Brand wars cost 7,500 Unilever jobs worldwide: Restructuring charge of pounds 490m over three years: British share of shake-up likely to be 15%

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UNILEVER, the detergents to ice cream consumer products group, is to shed 7,500 jobs over the next three years as part of a pounds 490m restructuring.

Sir Michael Perry, Unilever's chairman, would not give details of the job losses, although he said they would mainly be in Europe, where all the group's businesses will be affected, and the US detergents and foods businesses. British job cuts are likely to be about 15 per cent of the total, about 1,100, in line with its contribution to the group's sales. Unilever employs 294,000 people around the world, 105,000 of them in Europe.

The restructuring provision, which comes only three years after a pounds 305m charge for reorganising its European business, is expected to produce cost-savings of pounds 240m a year by the end of 1996. The restructuring will be spread across 60 projects, in 20 countries - some of which, like the merger of Van den Berghs and Jurgens with Brooke Bond Foods in Britain - have already been announced.

The rationalisation comes as Unilever faces increasing competition in many markets, with consumers trading down to cheaper, own-label brands. In the US, Procter & Gamble - the largest detergents supplier - cut the prices of many products, and there has been a fierce price war in pasta sauces. In Britain, Unilever's tea business suffered from price competition.

But Sir Michael rejected suggestions that brands were dead. 'During the course of 1993 there was much comment, some of it misplaced and most of it over the top, about the clouds hanging over manufacturers' brands. We believe strongly in the power of our brands as the engine of long-term growth.'

And he pointed out that sales of Magnum - 'hardly the cheapest ice cream' - had risen by 40 per cent worldwide, while prestige skin care and fragrances - such as Calvin Klein's Obsession - were enjoying double-digit sales growth.

The provision took the City by surprise and the shares were marked down 37p to pounds 11.62. But analysts said that following the dollars 1.5bn restructuring announced by Procter & Gamble last year, Unilever had been expected to announce a restructuring.

The plans were announced as the group disclosed that profits, before the costs of the restructuring, had increased by 11 per cent to pounds 2.3bn, although the provision, combined with an pounds 88m profit on disposals, meant that reported pre-tax profits were 4 per cent lower at pounds 1.9bn.

'We see no obvious signs that 1994 is going to be the year of economic upturn,' Sir Michael warned. 'But we do feel a gradual, albeit uneven, improvement is the most likely scenario.'

Most of the group's growth came from Latin America, Asia and other countries classed by the group as the rest of the world, where operating profits, at constant exchange rates, rose 22.6 per cent to pounds 645m. In Europe - which still accounts for more than 54 per cent of sales - profits rose just pounds 9m to pounds 1.291bn, while in the US they dipped 6.4 per cent to pounds 364m, excluding exchange gains - although that was partly due to the introduction of post- retirement benefits.

Sir Michael admitted, however, that the group had lost market share in detergents in the US and said the launch of a range of liquid detergents had 'not lived up to expectations'.

Personal care products and ice cream - helped by a number of acquisitions - performed better, and the group also gained market share in margarines.

In Europe, the poor summer depressed sales in the ice cream business, while the detergents market remained fiercely competitive. Again, however, personal products had 'excellent' sales and profits increases. For the group as a whole operating profits from personal products rose 9 per cent to pounds 419m.

The group's borrowings rose pounds 200m to pounds 1.4bn - largely because of the pounds 590m spent on acquisitions - or 21 per cent of net assets. The dividend is increased by 17.3 per cent to 25.03p a share, via a 18.95p final. Earnings per share were static at 69.45p.

(Photograph omitted)

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