More cost-cutting and no more margarine division for Unilever

In the fallout of Kraft Heinz’s failed Unilever acquisition, the intended target launched a range of plans to appease its shareholders. It will cut costs in the next few years, buy back stock and sell its margarine division.

Limited growth

Unilever had already revealed its desire to sell its margarine division, including brands like Bona and Becel, but it will now either consider whether to sell or whether to split it off into a separate company. CEO Paul Polman informed everyone that the division will no longer be part of the group, no matter which option is chosen. Investors have long since asked to sell the margarine division, because of its limited growth.

The company is also looking to generate more profit for its shareholders, with an intended 12 % dividend increase and it will also buy back 5 billion euros’ worth of shares. Another possible action is that it may get rid of its double main offices in the Netherlands and the United Kingdom, because the legal structure could hinder future changes and the Brexit will not make things easier. However, it is not yet clear which main office will remain and which will be shut down.

Cut costs

The company will also cut more costs than previously forecast. Over the next three years, it anticipated 4 billion euro in cost-cutting measures, but it will now adjust that to 6 million euro, despite 3.5 billion euro of investments to achieve that goal.

These strategy changes are an attempt to charm several unsatisfied shareholders who voiced their discontent after Kraft Heinz’s take-over bid was rejected. This particular group of shareholders wants more short-term profits, which is contrary to Unilever’s strategy to focus on long-term growth.