Unilever needs to “stop acquiring, stop shackling employees with bureaucracy, stop making empty promises and stop the corporate gobbledygook” – that’s according to one senior analyst after the British consumer goods multinational posted full-year turnover of €60.1 billion but margin slumped and overheads increased in 2022.
Since 1 July 2022 the company has organised around five Business Groups and what it describes as a “technology-driven backbone”, Unilever Business Operations. It plans to generate “around €600 million of cost savings over the first two years after 1 July 2022, with the majority in 2023” outgoing Unilever CEO Alan Jope said today.
Jope, who retires at the end of 2023, was reporting the company's Q4 and FY earnings. (Unilever operates in over 190 countries and regions. It has over 400 brands, of which 13 generate over €1 billion annually. Some of its best known brands include Ben and Jerry's, Comfort, Dove, Hellmann's, Magnum, and Vaseline.)
Unilever bureacracy being tackled with "bolder culture" says CEO
He added: “We have made further progress in the transformation of Unilever and continued to deliver against our strategic priorities. Our new operating model is already unlocking a culture of bolder and more rapid decision-making with improved accountability” – although the notoriously bureaucratic company remains burdened by IT siloes across its myriad geographies and operating segments, as Global CIO Sam Kini has noted.
In a 4,000-word earnings report the company mentioned technology just three times – once in reference to anti-perspirant and once in a footnote about restructuring costs – but is investing in digital transformation.
Unilever CIO: There’s lots of new technology we’ll want to invest in
“We’ve ended up buying lots and lots of pockets of technology and just become too complex – there’s a hidden burden of that complexity; the speed at which you can deploy change gets really prohibited” Unilever CIO Sam Kini said in December 2022.
“We’ve got a big business case that we are creating at the moment and that is essentially taking the entire technology estate globally -- across all the markets, across all of the different functional areas -- in the center; we've mapped it against the blueprint to identify key hotspots that we are going to consolidate and simply; then retargeting some of that spend to create pace and agility."
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She added: “We're targeting some of that spend to really drive more targeted differentiation in some of the business groups; if you can think about the beauty and well-being business for example there's lots of new technology coming through in that space that we'll be wanting to be able to start to invest in going forward; [we want to] design once, deploy many times..."
The Unilever Global CIO – who was previously Global VP, Applications, and who took over from outgoing CIO Jane Moran in December 2020 – told CIONET that the company also had “quite an aggressive cloud programme across the company” [the company is a big Microsoft shop] saying “we’ve already moved about 85% of our technology into the cloud; we have moved half of the SAP estate into the cloud… we’re thinking about implementing a centralised finance layer, potentially using S4 cFin, which we believe would bring some agility and allow us to take some of the complexity in the SAP estate up into a centralised layer that would really fit with our organisational model.”
Charlie Huggins, Head of Equities at broker Wealth Club, described the earnings as “a solid end to a tumultuous three years for departing CEO Alan Jope... all eyes now turn to successor, Hein Schumacher’s plans for the under-performing consumer juggernaut. There is little wrong with Unilever on the surface. It has good brands and a great footprint in emerging markets. The problem has been execution and getting the best out of the assets it owns”.
Referring to the “bureacracy and gobblegook” at the company and general sense among investors that there has been too much torpor he added: “There is a potential solution to that problem – disposals. The new CEO is bound to take a long hard look at Unilever’s portfolio. He may decide that over 400 brands is too many, especially since 13 account for about half of total sales.”
Unilever CEO Jope -- who said the company will continue to raise prices for its detergents, soaps and packaged food to offset rising input costs after hiking prices 13.% in Q4 -- emphasised that the company "will deliver only a modest improvement in underlying operating margin in the full year, as we plan for another year of increased investment, and with cost inflation remaining high, underlying operating margin will be around 16%" in H1.
