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Unilever: ice cream split is the cherry on top of lacklustre management reshuffle

Unilever is back in defensive mode. With an activist hedge fund on board and a failed £50bn bid for GSK’s consumer arm behind it, the consumer products group has reverted to an old playbook. The restructuring Unilever unveiled on Tuesday may already have been afoot. But it echoes the panicked response to Kraft Heinz’s abortive bid in 2017.

The latest rejig aims to simplify the group’s complex matrix, where geographic and category functions criss-cross. About 1,500 jobs — 1 per cent of the workforce — will go, reducing senior management roles by 15 per cent. A cynic would say deputy heads are rolling to protect the beleaguered C-suite led by chief executive Alan Jope.

Simplification helps cost allocation but disregards business realities. Managing beauty in Brazil or China are very different in terms of supply chain, distribution and marketing. Some executives will need to juggle adeptly. The divisional head of home care oversees a portfolio that includes “water & air”.

Disconcertingly, Nitin Paranjpe, crowned chief operating officer in 2019, takes on the newly minted role of chief transformation officer and chief people officer. Given “transformation” should be at the heart of Unilever it is odd to twin the role with an HR one.

Investors must hope any job cost savings are reinvested. Total staff costs have drifted lower in the past three years, to 12 per cent of sales in 2020, as expected given more automation. But there is scope to funnel more investment into brands and marketing, stuck at 14 per cent in the three years to 2020.

The most promising move is splitting ice cream from the rump of the foods division, rechristened nutrition. Ice cream, with brands like Wall’s and Ben & Jerry’s, is the jewel worth perhaps half the overall food portfolio. A split should facilitate any disposal later. That apart, there is not much to see here. Jope will need to pull a bigger rabbit out of the hat at next month’s results announcement.

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