Broker says volumes, margins and mix set to improve as India and Asia recover
Unilever PLC (LSE:ULVR) is poised for a stronger growth phase in 2026 as its emerging markets portfolio rebounds and cost savings feed through to margins, according to a detailed note from Barclays, which has reiterated its 'overweight' stance on the shares.
Barclays argues that Unilever has been “quietly outperforming” peers but has been overshadowed by broader noise in European consumer staples. It believes 2026 will be a decisive year, with emerging markets, now accounting for about 62% of revenues following the deconsolidation of the ice cream business, becoming a visible growth engine again.
The broker forecasts group volume growth of 2.4% in 2026, ahead of consensus, driven by a faster-than-expected recovery in India, China and Indonesia, alongside easier comparisons in Latin America.
In a bullish scenario, volume growth could exceed 3%, though Barclays cautions this would require both emerging market acceleration and continued resilience in developed markets.
India is seen as central to the recovery. Barclays points to supportive macro conditions, including strong economic growth, easing interest rates and a planned goods and services tax simplification that could amount to a 10% price cut on many everyday products.
The broker expects volumes at Hindustan Unilever to accelerate as consumer demand improves and premiumisation gains traction.
Indonesia and China are also expected to contribute after operational resets, while Latin America, which dragged on results in 2025 due to macro weakness and execution missteps, should benefit from easier comparatives.
Barclays said management had acknowledged “own goals” in Brazil but argued that corrective action had been taken.
Beyond volumes, the bank sees further upside from cost savings and margin expansion. Unilever has already delivered about €650 million of its €800 million productivity target and could announce a new savings programme as simplification accelerates under its “One Unilever” model.
Gross margins have recovered sharply since 2022, narrowing the gap with global peers.
The broker also highlights a potential rebound in haircare, about 11% of group sales, supported by relaunches of Dove and a growing contribution from premium brand K18.
At around 18 times forward earnings, Barclays believes Unilever could re-rate if it delivers consistent volume growth above 2% and organic sales growth above 4%, making 2026 a critical test year for the strategy.
At midday, the shares were flat at 4,981p.