The Guardian (UK): Unilever chief savages old guard: “Unilever - which, with Shell, was one of two big Anglo-Dutch groups to suffer an annus horribilis in 2004 (ShellNews.net) 11 Feb 05
Terry Macalister
Friday February 11, 2005
Patrick Cescau, who yesterday was named as the new chief executive of a streamlined Unilever, demolished the legacy of his former high-profile boss Niall FitzGerald and his "path to growth" strategy.
The Frenchman's damning verdict came as the Anglo-Dutch consumer group reported comparative pre-tax profits of €2.9bn (£1.99bn), down 36%, as it took €1.5bn of exceptional charges, partly for restructuring.
Unilever - which, with Shell, was one of two big Anglo-Dutch groups to suffer an annus horribilis in 2004 - revealed a new corporate governance structure but stopped short of amalgamating into one headquarters with a single stocklisting.
Antony Burgmans will become non-executive chairman of the Dutch and British arms of the business.
Mr Cescau, at present a co-chairman of Unilever with Mr Burgmans, said "path to growth" had bombed.
"The one milestone we did not make was the one it was all really about - growth ... We ended up too focused on our own internal targets and not on the consumer and customer," he said.
The company became "boxed in by too many targets", was "too slow to adjust pricing", and "neglected to play [its] brand portfolio" because it was focusing on a few big brands.
Mr Cescau denied he was "trashing" his predecessor's legacy, insisting that he had supported the initiative of Mr FitzGerald, who left to become chairman of Reuters in the autumn.
The Frenchman said in future the producer of household brands including Dove soap, Persil and Liptons tea would put the customer first as it tried to kick-start sales growth, which had sunk to 0.4% in 2004.
The company said sales of its top 400 brands rose 3.7% in the fourth quarter, after a third-quarter fall, bringing the total for the year up to 0.9%.
Following the problems of "path to growth", Mr Cescau said there would be no external targets published for 2005.
Operating margins over the previous 12 months were 0.6 percentage points below 2003 and 2.7 points lower in the last quarter of 2004 as Unilever increased advertising and promotions. In the last quarter the company took a €650m charge for the loss of goodwill on its Slim Fast diet drinks, which have been hit by the popularity of the Atkins diet.
There were also €597m of exceptional restructuring costs in the final quarter and an additional €177m was written off in Brazil to cover the removal of various tax credits.
Unilever said a turnaround plan for Slim Fast was going well but it noted that "the weight management category has declined significantly in the second half of 2004 reflecting declining interest in the more extreme low-carbohydrate diets."
It admitted that "consumers have not yet been attracted back to the Slim Fast meal replacement plan", and said re covery would take longer than expected.
Unilever shares fell 1.6% to 507.75p at one stage yesterday and analysts remained cautious about prospects of a turnaround.
"The new executive team is dominated by old Unilever hands, so they need to prove that the old ways will change," said Graham Jones at broker Panmure Gordon.