|Unilever is streamlining its global executive structure.
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Governed for decades by two executive co-chairmen with equal but sometimes unclear authority and accountability, Unilever appointed one of them, Patrick Cescau, as CEO, and the other, Antony Burgmans, as non-executive chairman.
Major global shakeup
It's the first step in a major shakeup globally, and in the U.S. Harish Manwani, 51, who became president of Unilever's North American Home and Personal Care business only last spring, will move to become president for Asia and Africa. John Rice, president of Unilever Bestfoods and Unilever U.S., takes on additional duties over Latin America.
Executives could not immediately be reached to comment on who will take over for Mr. Manwani or Mr. Rice's precise role over the home- and personal-care businesses in the U.S. But Mr. Cescau, in a meeting with analysts, left little doubt who's in charge globally.
"There's not a big age difference between the two of us [Mr. Cescau is 56, Mr. Burgmans 58]," he said. "He's been chairman and CEO for ages. It's fair that I should have a go at it. It's my time now."
New global presidents
As it named Mr. Cescau CEO, Unilever also named new global presidents of its food and home- and personal-care businesses. Keki Dadiseth, 59, who headed HPC, is retiring, to be replaced by Ralph Kugler, 48, now president of HPC in Europe. Kees van der Graaf, 54, who headed food, becomes president for Europe. Vindi Banga, 50, now president for Asia, becomes global food chief.
By May 2006, Unilever will announce more changes that will reshape the rest of the company, in what Mr. Cescau described as a "de-layering." The company's spaghetti-style organization chart has long mystified insiders and outsiders alike.
Mr. Burgmans will head the reorganization effort, along with consultants, unspecified other managers and at least two outside directors. Then he'll step down as chairman in 2007, to be replaced by an outside director.
'The stark reality'
Mr. Cescau minced no words in describing why things must change. "The stark reality is that we have not succeeded where it matters most, in the marketplace," he said. "Where we are at our best, we are world class. But we are not always at our best."
Unilever simultaneously announced full-year and fourth-quarter results that fell well short -- on the topline and in ad spending -- of what it was supposed to deliver at this point, the end of its five-year "Path to Growth" restructuring.
Sales of Unilever's leading brands were up 0.9% for 2004 -- compared with the 5% to 6% projected five years ago -- though up a stronger 3.7% in the fourth quarter. Overall, sales rose 0.2% to $47 billion. Ad spending for the year fell more than $200 million short of original Path to Growth commitments.
'Invest in more advertising'
Without specific commitments, Mr. Cescau promised: "We'll invest in more advertising and promotion and in presenting brands in the supermarket." He forecast "targeted" spending increases without outlining the targets -- except Europe, a "top priority" where Unilever's market shares have been hit hardest amid growth of hard discounters who shun almost all brands.
Acquisitions will "not be a priority" through 2010, Mr. Cescau said, describing potential deals as small and tactical. "Our top priority will be to make what we have work better," he said.
While Unilever's moves appear aimed at pulling its food and HPC operations closer, Mr. Cescau was circumspect about how a fully reorganized company will look. "We go [to the next step] with a vision of united companies," he said. "We don't go there with a brief outlining [what the new organization] is going to be."