Consumer goods behemoth Unilever is to slash 7,500 jobs as its new boss leads a massive shake-up at the maker of Dove Soap, Marmite and Ben & Jerry’s ice cream.
Unilever said the cuts would be “predominantly office-based”. It didn’t offer a geographic breakdown of the cuts or detail of the type of roles involved, but many are likely to be at its global headquarters in Victoria. The firm has 6,000 staff in the UK and a global workforce of 127,000 people.
The cuts are part of “a comprehensive productivity programme,” to save €800 million (£684 million) over the next three years. The shake-up is led by new boss Hein Schumacher, who took over from Alan Jope last year. Schumacher set the stage for the cuts when Unilever reported its results last year, repeatedly calling the company’s performance “disappointing”.
Schumacher today said: “We are very aware of how unsettling this will be for our people around the world and we are set on carrying these changes out with respect and care.”
There could end up being more cuts further down the line. When asked whether to expect more jobs to go down the line, Schumacher said: “We have a big agenda. This is going to be a very busy period for the next 18 months.”
Schumacher is among the FTSE 100’s top-paid bosses, and could make up to £14 million this year depending on bonuses.
Victoria Scholar, head of investment at interactive investor, said the moves to boost margins were “influenced” by activist investor Nelson Peltz, who made similar changes at rival Procter & Gamble and sits on the Unilever board.
Besides slashing jobs, Unilever is also set to spin out its ice cream arm, which includes Ben & Jerry’s, Magnum and Cornetto. It said the business is run differently to most of its other divisions and so should be run under a “different ownership structure”. Unilever sold €7.9 billion worth of ice cream last year.
While it said it had not made a final decision on the best path for the ice cream division, a demerger is the “most likely” option. Schumacher said Unilever would choose “the route that maximises value for our shareholders” for the ice cream business.
The spun-off ice cream business may end up listing somewhere other than London, in what would be another blow to a London Stock Exchange that has already seen firms like Flutter and Arm choose to list their shares in the US instead. Schumacher said Unilever is “open to options” about where the ice cream arm will be listed, and noted that the division is headquartered in the Netherlands.
Unilever itself is committed to keeping its listing in London.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: “Action is what shareholders wanted to see from the new team at the top, and that’s what’s been delivered today. Ice Cream always looked like the odd one out when you compare it to other product lines, and performance has struggled of late.
“It’s not a huge shock to see this move, but it’s something prior management wasn’t able to deliver.”
Chris Beckett, head of equity research at Quilter Cheviot, said: “Historically, Unilever’s decision to sell its tea business did not lead to a transformative impact on the company’s operations or value. It stands to reason that this latest move to split off the ice cream business may follow a similar pattern, offering no substantial metamorphosis.”
The markets responded positively to the shake-up. Unilever rose to the top of the FTSE 100 with shares up as much as 5.7% to 4027p. That brought the value of the company back above the £100 billion barrier.
