Unilever rejigs management as core brand sales flag
management structure - a move which it claims will help restore
top-line sales growth and allow it to draw a line under what it
called an "unsatisfactory" 2004 performance, Tom Armitage
reports.
The company blamed declining sales of its core brands in contributing to a fall in pre-tax profits of 37 per cent on the previous year to €2.9 billion, while it recorded a net loss for the fourth quarter of €255 million.
It also announced that its 75 year-old two-pronged Anglo-Dutch management system is to be scrapped, after attracting criticism from investors that a much hyped sales turnaround has so far failed to materialise.
The management shake-up, to come into effect from April 2005, will see its current dual chairman arrangement replaced by a single CEO and a non-executive chairman (Patrick Cescau and Antony Burgmans, currently Unilever's joint chairmen, will each respectively assume these new positions), while the number of executive board members will be slashed from seven to four.
According to a joint statement released this morning by Cescau and Bergmans, Unilever's main objective for 2005 will be to "restore sustainable top line growth," while the new management arrangement will aim to "significantly simplify the organisation, speed-up decision making and ensure clear focus and accountability for the execution of our strategic agenda".
They admitted that the company's board had "let a range of targets limit our flexibility and we did not adjust our plans quickly enough to a more difficult business environment".
"We took our eye off our competitiveness and our execution could have been sharper," Cescau and Bergmans also conceded.
Meanwhile, the company pinned a 3.4 per cent sales decline across its European ice cream and frozen food division in 2004 on a "poorer summer", compared with the previous year's more favourable weather conditions.
But despite lower priced competition edging in on Unilever's market share of take-home sales of its branded ice-cream products, the company added that the roll-out of its Magnum Intense and Cornetto Love Potions brands had partially helped offset declining overall sales.
In its US division, Unilever said that the burgeoning trend for health and wellness-orientated products had helped guide it through what it called a "highly competitive" domestic ice cream market - with low-carb, low-sugar and lactose variations of its core Klondike, Breyers and Ben & Jerry's ice cream brands each successfully notching up an increased market share.
A soy-enhanced branded ice cream product, Ades Kibon, was successfully launched in Latin America, while increasing growth patterns continued across Asia - with Indonesia and China singled out as particularly strong performing markets.
