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(Alliance News) - Unilever on Tuesday said more than 1,000 management roles will be chopped, in the latest turn during what's been an eventful start to the year for the consumer goods firm.
Inflationary pressures already gave the Dove and Ben & Jerry's owner food for thought, but now pressure from an investor has given Unilever plenty more to mull over.
Unilever announced notable changes to its business model, which is expected to lead to the cutting of 1,500 jobs at both junior and senior management echelons.
"Alan Jope is attempting to show he's wielding a new broom at the top of Unilever as a spring clean of the business gets underway with 1500 management jobs set to be swept away. Instead of enlarging its cupboard of consumer staples, the focus is on clearing away layers in the existing business, in an attempt to boost profit margins," Hargreaves Lansdown analyst Susannah Streeter commented.
"With activist investor Nelson Peltz having built up a bigger stake in the firm, scrutiny is ratcheting up, and there will be no shortage of fingers itching to check whether the dust really has been cleaned out of underperforming corners of the business."
The FTSE 100 company is facing pressure from activist investors to boost its fortunes, following its failed attempt to buy the consumer healthcare business of GlaxoSmithKline PLC.
Unilever will shed its current matrix structure and become organised around five business groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream.
Each group will take responsibility for their own strategy and growth; however they will be supported by Unilever Business Operations, which will provide technological support and services.
These executive changes will take effect from April 1.
Unilever said that the new organisation model will lead to a reduction in senior management roles by 15% and junior management roles by 5%, equal to 1,500 jobs. However, factory teams are not anticipated to be affected by these changes.
Streeter added: "The management team clearly want to show they are getting the house in order before embarking on another shopping spree, given how badly the bid was received."
Unilever last week said it will not sweeten its bid for GSK's the consumer healthcare arm.
Interactive Investor analyst Victoria Scholar commented: "The company clearly needs to do some soul searching, focusing on ways to revitalise sales as Alan Jope's future as CEO hangs in the balance."
Unilever shares closed 0.1% lower at 3,940.00 pence each in London on Tuesday.
By Eric Cunha; ericcunha@alliancenews.com
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