Ongoing Management Restructuring Could Take Two Years

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CINCINNATI (AdAge.com) -- Unilever today said though it has made more than 100 executive appointments globally in its massive "One Unilever" restructuring, the company is still only halfway through the process of appointing senior managers to new posts -- a process it said would result in a 15% headcount reduction in the senior-management ranks.

John Rothenberg, senior vice president for investor relations, said the entire process of reshaping the organization will take two years and affect lower-ranking employees as well.

Better-than-expected results
Despite the shakeup, designed to simplify and speed Unilever’s management structure, the marketer of household, personal care, food and beverage brands such as Dove, Axe and Lipton posted better-than-expected results for the first quarter. Sales excluding currency and divestiture effects up 6% to $12 billion after several quarters of flat or slightly declining top lines.

Earnings per share grew 25% at currency-adjusted rates, though operating profit was up only 9% to $1.8 billion. Unilever’s shares were up 2.2% to $40.38 in midday trading on the New York Stock Exchange.

Unilever said it returned to sales growth in the U.S. in home and personal care last quarter after seeing a sales decline in the fourth quarter, gaining share in deodorant, hair and personal wash but losing share in skin care and laundry. The company also said it gained share overall in food, though the Slim Fast brand continued to see sales “sharply lower,” failing to make gains despite decline of the Atkins diet, which had hurt the brand in recent years.

To report ad and promotion expenses
The company also said it would begin reporting advertising and promotion expenses the same way U.S. companies do and disclosed restated results for 2004. Unilever will now account for costs of couponing and “trade communications,” which includes funds paid to retailers for such things as ads in circulars, as a reduction of sales rather than a marketing expense.

The change cuts Unilever’s reported 2004 global marketing spending by a whopping $1.6 billion to $5.8 billion. The biggest impact came in the Americas, and the restatement appears to peg Unilever’s spending on coupons and trade communications in the U.S. at more than 5% of its roughly $11 billion in sales.

Overall, the restatement reduces Unilever’s marketing spending as a percent of sales 2.7 points to 11.4%, still slightly ahead of such rivals as Procter & Gamble Co. and Gillette Co.

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