Friday, 27 May, 2022

Unilever plans thousands of job cuts

Unilever plans thousands of job cuts

Popular News

NEW YORK: Unilever Plc plans to cut thousands of management positions to speed decision-making after activist investor Nelson Peltz built a stake in the consumer-goods giant, people familiar with the matter said.

The move would eliminate numerous regional and divisional roles that Chief Executive Officer Alan Jope believes have slowed innovation, said the people, who requested anonymity when speaking about private matters. The job cuts are likely to number in the low thousands, they said. The company employs about 150,000 globally, report agencies. The shares fell as much as 0.8 per cent in London on Tuesday morning. A Unilever representative declined to comment. 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.

Unilever last week 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.

In recent days, news emerged that billionaire Peltz’s Trian Fund Management has acquired a material stake. The exact size and his intentions remain unclear, but Unilever’s stock surged 7.3 per cent in London on Monday—its biggest gain in 18 months—on optimism the hedge fund would push for significant changes.

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.