Executive Briefings

Unilever Cuts Costs on Flights, Products As Activists Circle

Unilever is sharpening its focus on profitability by lifting prices and cutting spending on everything from employee flights to product ingredients as activist investors take aim at consumer-goods giants wrestling with slow growth.

Unilever Cuts Costs on Flights, Products As Activists Circle

The maker of Hellmann's mayonnaise and Dove soap says it's stepping up an efficiency drive as it responds to a failed takeover bid from Kraft Heinz Co. and rivals Nestle SA and Procter & Gamble Co. come under pressure from activists Dan Loeb and Nelson Peltz.

“If it really benefits the long-term shareholders and there is constructive change to the benefit of the company, then at times it might be good to have actively involved investors,” Chief Executive Officer Paul Polman said in an interview with Bloomberg TV, after the company reported first-half earnings that exceeded estimates.

The Anglo-Dutch company increased prices by 3 percent in the second quarter, offsetting stagnant volumes, it said in a statement last week. That helped underlying sales rise by the same percentage. The shares rose as much as 1.2 percent in early London trading.

Unilever said it achieved savings of more than 1bn euros in the first half, putting it on track for a target of 6bn euros ($6.9bn) and a 20 percent underlying operating margin by 2020. It cut 500m euros through supply-chain initiatives, including reducing the cost of ingredients in laundry brands. Spending on advertising agencies was down 17 percent.

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The maker of Hellmann's mayonnaise and Dove soap says it's stepping up an efficiency drive as it responds to a failed takeover bid from Kraft Heinz Co. and rivals Nestle SA and Procter & Gamble Co. come under pressure from activists Dan Loeb and Nelson Peltz.

“If it really benefits the long-term shareholders and there is constructive change to the benefit of the company, then at times it might be good to have actively involved investors,” Chief Executive Officer Paul Polman said in an interview with Bloomberg TV, after the company reported first-half earnings that exceeded estimates.

The Anglo-Dutch company increased prices by 3 percent in the second quarter, offsetting stagnant volumes, it said in a statement last week. That helped underlying sales rise by the same percentage. The shares rose as much as 1.2 percent in early London trading.

Unilever said it achieved savings of more than 1bn euros in the first half, putting it on track for a target of 6bn euros ($6.9bn) and a 20 percent underlying operating margin by 2020. It cut 500m euros through supply-chain initiatives, including reducing the cost of ingredients in laundry brands. Spending on advertising agencies was down 17 percent.

Read Full Article

Unilever Cuts Costs on Flights, Products As Activists Circle