Unilever to revamp after profits fall
Brand giant tackling discounters and tough retail terms
Unilever has confirmed that it is to revamp its business after a tough year is which turnover and profits dipped.
With a huge portfolio of consumer brands which ranges from Birds Eye frozen food and Hellmans mayonnaise to Slimfast slimming products and Dove personal care, Unilever said that in Western Europe, trading conditions were difficult “due to the continuing growth of hard discounters and the responses of traditional retailers, looking to compete through value on both branded and private label products.”
In the year to the end of December, group turnover fell 2 per cent to €42,023m at constant exchange rates, with pre-tax profits down 36 per cent to €2,900m. Underlying sales grew by just 0.4 per cent and sales of leading brands by 0.9 per cent. Sales declined in Western Europe, with market share losses in some categories.Unilever also saw intense competition in Asia.
[img r]dovecurves4.jpg[/img]Ice cream and soft drink sales were hit by a poor summer compared to 2003. However, there were successes including strong sales of Dove firming lotion, backed by the high profile ‘Real Beauty’ campaign.
The group also saw exceptional costs of €1.5bn due to planned investment in restructuring and an impairment charge for SlimFast goodwill. The slimming brand has not performed as expected for unilver since its acquisition, due in part to the increase in alternative diet regimes such as the Atkins phenomenon.
In response, the Anglo-Dutch owned group is simplifying its corporate structure. The current dual chairman structure will be replaced by single CEO and non-executive Chairman. Dutch co-chairman Antony Burgmans takes the non-executive chairman role while Patrick Cescau, the UK co-chairman, becomes group chief executive. The management structure will be simplified, with fewer layers and greater consumer and customer focus.
Burgmans and Cescau said: “There are two fundamental reasons for the recent poor top line performance. Firstly, we let a range of targets limit our flexibility and did not adjust our plans quickly enough to a more difficult business environment. Secondly, we took our eye off our competitiveness and our execution could have been sharper.
“These changes will significantly simplify the organisation, speed-up decision making and ensure clear focus and accountability for the execution of our strategic agenda.”
