Unilever has revealed details of a major restructure, including plans to sell its Becel/Flora and Stork brands, in the wake of a mooted takeover by Kraft Heinz.
US food giant Kraft Heinz abandoned its $143bn takeover of the Anglo-Dutch FCMG firm earlier this year, after Unilever dismissed the potential merger as being of “no merit, either financial or strategic”.
However, under pressure from investors, Unilever announced plans for a “comprehensive review” of its structure and product portfolio to examine ways to increase profitability.
In a statement, the advertiser said it would be accelerating its ‘Connected 4 Growth’ programme announced last year, and its target of reaching a 20% underlying operating margin by 2020.
Its Food and Refreshment divisions will be combined into a single unit, which chief executive Paul Polman said would become a “leaner and more focused” operation. Unilever has also opted to dispose of its spreads business, including major brands such as Becel.
Polman confirmed that Unilever is to “review” its unusual dual-headed legal structure in the UK and the Netherlands – a result of the merger of Lever Bros and Unie nearly a century ago – in the interest of “simplification and flexibility”.
The company also stated it would focus on greater efficiencies through its ‘zero-based budgeting’ policy, though it has committed to spending around €30bn ($32bn) in marketing and brand investment over the coming four years.
In a subsequent call with investors, Polman revealed Unilever is aiming to cut the number of ads it produces by 30%, and achieve efficiencies of €2bn by 2019. It also wants to halve the number of creative agencies it works with.
“With the transformation of Unilever, we have built on a portfolio of strong and growing brands delivered to consumers across the world. We have established a responsible investment-led growth model that is well-equipped with global scale and unrivalled distribution strength in emerging markets,” said Polman.
“This has resulted in consistent, competitive, profitable and responsible growth and attractive returns for our shareholders. The faster pace of change that we are seeing in our markets and competitive set requires us to continue to set the bar higher.”