- Unilever appoints Hein Schumacher as new CEO
- New broom boasts considerable consumer goods industry experience
- Billionaire activist Peltz supports the appointment
Shares in Unilever (ULVR) nudged up 0.7% to £40.48 after the packaged consumer goods powerhouse named Royal FrieslandCampina boss and existing board member Hein Schumacher as its new CEO.
Schumacher starts on 1 July after a one-month handover from Alan Jope, who announced his intention to retire from the Dove soap-to-Domestos bleach business in September 2022 following an indifferent hot seat stint.
Jope’s spell in charge was marred by criticism from shareholders over the failed takeover approach for GSK’s (GSK) consumer health business and Unilever’s whole strategic direction; he also received brickbats from noted fund manager Terry Smith for focusing too much on sustainability at the expense of the fundamentals of the business.
SO WHO IS HEIN SCHUMACHER?
Tellingly, Schumacher’s appointment has been welcomed by billionaire activist Nelson Peltz, who was added to Unilever’s board last year after his investment firm Trian took a stake in the Marmite-to-Magnum ice cream maker, raising expectations of a shake-up.
Consumer goods sector mover and shaker Schumacher is currently the CEO of dairy cooperative Royal FrieslandCampina, an €11 billion of sales business operating in more than 40 countries, which Unilever insists he has helped transform into ‘a more focused, growth-driven and sustainable business’.
He became a Unilever non-executive director in October last year, having actually started his career in finance at the company, before moving on to roles with food retailer Ahold (AD:VIE) and Philadelphia cheese-to-Heinz ketchup maker Kraft Heinz (KHC:NASDAQ).
Schumacher said his new charge is a business with ‘an impressive global footprint, a strong brand portfolio, a talented team and an enviable reputation as a leader in sustainability’.
He insisted he will be ‘very focused on working with the Unilever team to deliver a step-up in business performance, as we serve the billions of people around the world who use its products every day.’
WHAT DOES HE NEED TO DO TO IMPROVE PERFORMANCE?
During his spell running Royal FrieslandCampina, Schumacher has readjusted the company and its portfolio and tightened its focus on growth.
As such, his skillset looks well-suited to the challenges facing Unilever, which according to AJ Bell investment director Russ Mould, is a ‘sprawling empire’ that ‘desperately needs a sharper focus on what it does best, and not constantly dip its toes into new areas’.
In recent years, Unilever has sold interests in tea and spreads and bought into male grooming with ‘questionable success, while falling flat on its face trying to forge a position in over-the-counter medicines’, notes Mould.
Unilever needs a clearer strategy and must achieve better organic growth. Its third quarter trading update flagged robust sales growth figures, but these were all down to raising prices and favourable foreign exchange movements, while volumes fell by 1.6%, which isn’t the sign of a business on top of its game.
‘Schumacher would do well to install an open-door culture internally and externally,’ says Mould.
‘He needs to rebuild confidence with investors and make a firm plan for how the business will look over the next decade and beyond. A plan could take time to pull together and dealing with cultural changes internally certainly won’t happen overnight.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Tom Sieber) own shares in AJ Bell.
