Unilever to eliminate jobs, dispose of more businesses
August 03, 2007
by FoodBusinessNews.net Staff
ROTTERDAM, THE NETHERLANDS — Unilever has announced a significant cost-cutting and disposal program that will result in the elimination of 20,000 jobs, or about 11% of its workforce. As a result of the move, Unilever said it would part with businesses that generate more than €2 billion ($2.754 billion) of its sales.
The company is considering disposal of businesses where growth and profit potential is limited and brands that don’t fit the company’s strategic objectives and aren’t essential to the company’s local ‘go-to-market’ operation.
"Most, but not necessarily all, we entail outright disposal," said Patrick Cescau, group chief executive. "However, we are open to consider j.v. type structures, ‘earn-outs’ and licensing deals, and any other arrangement that will allow us to release value and focus our resources more effectively."
The disposal should increase the company’s growth rate by around 0.4 percentage points and will be neutral to operating margins after the removal of uncovered costs.
"These are not forced sales, and as always, we will manage the timing and execution of this program to maximize value creation for Unilever," Mr. Cescau said. "We do expect at least some disposal profits in the second half of 2007."
During the last two years, Unilever has disposed of non-strategic assets equivalent to €2.3 billion ($3.167 billion), or 6% of Unilever’s 2004 revenues.