Anglo-Dutch consumer behemoth Unilever is abandoning its dual-chairman structure in favour of one CEO and a single headquarters. With this restructuring, Unilever hopes to speed up the decision-making process. However, it is notable that there is no sea change in overall product strategy, leaving Unilever’s moves looking rather conservative compared to those of some of its rivals.
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Unilever, one of the world’s largest manufacturers of food and soap, also announced a net loss for the fourth-quarter of €255m (US$328.1m), compared to a €730m profit in the same period a year earlier. It is the firm’s first quarterly loss since 2000.
Unilever has had twin UK and Dutch holding companies since its creation. However the company now plans to review its entire company structure and will eliminate the current executive committee. Frenchman Patrick Cescau will become the chief executive, while Dutchman Antony Burgmans will be moved to a non-executive chairman’s role.
Five years ago, Unilever initiated a plan called the ‘Path to Growth’, with the aim of boosting growth in the company’s leading brands by as much as 6% by the end of 2004. Unilever has therefore bet heavily on its big brands, selecting its top 400 from its portfolio of more than more than 1,500 for greater investment. After disappointing third-quarter results last year, Unilever said it would follow this plan even more vigorously, pushing greater exposure of its top names.
Based on the results posted today, the company is still underachieving. While competition has been intensifying in the consumer goods industry, Unilever has undoubtedly been slow to react to changing trends, and its cumbersome structure was seemingly a factor in this. For instance, Unilever was slow to offer low-carbohydrate products in response to the popularity of diets such as the Atkins. Abandoning the split company structure in favour of a centralised management should speed up the decision-making process.
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By GlobalDataWhile this is to be welcomed, it does not conceal the fact that there is no overall change in strategy. Continuing down the same path will not revive its fortunes: one option might be a bold M&A coup to provide added muscle, such as that made by Proctor & Gamble in purchasing Gillette.
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