Comment: FitzGerald's flotilla plots a hazardous course

Niall FitzGerald, Unilever's recently appointed chairman, likes to depict his company not as the giant oil tanker it is often described as - difficult to turn - but rather as a flotilla of nimble frigates all sailing in the same direction with a consistent set of battle orders. For the time being that analogy - intended to convey the impression of a hard-hitting, fast, flexible and entrepreneurial machine - may owe more to wishful thinking than reality. As the world's second-largest consumer products company, Unilever is always going to find it hard to deliver anything other than pedestrian, OECD-average growth.

But that's not for lack of trying, and certainly Unilever seems at the moment to be making all the right noises. The flotilla is being firmly set on a course away from the stodgy, low-growth economies of Europe and the US and towards the double-digit growth opportunities of emerging markets. Furthermore a quite substantial part of the flotilla, speciality chemicals, is to be separated and sold. In itself, there's nothing particularly new in this; Unilever has been weeding out and selling off poorly performing businesses for years. Disposals over the past 10 years amount to pounds 3.5bn of sales.

The point about Unilever's chemical businesses, however, is they are not poorly performing. In fact they are very much in demand among those at the cutting edge of consolidation in these industries. These are very significant businesses, accounting for some 10 per cent of total group sales, worth perhaps upwards of pounds 5bn. Mr FitzGerald's phone has barely stopped ringing since the "for sale" sign was hoisted yesterday morning. This is therefore quite a departure from the run-of-the-mill, ongoing disposal programme.

So what's the point of it? Unilever was faced with a choice. To leave these businesses alone would merely have been to watch their value erode. Unilever either had to commit very substantial extra investment to make them bigger, or it had to sell. Given that some of the businesses were finding they were disadvantaged by the Unilever link (Unilever competitors don't on the whole like dealing with Unilever companies), Mr FitzGerald has opted for the latter.

All very logical but the strategy is not without its risks. The difficulty is going to be in finding a replacement for these businesses which is as high-margin. Like many big companies these days, Mr FitzGerald believes the answers lie in the emerging markets of the Far East, Latin America, India and China. Today these markets account for less than 30 per cent of group sales. He aims to push that above 50 per cent over the next 10 years. That in itself would seem to rule out a big consumer products acquisition in the developed world.

But how else other than through acquisition can Unilever usefully apply all that money? Investing in organic growth, even in emerging markets, is a path fraught with difficulties and pitfalls. But let's give Mr FitzGerald the benefit of the doubt. If Unilever does manage to reorient itself away from tired old, slow-growth Europe to the dynamic developing economies, we will see the emergence of a quite different sort of company - one which really does justify the description of a flotilla of fast-moving frigates.

Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
There have been various incidents of social media users inadvertently flouting the law

footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Life and Style

Board creates magnetic field to achieve lift

Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Those who were encouraged to walk in a happy manner remembered less negative words
Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Sudan, the last male northern white rhino
environmentThe death of a white northern rhino in Kenya has left the species with a single male. These are the other species on the brink
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth