Unilever to axe 1,500 jobs amid prospects of food sell-off

By Rod Addy contact

- Last updated on GMT

Unilever did not expect the changes to affect its factory operations
Unilever did not expect the changes to affect its factory operations

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Unilever is axing 15% of senior managers and 5% of more junior managers, hitting 1,500 jobs in a restructure amid speculation it may be planning to divest its food portfolio.

In a stock exchange announcement on 25 January, the company stated that it did not expect factory teams to be affected.

Unilever said it would be organised around five business groups: Beauty & Wellbeing; Personal Care; Home Care; Nutrition; and Ice Cream units. Each would be fully responsible and accountable for their strategy, growth, and profit delivery globally.

The groups will be supported by Unilever Business Operations, which will provide the technology, systems, and processes ‘to drive operational excellence’ across the business. A lean Unilever corporate centre will continue to set overall strategy.

Nutrition and Ice Cream

In addition to new presidents for Beauty & Wellbeing; Personal Care, Hanneke Faber – currently president of Foods & Refreshment, has been named president of Nutrition. That group covers Scratch Cooking; Healthy Snacking; Functional Nutrition; Plant-Based Meat; and Food Solutions.

Executive vice president for ice cream Matt Close has been appointed president of the Ice Cream business group.

These appointments would take effect from 1 April, the company stated.

Other appointments

Chief operating officer Nitin Paranjpe will take on a new role as chief transformation officer & chief people officer, leading the business transformation, and heading the HR function.

Chief supply chain officer Reginaldo Ecclissato will lead the supply chain and Unilever business operations as chief business operations officer.

The company stated: “The proposed new organisation model will result in a reduction in senior management roles of around 15% and more junior management roles by 5%, equivalent to around 1,500 roles globally. Changes will be subject to consultation. We do not expect factory teams to be impacted by these changes.”

Costs

Costs related to setting up the new organisation would be managed within existing restructuring investment plans, it confirmed.

Simon Underwood, business recovery partner at accountancy firm, Menzies LLP, said: “Unilever is quite rightly focusing back on its core business, after failing in its bid to buy the healthcare and hygiene division of GSK.

“There are lots of deal opportunities in the marketplace just at the moment, not just for large corporates, but for businesses of all sizes that have cash reserves or finance in place. It is incredibly tempting to pursue growth by acquisition, particularly if the price is right. However, it is important to be prepared to step away and focus back on core activities if things don’t go according to plan.

“There is a lesson here for businesses that might be tempted to pursue a deal with the aim of extending their foothold in a key target market. They should stay focused on viability and make sure their own house is in order first, by trimming costs where possible and investing in productivity-driving technologies and other activities.”

New organisational model

Unilever chief executive Alan Jope explained: "Our new organisational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business.

“Moving to five category-focused Business Groups will enable us to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery. Growth remains our top priority and these changes will underpin our pursuit of this."

These latest developments follow a Financial Times report that Nelson Peltz’s hedge fund Trian Partners had built a position in Unilever​. That has piled further pressure on the board after Unilever recently dropped its £50bn bid for GlaxoSmithKline’s (GSK’s) consumer arm.

Divest food operations

In previous announcements, Unilever has also hinted strongly it was planning to divest its remaining food operations.

On 17 January, the company stated: “Following the unification of Unilever, the board has undertaken an extensive process to review strategic pathways to reposition Unilever's portfolio into higher growth categories. 

“This concluded that Unilever's future strategic direction lies in materially expanding its presence in Health, Beauty, and Hygiene. These categories offer higher rates of sustainable market growth, with significant opportunities to drive growth through investment and innovation, and by leveraging Unilever's strong presence in emerging markets.”

Unilever’s food activities remain conspicuously absent from mention in this statement of strategy.

Other senior changes at Unilever

  • Fernando Fernandez, executive vice president, Latin America, has been appointed president of Beauty & Wellbeing, which includes Hair Care, Skin Care, as well as Vitamins, Minerals and Supplements, and Unilever Prestige.
  • Fabian Garcia, president, North America, has been appointed president of Personal Care, responsible for Skin Cleansing, Deodorants, and Oral Care.
  • Peter ter Kulve will continue in his role as president of Home Care, responsible for Fabric Care, Home & Hygiene, and Water & Air.
  • Sunny Jain – current president of Beauty & Personal Care has decided to leave Unilever to set up an investment fund in technology megatrends.
  • Other members of the Unilever leadership executive will remain in role, including Sanjiv Mehta, who will retain executive leadership of Hindustan Unilever.

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