Unilever Looks to Jumpstart Growth With Sweeping Overhaul

Unilever Chief Executive Alan Jope said the overhaul would allow the company to be more responsive to trends and create more accountability. “Growth remains our top priority and these changes will underpin our pursuit of this,” he said.

Still, while the restructuring—particularly separating ice cream as a stand-alone unit—should make it easier for Unilever to sell slower-growing businesses, the overhaul doesn’t go far enough and will likely disappoint investors, some analysts said. Unilever shares traded flat in London in the wake of the announcement.

Mr. Jope has been under pressure to buoy sales growth for months but that has ratcheted up in recent weeks. The Wall Street Journal and others reported over the weekend that Nelson Peltz’s Trian Fund Management LP had acquired a stake in Unilever. That news came just days after the company abandoned a $68-billion bid for GlaxoSmithKline PLC’s consumer-healthcare business after it was rebuffed on price and criticized by Unilever’s shareholders.

As part of its efforts to boost growth, Unilever last week said it wanted to push further into health, beauty and hygiene products, at the expense of slower-growing food brands. The overhaul announced Tuesday speaks to that emphasis.

Unilever said its beauty and well-being division would include vitamins—an area the company has been beefing up in—as well haircare, skin care and its prestige business, which houses upscale beauty brands. The personal care division will include skin cleansing, deodorants, and oral care brands, and be led by Unilever’s current head of North America, Fabian Garcia.

The nutrition arm will include ingredients lines such as Knorr, and a group of foods Unilever is describing as healthy snacking such as its Graze brand. Also included in the nutrition business: so-called functional-nutrition products, such as its Horlicks malt drink, plant-based meat alternatives, and its business that sells ingredients to restaurants and offices. It will be led by Unilever’s current head of food and refreshments, Hanneke Faber.

The company said it expects its new operating model to reduce senior management roles by around 15% and more junior management roles by 5%, which it said amounts to around 1,500 roles globally. Unilever employs about 149,000 people.

Unilever also said its head of beauty and personal care, Sunny Jain, who joined the company in 2019 from Amazon.com Inc., will step down. Its Chief Operating Officer Nitin Paranjpe will take on a new role as chief transformation officer while also heading up human resources.

The company has indicated it plans to sell off some businesses as part of its effort to reorganize its portfolio toward higher-growth categories such as health. These divestitures are widely expected by analysts to include the company’s food brands, which have grown slowly and are increasingly criticized as a poor strategic fit for a company that owns high-end skin care, laundry detergent and vitamins brands.

Analysts have previously said they expect Mr. Peltz to push for Unilever to sell or spinoff its food business. Now that that has been split into ice cream and nutrition—with the latter housing some higher-growth categories such as health snacking—RBC analyst James Edwardes Jones said he thinks the company could focus on selling off ice cream.

Despite this, Mr. Edwardes Jones said he isn’t convinced the reorganization will work. “The new operating model announced today might make divestments easier, but we would prefer them to focus on reinvesting cost savings behind their brands and categories,” he said. He also criticized the lack of fresh faces, noting that the new divisions are all headed by Unilever incumbents.

Write to Saabira Chaudhuri at [email protected]