Unilever cuts 1,500 management jobs in strategic overhaul
Premium- The move would eliminate numerous regional and divisional roles that Chief Executive Officer Alan Jope believes have slowed innovation
As part of a global restructuring plan aimed at streamlining operations and soothing the concerns of worried investors, Unilever Plc plans to cut around 1,500 roles across senior and junior management.
Unilever said its "proposed new organisation model will result in a reduction in senior management roles of around 15%".
This comes days after reports that activist investor and billionaire Nelson Peltz's Trian Partners has been building a stake in the world's second biggest personal care products maker, which owns the Dove Soap and Vaseline brands.
The move would eliminate numerous regional and divisional roles that Chief Executive Officer Alan Jope believes have slowed innovation, according to a Bloomberg report. The job cuts are likely to number in the low thousands, they said. The company employs about 150,000 globally.
The shares fell as much as 0.8% in London on Tuesday morning.
Unilever plans to create five distinct business groups – Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream.
"Each business group will be fully responsible and accountable for their strategy, growth, and profit delivery globally," it said.
The news, which could be announced as soon as this week, comes at a crucial juncture for Jope, who took the top job three years ago and has come under increasing pressure to chart a new course as the company’s share price lagged rivals, the report added.
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Last week, Unilever abandoned its pursuit of GlaxoSmithKline Plc’s consumer healthcare business after the drugmaker rejected its overtures and investors disparaged the offer.
Fund manager Terry Smith called the bid a “near-death experience." Only days earlier, he had urged Unilever to focus more on fixing its own business than seeking to promote the sustainability ethos of brands such as Hellmann’s mayonnaise.
Following reports of the stake, Sanford C Bernstein analysts led by Bruno Monteyne wrote to investors speculating that morale had been sagging in low-growth divisions and that “all talented people in Food and Refreshments must have updated their LinkedIn profile by now."
Monteyne had anticipated that Unilever could be Trian’s next target in August, when Peltz retired from Procter & Gamble Co's board after a campaign at that company.
At the time, the analyst called out the need to address Unilever’s “stifling bureaucracy," which former Chief Executive Officer Paul Polman had sought to address during his 10-year tenure by periodically cutting bloated management structures.
Despite the rising share price, Unilever’s stock is trading near the same levels as when Kraft Heinz Co made an unsuccessful bid to buy the company for $143 billion five years ago.
Trian has a history of shaking up consumer companies, including PepsiCo Inc., Danone SA, Kraft Foods and others. Peltz has called for major break-ups at several of the businesses he’s invested in to maximize shareholder returns. The firm often seeks representation on the board and has sometimes called for CEOs to step down.
Jope said last week that Unilever aims to make acquisitions in consumer health and shed underperforming businesses.
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