In the News – UL (Unilever)
Last week was the last annual earnings call for current UL CEO Alan W. Jope, as Hein Schumacher will take over July 1. Mr. Jope was asked about the incoming CEO, to which he responded (in part)
“It’s not for me to comment on what Hein’s agenda would be, but what I can tell you is that in an internal video that he recorded unscripted, unprompted, he highlighted 3 things. Number one, his absolute focus on performance and value creation. Number two, his commitment to the organization that Unilever’s put in place… And the third thing is his belief that performance can be enhanced by staying the course on Unilever’s long-standing commitment to sustainable business.”
-Alan W. Jope, CEO of Unilever
The obvious question: what happens if “performance and value creation” are in conflict with the existing organization or sustainable business? Hein Schumacher worked at Unilever 20 years ago as a finance manager, but more importantly he worked at Heinz 10 years ago, which is where he came to the attention of Nelson Peltz. Mr. Peltz was appointed to Unilever’s board last May (after his fund, Trian Fund Management, acquired 37.4 million UL shares or about ~1.5%). To understand what to expect from the new CEO, it’s worth considering the impact of Mr. Peltz according to Unilever executives.
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Nelson Peltz – Not Just an Activist Investor
UL – Former Division Founder Sees Near-Term Headwinds Including End Market Weakness Due to Inflation Unilever [Supply Chain Executive] (Prior) – Interview Date: 6/21/2022
“If you look at Mr. Peltz’s track record, this guy used to drive trucks for his father’s food company. You might know that cold drink called Snapple. Nelson Peltz and his colleagues bought that brand after it had been run into the ground by Quaker Oats from $1 billion brand to 300 million brand. Mr. Peltz bought it around 98, 99. Within three years, they turned it around, made it a $1 billion brand again, and sold it off to Cadbury. These are folks who have real experience. They’re not just activist investors. They’ve done this. They have gotten their hands dirty.”
-Unilever [Supply Chain Executive] (Prior)
This expert appears to have a good read on Mr. Peltz, as he predicted major announcements of last week’s earnings call back in June of 2022.
Expert Prediction #1: Hire Outside of Unilever and FMCG
Expert, June 21, 2022
“The leadership and the lack of diverse experiences from outside Unilever and from outside of FMCG would be one of the things that Mr. Peltz would want to look at. He has asked for these changes in his previous approaches to various companies.”
Alan W. Jope, February 9, 2023
“Thanks, Richard, and good morning, everybody. Before we start, I’m sure you will all have seen by now that Unilever has appointed Hein Schumacher as our new CEO as from the 1st of July, and I’d like to use this moment to congratulate Hein on his appointment.”
Expert Prediction #2: Increase R&D Spend to Drive Innovation
Expert, June 21, 2022
“There’s a lot that Nelson Peltz has to add, one of which is innovation. Unilever hasn’t created a market-leading brand of its own in the last 20 years, only acquisitions. Increasing the R&D investment as a percentage of turnover will probably increase when Mr. Peltz is on the board. Unilever has lagged behind on that KPI, behind P&G and Nestle. Innovation and lack of innovation is endemic in FMCG.”
Alan W. Jope, February 9, 2023
“R&D increased by around EUR 50 million…We expect to again increase levels of investment in brand and marketing investment in R&D and in capital expenditure… The one thing that we’re very comfortable with is our innovation and investment plans behind our brands for 2023 are stronger than any of us can remember in the last 10 years.”
The expert nailed those two, but predicted much more. Here’s the full transcript. Or you might be interested in a competitor’s view of UL, hot off the presses.
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Austin’s primary experience is in consulting and private equity, though he’s also a published author.
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