London The consumer goods group Unilever is repositioning itself and is separating from 1,500 executives. Around 15 percent of all employees in upper management are affected by the job cuts, five percent are to be lost among junior managers. There should be no cuts in the workforce in production.
The group, whose range of brands with food (Knorr, Pfanni), cosmetics (Axe, Dove) and cleaning agents (Coral, Domestos) covers the entire spectrum in the consumer goods market, announced on Tuesday. The British group is experiencing turbulent weeks after a failed takeover attempt and the entry of a US investor.
Unilever CEO Alan Jope, who has led the company and its 149,000 employees since 2019, has been under pressure for some time because sales are stagnating and the share price is developing more slowly than the competition. With a reorganization of the divisions and the layoffs, Jope is now trying to generate new growth.
Last week, Unilever tried to take over the consumer goods division of the pharmaceutical giant Glaxo-Smithkline (GSK), which is known for the toothpaste Sensodyne and the pain ointment Voltaren, for around 50 billion pounds (the equivalent of around 60 billion euros).
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It would have been the largest takeover since the pandemic began and in Unilever’s history, but it failed miserably. GSK dismissed the offer as too low, and criticism from Unilever investors and analysts was unusually harsh.
This Monday it was announced that activist investor Nelson Peltz and his New York hedge fund Trian Partners are investing in Unilever. Peltz has worked for other consumer goods giants and has successfully restructured them.
Five instead of three business areas
Unilever announced a reorganization of its business units on Tuesday. The company is planning five new divisions for beauty and wellness, personal care, home care, food and ice cream. In this way, one can react more quickly to new trends, explained CEO Jope. Unilever wants to focus more on the areas of health, beauty and hygiene because they promise higher and more sustainable growth.
The group had previously been divided into three business units: personal care, food and cleaning products. The previous body care area, which grew the slowest, will be split into two new units.
The division of the food division into two new units brings more transparency about the growth of the ice cream division. For example, Unilever sells ice cream under the Ben & Jerry’s and Langnese brands. Market observers had speculated that Unilever could sell its ice cream brands or exit the food segment altogether.
However, CEO Jope said last week that there were no plans to divest the entire grocery division. Instead, he wants to invest more in vegan meat alternatives and in the fast-growing business with vitamins, minerals and dietary supplements.
The restructuring steps taken by the British, which they say have been working on it for a year, are reminiscent of the restructuring of the American rival Procter & Gamble (Ariel, Pampers, Gillette) three years ago. At that time, the company created six similar business units as part of a major restructuring. Investor Peltz, who sat on the board of directors of P&G between 2018 and 2021 and has now joined Unilever, also worked on this.
Observers react with restraint
Analysts were cautious about the realignment: the new structure makes sales easier, wrote analyst James Edwardes Jones from the Royal Bank of Canada. But one would prefer Unilever to focus on reinvesting cost savings in their brands. In addition, there are no signs of a cultural change because the managers of the new units all come from the company.
The stock exchange hardly reacted to Unilever’s announcements either, and the stock was slightly down. In the past few days, the paper had been on a real roller coaster ride: after investor Peltz got involved, the price rose by up to eight percent, and last week the value had fallen by around this value after the unsuccessful takeover of GSK. A share certificate currently costs between 46 and 47 euros.
More: Hedge funds join Unilever – and should accelerate the upheaval