Unilever Long-Term Holding Case Strengthened by Margin Gains and Buyback

Unilever as a long-term holding has attracted fresh scrutiny after the consumer goods group reported a GAAP operating margin of 17.9% for full-year 2025, up from 16.8% in 2024, alongside a new €1.5 billion share buyback programme. For investors prepared to think in decades rather than quarters, the numbers behind the headline tell a more instructive story than the revenue line alone.

What the 2025 Results Actually Show

Reported turnover fell 3.8% to €50.5 billion, from €52.5 billion in 2024. The decline, however, was driven almost entirely by factors external to the underlying business: adverse currency movements accounted for -5.9 percentage points and net portfolio disposals (including the Ice Cream demerger) for a further -1.2 points. Strip those out and underlying sales grew 3.5%, with 1.5% volume growth and 2.0% price growth.

The Ice Cream separation also weighed on cash generation. Free cash flow came in at €5,921 million for the year, down €0.4 billion from €6,304 million in 2024, with demerger costs cited as the primary cause. Cash conversion remained at 100%, which is the figure that matters for assessing earnings quality.

Operating profit reached €9.0 billion (€9,037 million) and net profit was €6.2 billion, per the full-year accounts. Underlying earnings per share was €3.08, with diluted EPS growing 6.2% year-on-year. On the margin side, the underlying operating margin reached 20.0%, up 60 basis points from 19.4% in 2024. The snippet’s cited range of 14.1% to 15.5% reflects an earlier period; the issuer’s own 2025 filing supersedes those figures.

The Long-Term Holding Case for ULVR

The Power Brands, which account for 78% of turnover, delivered 4.3% underlying sales growth with volume up 2.2%. These are the Dove, Knorr, Hellmann’s and Vaseline lines that sit in bathroom cabinets and kitchen cupboards regardless of the economic backdrop. That volume growth matters: it suggests consumers are buying more units, not just paying more for the same ones.

Unilever’s four business groups on a continuing operations basis (Beauty and Wellbeing at €12.8 billion, Personal Care at €13.2 billion, Home Care at €11.6 billion, and Foods at €12.9 billion) show a business spread across categories that tend not to move in lockstep. When one segment softens, others typically absorb the slack. That diversification is part of what makes the Unilever long-term holding argument hold up across cycles.

A productivity programme has delivered cumulative savings of approximately €670 million by end-2025, described by the company as ahead of plan. Chief Executive Fernando Fernandez has framed the programme as a structural reset rather than a one-cycle cost squeeze, which is the kind of language that either ages well or becomes an embarrassing promise. The margin trajectory so far argues for the former.

The capital return story has also firmed. Alongside the full-year results, Unilever announced a €1.5 billion share buyback and raised its quarterly dividend by 3% versus the third quarter of 2025. For income-oriented investors, the dividend pause in 2022 and 2023 (to preserve capital) is the relevant caveat. Growth has resumed, but the episode is a reminder that even stable consumer staples are not immune to balance-sheet pressure.

Risks Worth Holding in Mind

Pricing power is the variable most worth watching from here. Underlying price growth of 2.0% in 2025 is modest, and consumer staples companies face a persistent tension between recovering input costs and not pushing volumes into negative territory. Unilever managed 1.5% volume growth despite the pricing, which is a reasonable outcome, but the first-half 2025 results showed net income down 5.1% year-on-year, a sign that the full-year improvement was weighted to the second half.

Competition from private-label brands, supply chain cost inflation, and exposure to emerging-market currencies remain structural headwinds. None of them are new. Unilever has navigated all three before, and its brand equity across categories gives it more pricing latitude than most peers.

Listing on the London Stock Exchange as ULVR, the stock benefits from FTSE 100 index demand and a sterling-accessible dividend stream for UK investors. The next test for the thesis is whether underlying volume growth can be sustained above 1.5% as the company completes the Ice Cream exit and focuses on its remaining four segments. That is the number to watch when first-half 2026 results land.