Unilever's Q2 Sales Beat Forecasts, Led by Robust Ice Cream Demand.

Unilever reported Q2 sales growth beating forecasts, driven by strong demand in its ice cream business, which will spin off in November. The Dove soap maker maintained its full-year sales outlook, citing robust demand in North America and Europe. However, free cash flow dropped 50% YoY in H1, raising concerns about financial strain caused by supply chain changes and spin-off costs.

Unilever PLC reported strong second-quarter (Q2) sales growth, beating market expectations. The consumer goods giant cited robust demand in its ice cream business as a key driver, which is set to be spun off in November. The company maintained its full-year sales outlook, attributing the performance to strong demand in North America and Europe. However, free cash flow dropped by 50% year-over-year (YoY) in the first half of 2025, raising concerns about financial strain from supply chain changes and spin-off costs.

Unilever's underlying sales growth for Q2 was 3.8%, exceeding analysts' consensus of 3.6%. The company's ice cream division, which includes brands such as Ben & Jerry's, Wall's, and Magnum, recorded an impressive 7.1% growth in underlying sales, the fastest-growing category [3]. The spin-off, to be called The Magnum Ice Cream Company, is scheduled for mid-November. Unilever will retain a stake of less than 20% in the new business for up to five years [3].

The company's overall Q2 performance was bolstered by brands such as Dove bodywash, Liquid IV electrolyte mix, and Wonder Wash detergent. CEO Fernando Fernandez highlighted the success of the company's strategy in the US, noting that "our performance in the US is showing that the model of deploying our investment is really working well" [3].

However, the 50% drop in free cash flow from Q2 2024 to Q2 2025 is a significant concern. The company attributed this decline to supply chain disruptions and the costs associated with the spin-off. The financial strain is likely to be exacerbated by the ongoing demerger, which will involve operational and financial adjustments to maintain capital flexibility and reduce net debt [1].

Unilever's full-year sales outlook remains within its range of 3% to 5%, with the company expecting second half progress ahead of the first half. The company also anticipates an improvement in underlying operating margin for the full year, with second half margins of at least 18.5% [1]. Despite these positive forecasts, the uncertain macroeconomic and currency environment may necessitate agile adjustments to the company's plans [1].

Unilever shares were up 0.2% to 4,470.00 pence each in London on Thursday morning, while the wider FTSE 100 index was up 0.4% [1].

References:
[1] https://www.marketscreener.com/news/unilever-underlying-growth-beats-consensus-ahead-of-ice-cream-demerger-ce7c5fdcd181f124
[2] https://www.foodnavigator.com/Article/2025/07/31/unilever-ice-cream-growth-strong-ahead-of-demerger/
[3] https://www.freemalaysiatoday.com/category/business/2025/07/31/unilever-beats-sales-forecasts-as-ice-cream-business-shines