30th Jan 2023 10:15
(Alliance News) - New Unilever PLC chief executive has work to do to win back investor confidence, with the consumer goods company's reputation taking a hit from questionable strategy calls made under Alan Jope's leadership, analysts said on Monday.
Unilever has picked existing board member and Royal FrieslandCampina NV boss Hein Schumacher as its new chief executive. He joined the Unilever board as a non-executive director in October last year and has been CEO of the Amersfoort, Netherlands-based dairy co-operative since 2018.
He becomes Unilever CEO at the start of July, following a one-month handover period.
"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 analyst Russ Mould commented.
Unilever back in 2016 bought personal care and razor products seller Dollar Shave Club for USD1 billion.
Mould added: "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."
Jope's stint has Unilever CEO has been marred of late by shareholder pressure.
The Dove soap maker added prominent shareholder Nelson Peltz to its board in May, raising expectations of a shake-up at the company. Jope came under pressure in early 2022 after Unilever's failed approach to buy GSK PLC's consumer health arm.
The unit was then spun-out of GSK and named Haleon PLC. Unilever had attempted to acquire the unit for GBP50 billion. Haleon is currently worth around GBP29.50 billion.
Mould added: "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."
The initial market reaction to Schumacher's appointment has been positive. Unilever shares were 0.7% higher at 4,048.50 pence each in London on Monday morning.
Hargreaves Lansdown analyst Susannah Streeter commented: "Hein Schumacher has been greeted positively by the market, in expectation he will help steady the ship further... he'll be seen as both a safe pair of hands and a fresh injection of ideas for the company.
"Unilever has been proving resilient, by pushing record price hikes onto consumers but there will come a limit and brand pulling power alone won't sustain this indefinitely. Already volumes are falling slightly and at the same time the company is having to spend hefty sums on marketing to keep products front and centre in customers minds."
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Unilever