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August 3, 2007

UK: Unilever cuts look set to hit European food ops

The swathe of job cuts announced by Unilever looks set to weigh most on the company’s European food operations.

The swathe of job cuts announced by Unilever looks set to weigh most on the company’s European food operations.

Unilever, the maker of brands including Hellmann’s mayonnaise and Knorr soups, told just-food today (3 August) that cuts of around 20,000 would be of “greater consequence” to its food business than its personal care division.

The company said yesterday that the cuts – around 11% of its workforce – would be focused on Europe.

A Unilever spokesman told just-food: “The European business is more foods-biased than personal care, so the cuts would be of greater consequence to food than personal care.”

The spokesman said Unilever would look to “streamline or close down” up to 60 factories. He added that of some 40% of the job cuts are likely to be in production.

Unilever has recently announced job cuts in the Benelux, France and the UK, moves the spokesman described as “the first wave” of the planned job losses announced yesterday.

The spokesman declined to comment on where the cuts would come within Unilever’s food business. However, he said the company is looking to manage its businesses on a more regional basis, rather than country-by-country.

“We’re going from a company of around 100 country organisations and 20 categories – and you can imagine what a complicated matrix that looks like – to one of 25 country organisations and 10 categories,” he said. “It will be much, much simpler.”

The announcement of job cuts came as Unilever said it would also look to sell off businesses worth EUR2bn (US$2.7bn).

The Unilever spokesman said the “majority” of the 20,000 jobs to be lost would come outside the company’s disposal programme.

However, he refused to be drawn on how any disposals would affect the company’s food division, which also includes Ben & Jerry’s ice cream. “The criteria we have are businesses where we don’t have good growth or profit potential or can’t use our global scale or leverage our route-to-market operations,” he said.

Unilever is looking to create a more streamlined business to generate higher earnings and sales growth.

Yesterday, shares in the company rose after the consumer goods giant’s second-quarter results cheered the market.

Unilever posted a 5.8% rise in underlying revenues to EUR10.5bn. Underlying operating profit for the quarter rose 3% to EUR1.4bn.

“There is now real evidence of sustained improvement in the group,” Panmure analyst Graham Jones wrote in a note to clients.

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