Hein Schumacher, Unilever’s newish chief executive, was hired from a Dutch dairy co-operative, which isn’t always the first port of call when you’re looking for a get-tough boss to shock an international consumer goods titan out of its complacency, which was the rough brief to the headhunters once Nelson Peltz, feared US activist, had entered the Dove-to-Knorr boardroom. But the milkman is clearly out to make an impact.
In act one last autumn, he opined that “force-fitting” worthy values on to brands can be an “unwelcome distraction”, a view that hasn’t been heard from Unilever in a few decades. In Thursday’s act two, Schumacher said full-year numbers for 2023 that mildly cheered the stock market – the shares rose 3% – weren’t actually much good. “Our competitiveness remains disappointing and overall performance needs to improve,” he said.
His specific beef was about the score for the percentage of the business that won market share – a mere 37% when 50%-plus used to be common. That’s what happens, one might respond, when virtually your entire 7% increase in underlying revenues was achieved by increasing prices: some consumers will buy supermarkets’ own-label goods instead. Unilever, like most of its peers, has received a lesson in the limits of its pricing power during a bout of commodity inflation.
But it’s also hard to deny that Schumacher is correct in his diagnosis that Unilever can be run leaner and harder, just as many shareholders said two years ago when they rebelled against the abortive £50bn bid for GlaxoSmithKline’s consumer products division. The group has a superb collection of well-invested brands with good market positions around the globe, but the sluggish share price since 2017 screams unfilled commercial potential. The open question is the speed at which it’s possible to turn the supertanker.
Schumacher’s 10-point “growth action plan” was long on yawn-inducing “strategic cells”, “critical platforms” and “end-to-end responsibilities”, but maybe one shouldn’t damn it for its jargon. Half the executive leadership has quietly changed in six months, which may give a clearer signal about the intention to deliver a kick to productivity. Other Unilever bosses have declared similar ambitions over the years, but Schumacher’s version looks genuinely different. It will either work or fail spectacularly, one suspects.
In the meantime, if Schumacher really wants to demonstrate new corporate thinking, he and the new chair, Ian Meakins, should revisit the unfathomable decision to keep operating in Russia and keep paying corporate taxes to a Russian state waging war in Ukraine.
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Yes, we know you’ve stopped advertising Magnum ice-creams and so on locally and fear the Kremlin would gain more by grabbing the factories. But the bottom line is that Russia, according to the accounts, still contributes 1% of group net profits of €7.1bn – so roughly €70m, or £60m, which isn’t small change. From a group that still says it wants to have “a lasting positive impact on the world”, that remains impossible to justify. A new-broom chief executive with a mandate to make major changes would follow the lead of many other major firms and find a way out.
