs for oil, gas, and chemical inputs including surfactants. Price hikes, originally forecasted to be “frequent” but modest, have accelerated in the company’s home care division, which includes brands such as Domestos and Cif.

Fernández also pointed to the growing influence of buying alliances among retailers in Europe, which have amplified their negotiating power in recent years. Despite these pressures, Unilever maintained its annual sales guidance and now expects underlying sales growth in the second half to be around 5%, at the upper end of a previously indicated range between 4% and 5%. The company’s overall turnover rose 6.7% to €13.3 billion, while quarterly dividends were increased by 3% to approximately €0.47 per share.

Breaking down performance by segment, home care sales grew 9.1% on €3.1 billion in revenue, while beauty and wellbeing rose 5.7%. Personal care, representing more than a quarter of total revenues, recorded 6.3% growth, boosted by strong demand for Dove skin cleansing products. Conversely, the food division, which includes Marmite and Hellmann’s mayonnaise, showed virtually no growth at 0.1%, reflecting a tougher environment in developed markets.

Unilever is preparing to complete the separation of its $44.8 billion food division next year, pending shareholder and regulatory approval. The separation deal announced in March with U.S.-based McCormick initially led to a sharp decline in Unilever’s shares. Although the stock has since recovered and gained 12% over the past six months, it fell by 2.1% to £47.92 following the latest results.

The company’s North American market remains a concern for investors, with sales declining 0.7% during the quarter. Analysts at RBC Capital described the negative share price reaction as surprising given the overall solid results but suggested that the North American slowdown, driven in part by the fading momentum of health and wellbeing brands like Liquid IV and Nutrafol, may be temporary. They also emphasized the compensating strength of Unilever’s emerging market performance, particularly in India, which Fernández described as a key growth driver.

Fernández summarized the quarter by saying the company delivered competitive growth through strong volume increases and pricing actions that helped offset rising commodity costs. The results underscore the challenges Unilever faces balancing cost pressures and retailer relationships while maintaining growth ahead of the impending corporate split.