Unilever says new products and a leaner organisation will improve growth
London — Anglo-Dutch consumer goods maker Unilever told investors on Wednesday that it expects new products and a leaner organisation to help win an intensifying battle to sell packaged goods around the world.
The maker of Dove soap and Knorr soup, which is under huge shareholder pressure since rebuffing a $143bn takeover bid in February from Kraft Heinz, posted an unexpected slowdown in sales last month, citing lost market share to smaller rivals.
The company’s ¤20bn-a-year personal care business, often seen as its most attractive, posted only 2.4% growth in the first nine months of the year, but the unit’s president, Alan Jope, on Wednesday said it should be back above 4% soon.
"I’m not going to give an exact date," Jope said during an investor event in New Jersey that was broadcast online. "But I don’t think I’d be standing here with this tone and this cocky, relaxed position if it wasn’t going to come around quite soon." In explaining the slowdown, Jope pointed to lower growth of the global market, weakness in Indonesia and Brazil — two of its big markets — and increased competition from local rivals, such as Patanjali in India and Wardah in Indonesia.
While the first two issues were temporary, Jope said local competition was a long-term phenomenon, and largely why Unilever was focusing on increasing its agility in local markets.
He cited several new brands that would aid the unit’s growth, including prescription-strength Dove products for people with psoriasis or eczema; Skinsei, a personalised, subscription-based skincare regimen sold directly to consumers; and a beauty brand called Love Beauty and Planet.
Over the past two years, Unilever has worked to make the most of its global scale in areas where it counts, like back-office functions and procurement, and to be quicker with new products targeted for local markets.
The company cited this new structure for being able to launch a low-calorie, high-protein Breyers ice cream in the US in only five months, capping the damage done by the start-up Halo Top, which quickly gained market share.
Another reason for the new structure is costs, and ,on Wednesday, Unilever reiterated its targets for savings of ¤6bn by 2019, two thirds of which will be re-invested into the business, and a 20% operating margin by 2020.
Over the next few years, Unilever expects to generate more of its sales from alternative channels such as health and beauty stores, delivery services and online. It is launching new products to suit those channels and pursuing partnerships with firms such as Just Eat and Deliveroo to expand distribution.
The company said it is nearly done with the stock buyback plan it announced in April soon after the Kraft approach, and its plans to dispose of its spreads business were progressing well.
Reuters reported earlier on Wednesday that the auction process for the business, which could be worth more than $7bn, has narrowed to three bidders.
Unilever said on Tuesday it favoured collapsing its dual-headed, Anglo-Dutch structure into a single entity, but delayed a decision on whether it would be based in Britain or the Netherlands, avoiding, for now, a choice with political dimensions amid ongoing Brexit negotiations.