What subsequent for Unilever as King urged to strip large of royal warrants?
What’s going on?
Unilever is a £111billion leviathan, most famous for Marmite and Hellmann’s mayonnaise, but also the name behind Cif, Dove, Persil, Sunsilk, Surf and Lynx cologne.
This week King Charles has been urged by a Ukrainian campaign group to strip Unilever of its royal warrants because it continues to operate in Russia.
Unilever’s CEO Hein Schumacher, 52, says that the matter is ‘not straightforward’ since, if Unilever quits Russia, its assets could be seized by allies of President Putin.
The company is making other big changes, however.
Tell us more
Supersized conglomerates are somewhat out of fashion and Unilever will spin off its ice cream subsidiary. Ice cream is a low-margin business.
Is it big in ice cream?
I should say so. The division which includes Ben and Jerry’s, Magnum and Wall’s may be valued at as much as £15billion. It is not yet known what the spun-off business will be called – or where it will be listed. Amsterdam or New York could win this prize because some think the London market has the appeal of a melted vanilla cornet.
Is the sell-off part of a bigger plan?
The group has developed a Growth Action Plan. One of those backing it is Nelson Peltz, US activist extraordinaire (and Brooklyn Beckham’s father-in-law). His campaign for a make-over at Unilever won him a seat on the board. Peltz was opposed to the previous focus on sustainability over performance. Fund managers like Terry Smith, of Fundsmith, were also unimpressed by the company’s woke agenda. Why should mayonnaise have ‘purpose’?
What’s the strategy behind the plan?
Unilever is to concentrate on its 30 power brands which make up 75 per cent of the group’s €15billion (12billion) turnover. These brands are seen as having ‘pricing power’, meaning customers will pay more rather than swap to a rival’s cheaper products. The power brands include Marmite and Dove, but also the more obscure Paula’s Choice.
I am unfamiliar with that product…
This range is one of Unilever’s upmarket cosmetic and skincare brands, which have prospered despite the cost of living crisis.
How have Unilever shares performed?
Over the past decade the shares have fallen by 11 per cent. But they are up 17 per cent since January at 4434p.
Are Unilever shares worth a bet?
Most analysts rate the shares a ‘hold’. But Smith is now an enthusiast, arguing that the group has potential. Deutsche Bank analyst Tom Sykes perceives this to be a buying opportunity, setting a target price of 4600p.
