Unilever Just Had Its Best Volume Quarter in a Decade. The Foods Business It Is Selling Went Backwards

Unilever has just reported the best volume quarter it has had in more than ten years. Group volumes rose 5.5% in the second quarter of 2026. One part of the company went the other way. Foods, the business Unilever is handing to McCormick, sold 0.1% less product than a year earlier.

Foods is a quarter of Unilever's turnover and the most profitable thing the company owns. It runs a 23.3% underlying operating margin. Personal Care sits at 22.2%, Beauty and Wellbeing at 19.5%, Home Care at 15.8%. Foods is also the only one of the four that has stopped growing.

Three business groups accelerated. One stalled

The first-half numbers are clear. Group underlying sales growth was 4.8%, made up of 4.2% volume and 0.6% price, and it sped up to 5.8% in the second quarter. Home Care grew 7.6% in the half and 9.1% in the quarter. Beauty and Wellbeing hit 8.1% in the quarter. Personal Care managed 5.9%.

Foods grew 1.2% in the half and 0.2% in the quarter, with volume at minus 0.1%. First-quarter Foods growth was 2.2%. So the trend inside the half runs downhill. Unilever called the second quarter "below our expectations" and pointed to softer developed markets and more competition in US condiments.

High margin with flat volume is a signature

A business with a 23.3% margin and no volume growth is usually a business that has been run for cash. Foods underlying operating profit came in at 1.5 billion euros, down 4.3%, with the margin held flat. Reported Foods turnover fell 4.0% to 6.3 billion euros once currency and disposals are counted.

That pattern matters to any buyer. Margin held at that level while volume flattens tells you where the trade-offs have been made. Unilever says brand and marketing spend in Foods stays well above the peer average, so the answer is more likely mix, pricing discipline and overhead control than a spending famine. Either way, the next owner inherits the margin and the growth problem in the same transaction.

Mayonnaise is the tell

Unilever said it is taking steps to correct share loss in US condiments, specifically in premium and avocado mayonnaise. Those are the fastest-moving corners of a category Hellmann's is supposed to own. Losing ground there while the parent company is mid-separation is the kind of detail buyers should read twice.

Cooking Aids was flat for the half, with Knorr growing low single digit as emerging market gains were cancelled out by declines in developed markets. Unilever Food Solutions, the foodservice arm, grew low single digit with volume leading, helped by China and the US. Emerging markets carried what growth there was. India Foods grew mid single digit, led by double-digit growth in Horlicks.

What McCormick is actually buying

On 23 July, five days before these results, McCormick set out the shape of the combined company. Four divisions: Americas Consumer with about 8 billion dollars of 2025 sales, International Consumer with about 7 billion, Global Food Service and Global Flavor. Brendan Foley stays as chairman, president and chief executive. Marcos Gabriel stays as chief financial officer. McCormick will seek a secondary listing in London while keeping its primary listing in New York.

The deal case now has to rest on flavour capability, scale and cost, because category momentum is not there to lean on. Unilever expects completion by mid-2027 at the latest, subject to a McCormick shareholder vote, regulatory approvals and Works Council consultation. Cash from the separation plus trading is expected to fund 6 billion euros of Unilever buybacks between 2026 and 2029.

The gap between now and closing

Unilever guides to full-year growth of 4% to 6% with around 3% volume, and expects Foods to speed up in the second half on innovation and commodity-led price rises. Net debt closed the half at 26.0 billion euros against 23.1 billion at the end of 2025, or 2.3 times underlying EBITDA. The 800 million euro productivity programme is finished ahead of plan.

An asset waiting to change hands for another year has two sets of interests pulling on it. The seller wants the print to look orderly. The buyer wants brands with room left in them. Anyone competing against Hellmann's, Knorr or Unilever Food Solutions over the next four quarters has an unusual window, because a business in this position rarely fights for shelf space as hard as one whose owner plans to keep it. Anyone buying a carved-out food business should price the reinvestment they will have to fund before they price the margin they are inheriting.