LONDON Consumer products giant Unilever Plc (ULVR.L) (UNc.AS) aims to cut the number of individual products it sells by 30 percent by the end of 2014 to become more efficient and navigate a global economic slowdown it admits it was slow to confront.
The Anglo-Dutch maker of Ben & Jerry's ice cream, Lipton tea and Dove soap also said on Thursday it is cutting about 2,000 jobs and will continue to adjust its portfolio.
"The global economy has calibrated down about 1-1.5 percent and we probably should've done a better job seeing it coming," said Unilever Chief Executive Officer Paul Polman in a presentation in London that was broadcast over the internet.
"We're using that opportunity to step up the performance and drive new energy into the organization."
In October, Unilever posted slower sales growth for the third quarter after demand was hurt by the devaluation of some emerging market currencies and aggressive promotions in the United States by rival Procter & Gamble Co (PG.N).
"We lost our competitiveness," Polman said.
Unilever intends to save 500 million eurosnext year, after cutting about 2,000 jobs this year, improving its supply chain and making various processes more efficient.
DEALING WITH YOUR OWN DECK
Unilever is shifting more of its focus to its larger brands, including the 15 that each generate over 1 billion euros in annual revenue. Polman said it will continue to sell non-core, underperforming brands and buy attractive bolt-on brands when possible.
"The overall portfolio is perhaps not as robust yet as some of our competitors, but you have to deal with the deck of cards you've been given," Polman said.
Chief Financial Officer Jean-Marc Huet said most brands to be sold will be from Unilever's food business, which includes Knorr soups and Hellmann's mayonnaise, rather than the personal care side, which makes Radox soaps, Lux shampoo and Vaseline.
Last week, media reports said Ireland's Kerry Group (KYGa.I) was the leading bidder for Unilever's Peperami sausage business.
Recent deals include the divestments of Skippy peanut butter and Wishbone salad dressings.
IMPROVING THE SPREAD
Unilever is not just buying and selling brands. It is working to improve its ailing spreads business, which has suffered for years due in part to a consumer perception that margarine is less natural than butter.
"We are taking the bull by the horns," said Antoine de Saint-Affrique, president of Unilever's food business. "We are seeing green shoots ... but it's going to be a long-term journey."
He declined to say whether there was a deadline for turning around the business, or quantify the size of its current sales declines.
Unilever has launched new margarine products in Germany, the United States and Britain that highlight naturalness and healthiness.
"After more than 15 years of share declines ... in the last few months, we're actually seeing our share at least go in the right direction," said Polman, noting that it was still very early days.
"Having said that, we will look at all options to be sure that it gets the return that this business deserves and we will be very open-minded about that," he said.
Analysts have speculated about whether Unilever would sell the spreads business, or separate the food business from the higher-growth, higher-margin personal care business.
The company is also working to boost sales by focusing on higher-growth markets in Africa and Latin America, new channels like drug stores and convenience stores, and developing more premium products.
($1 = 0.7323 euros)
(Reporting by Martinne Geller in London; Editing by Anthony Barker)
Trending On Reuters
The Reserve Bank of India kept its policy rate on hold at 7.25 percent on Tuesday, as widely expected, while leaving the door open to ease further depending on the inflation outlook and how swiftly banks lower their lending rates. Full Article | Full Coverage