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Yahoo
10-03-2025
- Business
- Yahoo
Unilever's CEO shakeup signals a return to the ‘move fast' era
In recent years, companies have largely abandoned the "move fast and break things" approach, popularized by tech giants in the early 2000s, recognizing the risks of prioritizing speed over sustainable long-term growth. However, in today's era of rapid disruption and heightened competition, the need for speed is making a comeback. Unilever's sudden leadership shakeup last week exemplifies this shift. The company behind Dove and Ben & Jerry's announced that CEO Hein Schumacher would step down after less than two years in the role. Despite implementing a strategic overhaul—including cost reductions, plans to spin off the ice cream division, and a sharpened focus on core brands—the board determined that progress was too slow, particularly compared to industry rivals like Nestlé and Procter & Gamble. In response, CFO Fernando Fernandez was named the new CEO, signaling an urgency to accelerate Unilever's turnaround. The decision stunned many, including Schumacher himself, as his early results had been promising. Since he assumed the role, Unilever shares have risen by approximately 10%, reflecting investor confidence in his strategy. Yet, the board had higher expectations, demanding not just growth but faster growth. Chairman Ian Meakins underscored this urgency in a statement: 'The Growth Action Plan (GAP) has put Unilever on a path to higher performance, and the Board is committed to accelerating its execution,' he wrote. 'While the Board is pleased with Unilever's performance in 2024, there is much further to go to deliver best-in-class results.' Unilever's bold decision to fast replace a well-regarded CEO—one who had delivered positive, albeit modest growth—highlights the intense pressure on executives today. Simply put, good performance isn't good enough. CEOs are expected not just to succeed but to outperform competitors at record speed. Beyond speed, leadership style appears to have played a role in the decision. As I've noted in a previous newsletter, companies are increasingly favoring leaders who are aggressive, mercenary, and willing to push change swiftly. According to the Financial Times, insiders described Fernandez as "abrasive" yet "decisive" and a leader who would move far quicker than Schumacher, whose leadership style was considered "cuddlier.' One analyst at Bernstein described Fernandez as "fiery and charismatic," while Schumacher was more "understated." Whether Fernandez's leadership will deliver the rapid transformation Unilever desires remains to be seen. But one thing is certain: Companies today aren't just demanding results—they want them immediately. Separately, I'm attending SXSW from March 8 through March 12 and holding meetings with leaders at Fortune 500 companies. Shoot me a line if you'd like to meet. Ruth Today's newsletter was curated by Lily Mae Lazarus. This story was originally featured on Sign in to access your portfolio
Yahoo
28-02-2025
- Business
- Yahoo
Pace of delivery at play in Unilever CEO Hein Schumacher's short innings
Unilever's revelation of the sudden departure of Hein Schumacher – before he could celebrate a second summer as CEO – seemed shrouded in mystery. But the devil might just be in the detail – in the case of Unilever, the choice of words used by chairman Ian Meakins to announce the exit of Schumacher just eighteen months after he joined the CPG giant from dairy group FrieslandCampina. And the expectations on incoming chief Fernando Fernandez – promoted to CFO in January 2024 from president of the company's beauty and wellbeing division – might well weigh heavily, with the terminology expressed by Meakins indicative of the pressures on executives to deliver results in such a fraught operating environment. That environment was evident in the comments coming out of CAGNY presentations last week around consumers still struggling with food affordability, while manufacturers are still having to raise prices to offset inflation-linked costs and, at the same time, protect volumes and margins. 'Speed' and 'urgency' would appear to be the not-so-obvious details in Meakins comments but you would have to look closely. The 'board is committed to accelerating its execution', the Unilever chairman said in a statement, referring to the Growth Action Plan (GAP) Schumacher put in place in October 2023, a speedy move just three months after taking the CEO baton. And, perhaps more revealing, Meakins added: 'The board has been impressed with Fernando's decisive and results-oriented approach and his ability to drive change at speed… 'Having worked with Fernando closely over the last 14 months, the board is very confident in his ability to lead a high-performing management team, realise the benefits of the GAP with urgency, and deliver the shareholder value that the company's potential demands.' Demand being another operative word there. One might have expected the shock announcement would have sent Unilever's shares into a dive. But, while they started and traded the day yesterday (25 February) in the red, the decline was limited to around one and a half percent. Read into that what you will. 'Whilst unexpected, we agree with the board that Fernandez is best placed to accelerate the value unlock. We would buy into weakness,' Barclays analysts, led by Warren Ackerman, wrote in a research note. 'Usually, when you get unexpected CEO change, the market worries about a problem or trading. This isn't the case here – rather, the board have made a decisive decision to empower, in our view, the best candidate for the next leg of the story.' Eighteen months is still a short innings for a CEO to make an indelible mark on a business and strategy, but Schumacher has put some notable plans in place at Unilever. Of course, the rate of change may not have been to the board's liking. Market talk has suggested the softness in sales growth implied for the early part of Unilever's new financial year – when 2024 results were delivered on 13 February – might have led to Schumacher's demise. While that reasoning seems unlikely given Unilever's challenges are generally no different to other food manufacturers – although still plausible – his departure is perhaps indicative of the urgency felt by the higher echelons. Underlying sales growth (USG) in Schumacher's first full year as Unilever CEO did slow to 4.2% last year, from 7% in 2023, but volumes ticked up to 2.9% from a meagre 0.2%. Margins also continued in the right direction. The underlying operating margin increased by 170 basis points to 18.4%, building on the 60 point-gain in the previous 12 months. And the gross margin rose 280 basis points to 45% – the highest in a decade, according to Unilever. And, for shareholders, underlying EPS advanced 14.7% to €2.98 ($3.12), a vast improvement on 2023's 1.4% pace. Nevertheless, with Unilever more than a month into its new fiscal year when the 2024 results were presented, Jefferies' analysts suggest the sales environment could have worsened since. That said, both the short- and mid-term USG guidance remained unchanged in yesterday's executive announcement at 3-5% and 4-6%, respectively. But, setting out the course earlier this month, Unilever guided to only a 'modest improvement' in the underlying operating margin in the new year. 'Company reiterates guidance. But indications [were] that 1Q had seen a much slower start, with OSG indicated to be perhaps no more than 3%,' the Jefferies team, including David Hayes, wrote in a follow-up note. 'The worry will be that this slowdown has deepened in the last few weeks.' TD Cowen analyst Robert Moskow emphasised the theme, choosing the term 'urgency' in his follow-up commentary. 'On one hand, this announcement fits our buy thesis that the board is running Unilever with a performance-driven mindset and urgency that had been lacking previously,' Moskow wrote in a research note. But Moskow also expressed some concerns on behalf of TD Cowen: 'Making a decision like this in such a short time frame probably reflects a sense of dissatisfaction with the company's near-term performance to some degree. 'As a result, we can't help but wonder if the company's guidance for a back-half loaded 2025 will play out as expected, even though management technically reiterated guidance.' As CEO, Schumacher pledged to streamline Unilever's portfolio under a productivity programme to realise €800m in costs savings, but while he disposed of a number of assets, mainly in the Netherlands but also in Germany and Romania, the company's board may have wanted more. And with sales growth slowing in 2024, perhaps a gap needed plugging in terms of acquisitions, a point put forward by Jefferies. Perhaps even more so as Schumacher has also overseen the planned demerger of the ice-cream business, which is slated to be spun-off by the year-end with a trio of listings announced this month in London, Amsterdam and New York. And, in November, Unilever confirmed the demerger of its ice-cream business units in India and Indonesia, too. Whilst Hein's experience was in foods, remember Fernandez's background is more HPC (this is Unilever's future) Barclays analysts However, presenting the Growth Action Plan in October 2023, the outgoing CEO said Unilever would 'selectively optimise the portfolio' with 'no major or transformational acquisitions'. He added at the time: 'We will continue to prune the portfolio in areas that are less strategically attractive. This will be accompanied by selective bolt-on acquisitions focused in specific high-growth areas, provided they meet the higher bar for M&A criteria and parameters for value creation.' The Jefferies team wrote on Schumacher's departure: 'We would see this creating much uncertainty on the performance in 1Q; what it means for strategy, especially M&A [and] what now for additional cost cuts and other acceleration of changes.' They added, noting the aborted bid by Schumacher's predecessor Alan Jope to buy GlaxoSmithKline's consumer-health business in 2022: 'This provides free-range to the board and new CEO to review strategy. That may see a different positioning on M&A strategy. 'We have considered a need to revisit bigger acquisition ambition, as demonstrated in 1Q22 re: the failed approach for GSK CH for £50bn.' Fernandez, meanwhile, will take up the CEO role on 1 March, the same day Schumacher steps down but he will stay on until May. Market talk is, at least according to Sky News' sources earlier this month, that Unilever has agreed terms to buy the personal-care business Wild, reportedly for £230m ($290.8m). Was that prospective deal opposed by Schumacher? Perhaps we will never know. 'Whilst Hein's experience was in foods, remember Fernandez's background is more HPC (this is Unilever's future),' the Barclays team wrote. And what does that suggest for Unilever's nutrition (food) unit, which has long been touted as a potential divestment target? Jope reorganised operations into five divisions in 2022 – nutrition, ice cream, beauty and wellbeing, personal care and home care – at a time when speculation was rife that food could be chopped, and even ice cream. While Schumacher put in motion the plan to spin-off ice cream in March 2024, he had ruled out the full blown disposal of 'food'. The Barclays' analysts gave their perspective: 'We believe that Hein did a very good job overseeing a lot of change in a short period of time – strategy reset, organisational change, productivity acceleration and innovation step-up. 'Unilever delivered its best results in more than a decade in 2024 with EPS +15%, and so this decision is not a slight on Hein Schumacher. 'We view it as a hard-nosed decision by the board about who is the best person going forward into the next stage of its evolution.' Pace was evident in the Barclays' comments, too, as the Ackerman-led team suggested Fernandez 'may look to accelerate portfolio change and drive costs out more quickly'. And Moskow at TD Cowen also stressed the point: 'Unilever's sudden announcement that Hein Schumacher will step down as CEO on March 1 suggests dissatisfaction with the pace of the company's turnaround.' So what might Fernandez do differently to the departing Schumacher? We might just get a sense when Unilever presents its first-quarter trading update on 24 April with the new CEO at the helm. In the meantime, Hayes' team at Jefferies wrote: 'The step-up from CFO to CEO by Fernandez will be liked by many investors. They like his direct approach but some may also see his style as somewhat maverick.' "Pace of delivery at play in Unilever CEO Hein Schumacher's short innings" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
CNN
25-02-2025
- Business
- CNN
CEO of Ben & Jerry's parent company unexpectedly steps down
The chief executive of Unilever, which owns ice cream brands such as Ben & Jerry's and Magnum, has stepped down after less than two years at the helm, as the UK company works to boost its lackluster sales and profits. Hein Schumacher will be replaced by Unilever's Chief Financial Officer Fernando Fernandez on March 1, the company said in a statement Tuesday. 'The board has been impressed with Fernando's decisive and results-oriented approach and his ability to drive change at speed,' Unilever Chairman Ian Meakins said in the statement. Meakins added that the board is 'very confident in (Fernandez's) ability to lead a high-performing management team, realize the benefits of the (growth plan) with urgency and deliver the shareholder value that the company's potential demands.' Nathaniel Meyersohn discusses Unilever's plans to spin off its ice cream brands, including Ben & Jerry's and Magnum. The surprise announcement of Schumacher's departure comes as the consumer goods giant implements its so-called Growth Action Plan, a program unveiled in late 2023 to cut costs and boost sales and profitability. Shares in Unilever (UL) were down almost 1.6% by 5.43 a.m. ET Tuesday. Matt Britzman, senior equity analyst at financial services firm Hargreaves Lansdown, called Schumacher's resignation a 'surprise twist,' echoing other analysts. 'This unexpected transition might be the spark that helps deliver a new version of Unilever that investors have long been waiting for,' he wrote in a note Tuesday. Unilever owns many household-name brands including Dove soap, Hellmann's mayonnaise and Vaseline. Part of its growth strategy involves spinning off its massive ice cream business. Unilever said last year that the separation would help it become 'a simpler, more focused company' as its ice cream business had 'distinct characteristics' such as season-dependent demand and a supply chain that must be able to support frozen goods. The company is also cutting 7,500 mostly office-based roles as it uses technology to boost efficiency.
Telegraph
25-02-2025
- Business
- Telegraph
Unilever boss quits as company struggles to move on from ‘social purpose'
The boss of Marmite maker Unilever is to quit as the business struggles after toning down its 'social purpose' mission that championed progressive causes. Hein Schumacher will leave next month after less than two years as chief executive, and will be replaced by Fernando Fernandez, the recently appointed chief financial officer. It comes as Unilever attempts to reinvent itself following a decision to row back on its social purpose mission shortly after Mr Schumacher took charge. Before 2023, the company had attempted to promote environmentalism and equality by giving every brand a social purpose, a move mocked by investors for attempting to imbue the likes of Hellmann's mayonnaise with a reforming agenda. Mr Schumacher swiftly announced a major overhaul dubbed the Growth Action Plan (GAP), under which its efforts to transform the world are more tightly focused. However, he has been unable to significantly boost a share price that has been largely stagnant since 2017. Ian Meakins, the Unilever chairman, said: 'While the board is pleased with Unilever's performance in 2024, there is much further to go to deliver best-in-class results.' He added: 'On behalf of the board, I would like to thank Hein for resetting Unilever's strategy, for the focus and discipline he has brought to the company and for the solid financial progress delivered during 2024. 'Hein introduced and led a significant productivity programme and the commencement of the ice cream separation, both of which are fully on track.' 'The GAP has put Unilever on a path to higher performance and the board is committed to accelerating its execution.' Mr Schumacher's departure, which the board said was by mutual agreement, was announced days after the consumer goods giant snubbed London in favour of Amsterdam for its €15bn (£12.5bn) spin-out of its Magnum business. It sent shares more than 2pc lower on Tuesday to make Unilever the worst performer on the FTSE 100 and comes as the business seeks to deliver 7,500 previously announced job cuts. Unilever said earlier this month that its ice cream business, which is being spun off with an expected value of between €10bn and €15bn, would have secondary listings in New York and London, but its primary stock market listing in Amsterdam. The decision was a blow to the London Stock Exchange and Rachel Reeves, the Chancellor, who met with Unilever officials last September to discuss 'investment in the UK and capital markets and reforms'. The company, which makes a range of consumer goods from Marmite to Dove, is also trimming down the number of brands in its food division and focusing more attention on its biggest sellers. Incoming boss Mr Fernandez was president of beauty and wellbeing before taking on the top finance role in January 2024. The company has kicked off a search for a new chief financial officer. Mr Meakens said the board had been 'impressed with Fernando's decisive and results-oriented approach and his ability to drive change at speed'. Mr Schumacher had laid out cost cuts at the company last year, including separating the ice cream division and cutting thousands of jobs to address years of underperformance. The ice cream business – which includes the Magnum and Wall's brands – generated turnover of €8.3bn in 2024. However, the British company said this month that it expected a slower start to 2025 due to subdued market growth in the near term, although it predicted its 2025 underlying sales growth to be within its multi-year range of 3pc to 5pc. Mr Schumacher said it had been a 'privilege' to lead Unilever. He said: 'We have made real progress and I am proud of what we have achieved in a short period of time.'
