There are some important clues in Hein Schumacher’s biography as to the type of boss he might be when joining Unilever in July. In the five years since running dairy cooperative Royal FrieslandCampina, he has readjusted the company and its portfolio and tightened its focus on growth and sustainable business.
Unilever has become this sprawling empire that desperately needs a sharper focus on what it does best, and not constantly dip its toes into new areas. In recent years it has sold interests in tea and spreads and bought into male grooming with questionable success, while falling flat on its face trying to forge a position in over-the-counter medicines.
AJ Bell’s Russ Mould said: “Last year there was speculation that Unilever’s food arm could be sold to help fund the purchase of GlaxoSmithKline’s consumer healthcare operations, but that bid failed in what was an embarrassing moment for outgoing CEO Alan Jope. Investors thought it had offered too much money and the target business wasn’t the right fit.
“Unilever needs a clearer strategy, and it must achieve better organic growth. Its third quarter trading update was full of impressive sales growth figures, but these were all down to raising prices and favourable foreign exchange movements. Volumes fell by 1.6% which isn’t the sign of a business on top of its game.
“In recent years Unilever has come under fire from activist investor Nelson Peltz who took a stake in the business and secured a seat on the board. Fundsmith boss Terry Smith has also criticised the management for ignoring his request for engagement, despite his fund being a long-term shareholder.
“Schumacher would do well to install an open-door culture internally and externally. He needs to rebuild confidence with investors and make a firm plan for how the business will look over the next decade and beyond.
“A plan could take time to pull together and dealing with cultural changes internally certainly won’t happen overnight.”
Leave a Comment