Unilever puts brands on alert as it kicks off ‘comprehensive review’
Flora is one of the brands that could be sold as part of the reviewUnilever is planning a “comprehensive review” of its business as it looks to prove to shareholders they are getting the best deal following the aborted takeover attempt by Kraft Heinz.
Unilever says the review will aim to “accelerate delivery of value for the benefit of shareholders”. It should be completed within three months.
“The events of last week have highlighted the need to capture more quickly the value we see in Unilever. We expect the review to be completed by early April, after which we will communicate further,” says the company in a statement.
What that review looks like is unclear, but cost cutting will likely be on the agenda. Unilever has already moved to zero-based budgeting, which involves getting departments including marketing to justify their spend every year rather than budgets being based on previous years.
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A sale of some brands would also seem to be on the cards. The spreads business has already been identified as underperforming, although Unilever has been slow in saying what it wants to do with the business. The Kraft Heinz bid will likely force its hand.
Other aspects of its food business could also be sold – with analysts citing for example Lipton tea and Hellmann’s mayonnaise. That would fit with Unilever’s aim to be more of personal care than a food company. Euromonitor analyst Raphael Moreau even thinks Kraft Heinz could be in the market to buy them as it looks for acquisitions to shore up its business.
That would also help boost growth. According to figures from Bloomberg Intelligence, Unilever’s food business has underperformed compared to its home and personal care businesses for the last five years.
Unilever will also want to improve its profit margins. Bernstein analyst Andrew Wood has that as one of his key objectives for the company. Unilever’s profit margin is currently less than half that of Kraft Heinz’s.
All these changes will put its marketers and brand managers on alert. Any sale of its brands is likely to lead to job losses and Unilever has been looking for some time at ways to make its advertising work harder by streamlining its agency roster.
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