opens a new tab<\/span> The company is splitting up its food business to create a $65 billion food giant that handles everything from sauces to spices. Unilever will retain a nearly 10% stake, with shareholders holding a further 55%.<\/div>\nThe recent spinoff has turned the company into a much leaner beast with a focus on beauty, personal care, and home care. Fernandes has spent most of his 38-year career at Unilever selling products from Dove soap to Surf laundry detergent.<\/p>\n
“This is the right step at the right time to build a simpler, sharper, higher-growth Unilever,” Fernandes told analysts on a conference call after the McCormick deal was signed.<\/p>\n
\u201cWe are taking a leading position in a highly attractive category, strengthening our exposure to fast-growing regions such as the US and India, and creating a \u20ac39 billion home and personal care pure-play business.\u201d<\/p>\n\n\n
<\/div>\n<\/div>
unilever stock price<\/figcaption><\/figure>\nThe prize will be worth it in the end<\/h2>\n Without food and ice cream, Fernandes will rely on Unilever’s 23 home, beauty and personal care “power brands”, including Dermalogica, Pond’s, Sunsilk and Schiff, which account for the bulk of Unilever’s sales.<\/p>\n\n\n
<\/div>\n<\/div>
Unilever has identified 30 “power brands” that will account for approximately 75% of annual sales in 2023. The company has since separated its ice cream business and plans to exit the food sector.<\/figcaption><\/figure>\nMost investors did not take the news well, with Unilever shares closing at a two-year low on Tuesday and falling further on Wednesday amid concerns about the long timeline for the deal to close in 2027 and food surpluses.<\/div>\n
But some investors see long-term gains in fast-growing beauty, personal care and home care products.<\/p>\n
\u201cPerhaps the most overlooked benefit is the increased visibility that comes from simplifying Unilever’s business model,\u201d David Samra, managing director of Unilever investor Artisan Partners and founding partner of the International Value Group, told Reuters.<\/div>\n
\u201cThe company has transitioned from operating in two different industries to focusing on a narrower group of brands in rapidly growing markets.\u201d<\/p>\n
The food business has high margins, but sales growth has lagged behind other divisions, weighing on Unilever’s goal of increasing annual sales by 4% to 6%.<\/p>\n
“The prize money for the pure-play home and personal care company will be worth it in the end,” said Warren Ackerman, an analyst at Barclays.<\/p>\n\n\n
<\/div>\n<\/div>
Underlying sales growth in Unilever’s food business has lagged other sectors since the peak of the coronavirus pandemic and has repeatedly fallen short of the group’s overall target of 4-6% growth.<\/figcaption><\/figure>\nRelocation could lead to higher valuation for Unilever<\/h2>\n Unilever’s investors and board have pushed for change in recent years, including billionaire activist shareholder Nelson Peltz, who owns a $1.73 billion stake in the company.<\/p>\n
This has put pressure on Unilever’s two CEOs, most recently Hein Schumacher, who was fired after failing to rationalize the company’s portfolio quickly enough. Mr. Fernandez, who was finance director at the time, was promoted to speed up the process.<\/p>\n
The deal marks a sharp change in direction for Unilever after it spent much of the last century acquiring food and drink brands from Marmite to Colemans to Horlicks.<\/p>\n
But the rise in consumer health consciousness and the rise of GLP-1 weight loss drugs in recent years has eroded demand for processed foods and investor confidence, and Unilever also faces stiff competition from cheaper private labels.<\/p>\n
Unilever’s forward price\/earnings ratio of 14.8 times is lower than L’Or\u00e9al (OREP.PA).
opens a new tab<\/span>Procter & Gamble (PG.N)opens a new tab<\/span>Nestle (NESN.S)opens a new tab<\/span> and Danone (DANO.PA)opens a new tab<\/span>is trading between 17.2x and 25.3x, according to LSEG Workspace data.<\/div>\n\n\n
<\/div>\n<\/div>
Line chart showing 12-month price\/earnings ratio over the past year<\/figcaption><\/figure>\n“Unilever has historically traded at a discount to pure HPC peers like L’Or\u00e9al and Procter, in part due to the impact of the low-growth food category,” said Will Knott, portfolio manager at Unilever investor NinetyOne.<\/p>\n
\u201cObviously there is potential for a rating change, but it won’t happen overnight. The market will want to see clean execution through the transition.\u201d<\/p>\n\n\n
<\/div>\n<\/div>
Unilever’s food division has contributed to improving overall underlying operating margins and helped offset delays in the company’s home care business.<\/figcaption><\/figure>\n(1 dollar = 0.8627 euro)<\/p>\n
\n
Report by Richa Naidu. Additional reporting by Alexander Marrow. Editing: Adam Jordan and Kirsten Donovan<\/p>\n<\/div>\n
Our standards: Thomson Reuters Trust Principles.opens a new tab<\/span><\/p>\nPurchase license rights<\/span><\/span><\/div>\n\n
\n\n
<\/div>\n<\/div>\n
Richa is a London-based reporter who covers consumer goods companies’ supply chains, advertising strategies, corporate governance structures, sustainability goals, and political issues affecting companies. She has previously written about U.S.-based retailers and consumer companies, major financial institutions, and the Tokyo 2020 Olympic Games.<\/p>\n<\/address>\n
\n\n
<\/div>\n<\/div>\n
Alexander covers European consumer goods from London, focusing on the corporate strategies of companies such as Nestl\u00e9, Unilever, Danone and Reckitt, and how their products impact consumers’ daily lives. Alexander previously covered the Russian economy and businesses from Moscow, reporting on the fallout from Russia’s 2022 invasion of Ukraine and the subsequent exodus of Western companies.<\/p>\n<\/address>\n<\/div>\n<\/div>\n
#Unilever #CEO #Fernandes #roots #health #beauty #transformation<\/p>\n","protected":false},"excerpt":{"rendered":"
Unilever CEO has many years of experience in health, beauty and home care Investors are eyeing long-term returns from fast-growing businesses But some are skeptical about how the food trade will be carried out. LONDON, April 1 (Reuters) – Almost 15 years ago, Fernando Fern\u00e1ndez, then a senior executive at Brazil’s Unilever, made a bold … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":219,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,1],"tags":[930,926,931,17,932,949,933,948,973,950,543,590,955,579,589,592,577,953,961,588,595,952,585,586,587,954,576,960,956,959,958,964,970,971,597,593,957,581,935,929,570,969,566,974,97,938,939,936,940,575,947,937,927,578,965,591,113,547,941,942,951,771,943,967,549,944,928,550,945,966,924,555,556,557,968,975,925,946,963,584,569,962,558,934,472,972,516,563],"class_list":["post-218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-beauty","category-uncategorized","tag-anlins","tag-anv","tag-bakuto","tag-beauty","tag-bisv","tag-bitters","tag-business","tag-ceeu","tag-ceo","tag-ch","tag-cmpny","tag-destucdptest","tag-destuki","tag-destination-abx","tag-destination-fun","tag-destination-gns","tag-destination-lby","tag-destination-m","tag-destination-oil","tag-destination-psc","tag-destination-rbn","tag-destination-sof","tag-destinationabn","tag-destinationafa","tag-destinationbnx","tag-destinationc","tag-destinationcsa","tag-destinationd","tag-destinationgro","tag-destinationmtl","tag-destinationo","tag-destinationocabsm","tag-destinationocog","tag-destinationocor","tag-destinationoukbsm","tag-destinationrws","tag-destinationu","tag-dominant-hand-right","tag-dvst","tag-elep","tag-emea","tag-enough-rita","tag-europe","tag-fernandes","tag-fin","tag-fodpr","tag-fodpr1","tag-forby","tag-fotb","tag-france","tag-gb","tag-get-used-to-it","tag-graph","tag-hand-lulube","tag-hand-ousbsm","tag-hand-rwsa","tag-health","tag-heheld","tag-hsepr","tag-inbibis","tag-intention","tag-investment","tag-invm","tag-legal","tag-lux","tag-mngiss","tag-mtgfx","tag-ncyc","tag-news-1","tag-nrlinocol","tag-nrlpaocog","tag-psnpr","tag-psnpr1","tag-publication","tag-reuter-law-legal","tag-roots","tag-rsbi-shareholder-activism","tag-shracto","tag-sustainable-business","tag-thats-enough-yes","tag-this","tag-topnws","tag-tortolis","tag-transaction-1","tag-transformation","tag-unilever","tag-us","tag-weu"],"_links":{"self":[{"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/posts\/218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/chabrok.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=218"}],"version-history":[{"count":0,"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/posts\/218\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chabrok.com\/index.php?rest_route=\/wp\/v2\/media\/219"}],"wp:attachment":[{"href":"https:\/\/chabrok.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chabrok.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chabrok.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}