Unilever splits operations but denies plan for divorce

Unilever, the foods and detergent conglomerate, on Friday announced the formation of two global divisions but stuck firmly to its line that the move was not a prelude to splitting into separate companies.

In the shake-up Patrick Cescau, finance director, will take charge of the foods division from January 1. Keki Dadiseth, who oversaw the group’s review of top organisation this year, is to become home and personal care director. Mr Dadiseth joined the board from Hindustan Lever, the group’s Indian subsidiary in May. The Anglo-Dutch company said the rationale was to accelerate decision-making and to strengthen the company’s ability to harness innovation. “This is not a precursor to a demerger,” it added.

Analysts welcomed the news, saying that the reorganisation made sense given the pressures on the business and that it would allow Niall Fitzgerald and Antony Burgmans, the co-chairmen, to focus on strategy.

Sylvain Massot, analyst with Morgan Stanley, said: “The two businesses are at very different stages of development and the issues for the two are very different. For the food division in particular, it makes sense for them to have a dedicated management team.”

Analysts added that a demerger of the two businesses would be unlikely to happen in the short to medium term because the company had its hands full with its ambitious “path to growth” strategy. That plan involves cutting 25,000 jobs, introducing steep growth targets and focusing on 400 key brands. Unilever is also digesting the $20.3bn (E22.4bn) acquisition of Bestfoods, the largest takeover in the global foods industry for 12 years.

Friday’s news of the reorganisation came as the company reported its half-year results which saw pre-tax profits down 9 percent to E1.88bn, at constant exchange rates. Profits were affected by restructuring costs of E200m in the second quarter. Reuters