Unilever Lives Up to Its Name - After 78 Years!

11 February 2005

Since the merger in 1929 of UK soap giant Lever Brothers with Netherlands-based fats manufacturer Margarine Unie (itself the result of a merger two years earlier), the resulting hybrid - now the globe's second largest advertiser - might more aptly have been known as Bilever.

Investors have long complained that the first syllable of Unilever's name is not evident in its dual-board management structure [WAMN: 31-Jan-05] and on Wednesday the consumer colossus finally bent to the will of its shareholders.

As of April this year Unilever will combine under a single board of directors chaired in a non-executive capacity by Anthony Burgmans, the current chairman of the group's Dutch operations. UK chairman Patrick Cescau (a French national) will become group chief executive.

The new structure will house three regional directors, respectively resopnsible for the Americas, Europe and Asia/Africa, under whom there will be two category presidents for foods and home/personal care.

The simplified organisation replaces three divisions, eleven business groups and a senior management tree split along country lines. Three unidentified directors are destined for the departure lounge.

Many observers believe the move has come not a moment too soon as the top-heavy giant continues to lose market share to a vibrant Procter & Gamble and other smaller, more agile rivals.

As if to underscore the urgency of change, Unilever's announcement coincided with its Q4 numbers - a loss of €519 million ($664.16m; £357.42m). This compares year-on-year with a profit of €1.20 billion.

The restructure also coincides with the end of Unilever's much vaunted five year plan, Pathway to Growth, under which its product portfolio has shrunk from 1,600 to just 400 key brands. But the group admits it could have done better.

A statement from the current joint chairmen reads: "The programme has produced a stronger portfolio. However, initial market shares gains have not been sustained. We let a range of targets limit our flexibility and did not adjust our plans quickly enough to a more difficult business environment.

"Secondly, we took our eye off our competiveness and our execution could have been sharper. Consumers have not yet been attracted back to the SlimFast meal replacement plan."

Data sourced from The Times Online (UK); additional content by WARC staff