OUTLOOK: Unilever's Cescau seeks path back to growth
Friday 11 February 2005
Though he achieved much, he never succeeded in that ambition, and with the supertanker now becalmed while Procter & Gamble forges ahead at an ever greater rate of knots, it falls to his successor, Patrick Cescau, to try to fix the engine. Following the changes announced yesterday, Mr Cescau does at least have full control of the bridge, even if his former co-chairman, Anthony Burgmans, still hovers around the background, waiting to grab the wheel given the slightest opportunity.
The structural changes announced yesterday ought over time to do some good. In the meantime Mr Cescau has wisely reduced his targets for free cash flow and sales growth to less challenging proportions. But although there is now just one chief executive and one chain of command, which ought to lead to greater accountability and speed of decision making, Unilever surely needs more even to keep pace with competitors let alone close the gap.
The Path to Growth strategy of recent years has turned out to be a path to nowhere. Sales growth for last year as a whole sank to zero, and though there was a decent recovery in the final quarter, this was only achieved at devastating cost to profits. Taking account of writeoffs on Slim-Fast and other exceptionals, Unilever was in loss in the final quarter for the first time since its last big restructuring.
Mr Cescau gave as full and frank an analysis of Unilever's failings yesterday as I've ever seen from one of the giants of the European corporate stage. It was, for instance, a far more humbling mea culpa than we've seen from Shell, which has yet fully to rid itself of the complacent arrogance of its past. Yet the problem that Mr Cescau has got is that he was a member of the management team that set out on the Path to Growth, and as a consequence he looks as much lost in the woods as any.
I'm not sure an insider is ever really capable of bringing about the root and branch cultural change companies facing hugely changed circumstances need. Still, investors seem prepared to give him the benefit of the doubt. Just to get this in perspective, Unilever is not yet in a state of crisis. The company's market leading positions across a large number of brands are so entrenched that it would have to do something truly negligent to face anything close to ship wreck.
For the time being, fat dividends and share buy-backs remain affordable. In these circumstances, the market is prepared to forgive a lot. Yet once the slide begins, it tends to be extraordinarily difficult to halt. Admittedly it is a much smaller company, but the contrast with Reckitt Benckiser, 40 per cent of whose sales come from products launched in the last three years, could scarcely be greater. Unilever now accepts the case for a unitary corporate structure, possibly extending eventually to a single share listing and headquarters, but it doesn't yet see anything wrong with combining food and personal care products in the same company. Both of Unilever's more successful competitors, Nestle and Procter & Gamble, are either one thing or the other. This ought to tell Mr Cescau something.
The magicians using online collaboration to push boundaries
Jennifer Lawrence attacks mass media again over body image
Jennifer Lawrence: 'It should be illegal to call someone fat on TV'
Sun will 'flip upside down' within weeks, says Nasa
Ian Watkins: Police forces probed over earlier allegations as paedophile Lostprophets singer sentenced to 35 years for child sex offences
DNA from a 50,000 year old toe shows Neanderthals were highly inbred
Devyani Khobragade: India-US row escalates over arrest of diplomat in New York
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Ian Watkins: Police forces probed over earlier allegations as paedophile Lostprophets singer sentenced to 35 years for child sex offences
- 4 Christmas comes early: Justin Bieber announces he's 'retiring from music'
- 5 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
- < Previous
- Next >
iJobs Money & Business
£60000 - £75000 per annum + Bonus and Benefits: Harrington Starr: A leading au...
£25000 - £32000 per annum: Harrington Starr: Junior Business Analyst - Banking...
£25000 - £35000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Implementation...