Unilever surprised the City yesterday with the news that Niall FitzGerald, its co-chairman, is to retire early as it abandoned its key sales target after failing to hit it last year.
Mr FitzGerald, 58, will be replaced by Patrick Cescau, the Frenchman who heads the group's food arm, when he bows out at the end of September. Mr FitzGerald is tipped to become the next chairman of Reuters, the media group whose board he joined last year. His departure, after 37 years with Unilever, and eight years as its boss, will come three months before the end of Unilever's five-year Path to Growth restructuring.
Unveiling full-year results that reflected a year rocked by a series of sales warnings, Mr FitzGerald said the group's focus would switch from specific performance targets to improving shareholder returns. The news lifted Unilever's shares by 3 per cent to 547p, as analysts predicted that the company could launch a share buyback programme by as early as the middle of 2005.
Unilever said underlying sales of its 400 leading brands rose just 2.5 per cent during 2003, well short of the 5 to 6 per cent growth it had hoped for by the end of 2004. The figure was dragged down by the group's food arm, which managed only "lacklustre" sales growth of 1.2 per cent, while its home and personal care division lifted sales by 4.2 per cent. In keeping with the decision to jettison detailed outlook guidance, Mr FitzGerald would say only that this year's sales of its top brands would "be ahead" of last year's.
The main culprit behind its disappointing performance was its SlimFast diet brand, which knocked almost 5 percentage points off the growth of its top brands such as Dove soap, Bertolli olive oil and Sunsilk shampoo. America's obsession with all things low-carb caught Unilever "on the hop" and caused SlimFast's sales to plunge by 20 per cent last year, Mr FitzGerald admitted. But he is confident that the brand's revamp, which has seen it launch new ready meals that are low in carbohydrates, will return it to growth this year.
Its other weak spots - fragrances, household care and frozen foods - have all been overhauled and look set to retain their place in the group, according to Mr FitzGerald. "We will not be driven into a panic decision about selling businesses because it helps the cosmetics of the numbers," he said.
Announcing the genesis of its strategic plan for growth from 2005 to 2010, the group said it expected to generate more than €30bn (£20bn) of ungeared free cash flow and increase return on invested capital from 12.5 per cent in 2003 to "at least 17 per cent". Once it had reduced its net debt mountain to €10bn from its current €12.6bn it said surplus cash flow would be used "to enhance shareholder return".
Its weak top-line performance did not stop it from hitting its low double-digit earnings target for 2003, achieving underlying earnings per share growth of 11 per cent. Pre-tax profit for the year to end December rose 12 per cent to €4.5bn on sales of €42.9bn.
Unilever also overhauled its unusual corporate board structure. The Anglo-Dutch company plans to merge its two boards into one and adopt the conventional non-executive director title for its current "advisory directors". All directors would stand for election each year, it added.
LOVE, LIFE AND LAUNDRY...
So, the ultimate soapbox boss is stepping down. Has a better offer come along? It will once Reuters' Sir Christopher Hogg picks up the phone.
Will he accept? Why not? It would only be part time, plus his appointment would keep it in the family: his daughter was Reuters' Moscow correspondent.
But she's only two. No, not that one. He's on his second wife.
Ah, all that marathon running must have given him a new lease of life. Quite.
Still, he'll need lots of energy if he's to live long enough to get through his £11.7m pension pot? I should say. That's £718,000 a year you know.
All the more to dish out on good causes, such as educational projects for young people. Yes, or anything involving Africa: his one true passion.
Do say: I think Britain should join the Euro.
Don't say: Got any ideas how I can get this stain off my shirt?
Pardon? His version of Persil washed away more than just dirt.
What will his epitaph say?
Miracle worker: turned Unilever into a (semi) interesting company.Reuse content