Unilever Plans to Cull 15% of Senior Management

09 May 2005

Unilever, the Anglo-Dutch global consumer products group, is consolidating senior management positions as part of its recently announced 'One Unilever' policy - a move that will consign 15% of its current top echelon executives to the departure lounge.

SVP for investor relations John Rothenberg predicts the management reshaping process will take two years, and that less senior employees can also expect to be looking over their shoulders.

The axe-wielding revelations accompanied a set of unusually sparkling results from the previously lacklustre giant last week: a 24% increase in Q1 profits [WAMN: 06-May-05].

Another highly significant change is the way in which Unilever will in future report its advertising and promotion expenses.

With immediate effect it will adopt standard US accounting procedures relating to money-off couponing and "trade promotions" (payments to retailers for ads in circulars and 'contributions' to local advertising) - treating these as a reduction in sales rather than marketing expenses as hitherto.

This accounting change is backdated to 2004, triggering a restatement of accounts for that year. It slashes the group's reported marketing spend for last year by an eyewatering $1.6 billion (€1.25bn; £845.66m), reducing the overall total to $5.8bn.

The restatement implies that of its approximately $11bn US sales in 2004, slightly more than 5% was spent on coupons and trade communications.

In global terms, the restatement reduces Unilever's marketing spending as a percent of sales by 2.7 points to 11.4%. Almost on a par with - but still marginally ahead of - its greatest rival Procter & Gamble.

Data sourced from AdAge (USA); additional content by WARC staff