- Under-fire CEO to retire after indifferent hot seat stint
- Unilever to look at internal and external candidates
- Growth remains Unilever’s ‘top priority’
Shares in consumer goods goliath Unilever (ULVR) rose 1.6% to £40.91 on the news CEO Alan Jope plans to retire from the Marmite-to-Magnum ice cream maker at the end of 2023, after five years in the role.
Jope has endured a difficult tenure since taking over in 2019 with the shares roughly at the level they were at when he started, having faced criticism over the failed takeover approach for GSK’s (GSK) consumer health business Haleon (HLN) and the whole strategic direction of the group.
SUCCESSION PLANNING UNDERWAY
In a short statement, the packaged consumer goods powerhouse said it will now proceed with a formal search for Jope’s successor and will consider both internal and external candidates.
Jope commented: ‘As I approach my fifth year as CEO, and after more than 35 years in Unilever, I believe now is the right time for the board to begin the formal search for my successor.
‘Growth remains our top priority, and in the quarters ahead I will remain fully focused on disciplined execution of our strategy, and leveraging the full benefits of our new organisation.’
While chairman Nils Andersen insisted Unilever has seen ‘improved performance, enabled by its clear strategic choices and a significant company transformation’ under Jope’s leadership, the FTSE 100 company has come under fire from shareholders, among them pugnacious fund manager Terry Smith, for presiding over subdued growth, focusing too much on ‘woke’ issues and an abortive £50 billion bid for GSK’s consumer healthcare unit, subsequently spun-out and listed as Haleon.
Billionaire activist Nelson Peltz was recently appointed as a non-executive director after his investment firm Trian took a stake in the Dove soap, Domestos bleach and Hellmann’s mayonnaise business.
LISTENING TO SHAREHOLDERS
Unilever’s chastened management is now listening to shareholders, having ruled out transformational acquisitions and centred the group’s financial communication on financial strategy rather than sustainability and ‘purpose’.
It has also implemented a new category-focused organisational structure which Jope has previously said marks ‘an important further step that will underpin the delivery of consistent growth, which remains our first priority’ and is set to generate around €600 million of cost savings over two years.
While the backdrop for Unilever remains tough given high input cost inflation, slower global growth and an unprecedented squeeze on household budgets, the group successfully hiked selling prices by 9.8% in the six months to June 2022 to mitigate input cost inflation.
That led to a 1.6% fall in volumes, but underlying sales were up 8.1% against an average forecast for an increase of around 7%.
THE EXPERT’S VIEW
AJ Bell investment director Russ Mould commented: ‘It can never feel great for the leader of a business when its shares rise on news of their departure, but that is the fate facing Unilever CEO Alan Jope who has said he will retire at the end of 2023.
‘Jope and the rest of the management team have faced criticism, fair or otherwise, of being too focused on “woke” issues and neglecting the fundamentals of the business.
‘The influence of billionaire activist and major shareholder Nelson Peltz is only likely to increase in the wake of this announcement and this could mean more radical action to streamline the group and improve its performance.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of the article James Crux owns shares in AJ Bell.
