Unilever is to sell off its spreads business, and merge its foods and refreshment businesses into one organisation following its strategy review in the wake of the rejected takeover bid from Kraft in February.
In 2016, turnover in Unilever’s foods business fell 3.1 per cent to €12.5 billion while core operating profit was down 4.8 per cent to €2.2bn. The group said sales in spreads declined as modest growth in emerging markets was offset by the continued but slowing decline in developed markets.
It plans to accelerate its Connected 4 Growth programme and is targeting a 20 per cent underlying operating margin, before restructuring, by 2020.
And it is reviewing the dual-headed legal structure, which means that it is both a plc in the UK and NV in The Netherlands, saying the objective is simplification and flexibility.
Chief executive Paul Polman said: “After a long history in Unilever, we have decided that the future of the Spreads business now lies outside the Group. We will look to increase our strategic flexibility for further portfolio optimisation through a review of the dual-headed legal structure, with a view to simplifying it.”
The group plans to accelerate the margin improvement initiatives already underway in Connected 4 Growth.
In the statement it said: “We are increasing our target for cumulative savings, to be delivered over the next three years in overheads, and through increased efficiency of our brand and marketing investment, from over €1 billion to €2 billion.
“In addition, we are rolling out the holistic ‘5-S’ gross margin programme from Home Care into all categories, raising expected supply chain savings from a cumulative €3 billion to €4 billion over the next three years.
“In total, this increases the expected cumulative savings over this period from €4 billion to €6 billion.
“The total restructuring costs for the accelerated programmes, including both the new initiatives and on-going activities, are expected to be around €3.5 billion for the 2017-2019 period.”