Unilever CEO Hein Schumacher Receives Support for Company’s Strategy from Billionaire Activist Nelson Peltz
Unilever CEO Hein Schumacher has expressed confidence in the recently devised strategy to revitalize the company, with the support of billionaire activist and board member Nelson Peltz. Despite concerns from some investors, Schumacher stated that Peltz is fully committed to the strategy.
Unilever, known for brands such as Dove soap, Hellmann’s condiments, and Ben & Jerry’s ice cream, aims to implement a systematic marketing strategy for its top brands. Schumacher also emphasized his intention to streamline Unilever’s workforce of 127,000 employees.
Schumacher addressed the criticism faced by his predecessor, Alan Jope, for allowing the company’s brand portfolio to grow to approximately 400, resulting in insufficient management focus on its best performers. Additionally, investors had expressed disappointment in Unilever’s failure to regain margins post-pandemic and its excessive emphasis on sustainability. Terry Smith of Fundsmith, for example, criticized the company for being overly focused on sustainability at the expense of performance.
Peltz’s stake in Unilever via his Trian Partners investment fund was revealed in January 2022, and he joined Unilever’s board in July of the same year. The fund currently holds a 1.45% stake in Unilever as of March 2023, according to LSEG data. Jope’s departure was announced in September 2022, eventually leading to Schumacher assuming the role of CEO in July the following year.
Schumacher highlighted the alignment of Peltz’s views with Unilever’s growth strategy, which emphasizes investment in the top 30 brands representing more than 70% of sales, innovation pipeline support, and improved operating discipline. Peltz also favors Unilever’s business line categorization compared to Nestle’s geographically-focused structure. However, Trian declined to comment on the matter.
While some investors have called for Unilever to spin off its food business, which includes brands like Marmite spreads and Knorr stock cubes, Schumacher stated that executing the growth action plan is currently the company’s top priority. Unilever recently initiated a 1.5 billion euro ($1.6 billion) share buyback following an increase in volumes, with its nutrition and ice cream businesses being the only ones to report fourth quarter volume sales declines.
Schumacher’s past experience working with Peltz during the merger of HJ Heinz and Kraft Foods has earned him Peltz’s support. Since his appointment, Schumacher has focused on implementing “performance culture changes” and has revamped Unilever’s leadership team, including the appointments of Esi Eggleston Bracey as head of growth and marketing officer.
Following initial disappointment from investors when Schumacher announced the strategic plans, he stated that he has heard their concerns and is taking action accordingly. As he works to execute the strategy, only time will tell whether Schumacher’s leadership will be deemed successful.
Analyst comment
Positive
As an analyst, it is likely that Unilever’s market will see positive growth as the CEO receives support for the company’s strategy from billionaire activist Nelson Peltz. Peltz’s endorsement and alignment with Unilever’s growth strategy, along with Schumacher’s experience and actions to address investor concerns, demonstrate a potential for successful execution of the revitalization plan. Streamlining the workforce and focusing on top brands could lead to improved performance and profitability. However, vigilance is advised to monitor the actual implementation and results of the strategy.
