Yahoo Finance Unilever to cut 1,500 jobs worldwide in company shake-up
Unilever (ULVR.L) has confirmed plans to cut more than a thousand jobs around the globe after its failed bid to buy the consumer health division of GSK (GSK.L) for £50bn ($68bn).
The consumer goods company, which owns brands such as Dove, Vaseline, Cif and Lipton, will reduce staff numbers in more than 100 countries in a bid to shore up its finances and take on a more competitive operating model.
According to a brief statement on Tuesday, Unilever will cut around 1,500 jobs as part of an overhaul to simplify its business structure. It will reduce senior management roles by around 15% and junior management positions by 5%, it said.
It currently employs around 150,000 staff worldwide, including more than 6,000 in the UK and Ireland.
The restructuring move comes as the company faces pressure from investors to increase its growth. As part of the changes, the company will be reorganised into five business groups — beauty and wellbeing, personal care, home care, nutrition and ice cream.
“Our new organisational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business,” chief executive Alan Jope said.
“Moving to five category-focused business groups will enable us to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery. Growth remains our top priority and these changes will underpin our pursuit of this.”
Read more: Unilever shares hit as GSK says £50bn bid is 'fundamentally undervalued'
Last week, Unilever put its foot down on its bid for GSK after investor backlash. It had already made three separate bids to acquire the business, but GSK said the latest offer was still “fundamentally undervalued”.
The pharmaceutical firm said its board unanimously concluded the offer was not in the best interests of shareholders, and that it was instead pushing ahead with the planned demerger of the unit.
“There are a lot of ways for Unilever to enhance its position and this acquisition is not one of them,” Bert Flossbach, founder and chief investment officer at German asset manager Flossbach von Storch, said. He is a top 10 shareholder in the company.
GSK’s consumer arm owns brands including Panadol and Advil painkillers, Sensodyne toothpaste, Tums digestive health products, and Nicorette nicotine replacement therapy.
Meanwhile on Monday, New York-based billionaire activist investor Nelson Peltz revealed it had taken a material stake in Unilever, sparking speculation of further overhaul.
Peltz's hedge fund Trian Partners has previously demanded reforms at rival consumer goods firms Procter and Gamble (PG) and Mondelez (MDLZ).
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"The management team clearly want to show they are getting the house in order before embarking on another shopping spree, given how badly the bid was received," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.
"Shares rose initially on news of the clear out, but have lost ground, with some investors not satisfied that cost cutting alone will be enough to ensure Unilever turns a corner.
"Customer loyalty is still a big asset for Unilever, and it’s been working to build a volume-led business, but with the cost of living squeeze intensifying there is a risk pricier products will struggle to shift. So clearly more clarity is being demanded about the direction ahead, and Alan Jope is still under pressure to come up with a brand new strategy.”
