Unilever seeks new recipe to fatten shareholders' returns

Unilever, the consumer products group whose top line has been ravaged by the popularity of the Atkins diet, is expected to switch its focus from growth to shareholder value when it unveils its new medium-term targets next week.

The Anglo-Dutch company, which will finish its five-year "Path to Growth" restructuring plan at the end of 2004, is tipped to announce a share buy-back programme and a more progressive dividend policy alongside its preliminary results on 12 February.

Niall FitzGerald, the co-chairman, will be under pressure to convince the City that he has transformed Unilever into a more dynamic company, rather than one that has just benefited from one-off boosts via its decision to axe 33,000 jobs and shut 130 factories. The past 12 months has seen the company stumble from one upset to another, culminating in its warning that its top 400 brands would struggle to achieve 3 per cent underlying sales growth, let alone the 6 per cent it achieved during the previous year.

Analysts yesterday questioned the company's reasoning for bringing its strategy update forward one month, with some suggesting the move was intended to deflect attention from weak Q4 profits. The group, which reports in euros, will have been scarred by the 12 per cent slide in the value of the US dollar since September to the tune of €541m (£370m) to add to its woes.

Mr FitzGerald is expected to christen the new programme "Value beyond 2004". He has already overseen a near doubling of the group's core earnings, double-digit earnings per share growth and a big increase in free cash flow generation, but setbacks this year - from poor SlimFast sales to disappointing performances from its perfumes and home care arms - mean the City has failed to re-rate its stock.

Dresdner Kleinwort Wasserstein applauded Unilever's decision to focus on value instead of growth. Alex Molloy, at Lehman Brothers, said Unilever's leading brands sales target of 5 to 6 per cent growth was "unsustainable", adding "a target of 3 per cent is more realistic for the long term".

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