Monday, May 29

Unilever faces restructuring by eliminating 1,500 management jobs

The move, which Unilever says has been in the works for the past year, resembles the restructuring carried out by its arch-rival Procter & Gamble (P&G) three years ago, when it created six similar business units, in its biggest reorganization in two decades.

“Shifting to five category-focused business groups will allow us to better respond to consumer and channel trends, with clear accountability for results,” Unilever Chief Executive Alan Jope said.

The consumer goods giant, whose shares have fallen 13% in the past year, last week abandoned plans to buy GlaxoSmithKline’s (GSK) health business for 50 billion pounds ($67 billion).

His proposal, rejected by GSK, was widely criticized by investors as a costly and risky distraction from pressing business challenges such as rising inflation in emerging markets and weakness in healthy foods.

Days later, it was also reported that Nelson Peltz’s activist investor Trian Partners was building a stake in Unilever, mirroring earlier investment and a push for change in P&G and other consumer goods companies. Trian did not confirm the report.

On Thursday, influential British fund manager Terry Smith criticized Unilever in a letter to his Fundsmith LLP investors, calling the loss of the GSK deal a “near-death experience” and urging management company to focus on reinforcing results.

By Richa Naidu and Pushkala Aripaka, Reuters Agency