Unilever slashes its workforce

The leading consumer goods company, which owns major cosmetics brands like Dove, Lux and Vaseline, intends to focus on its core businesses and cut costs by €1.5bn so as to lift its operating margins to above 15 per cent by 2010. Unilever made the announcement yesterday after beating market expectations and posting a 16 per cent increase in net profit. As far as disposals and job cuts are concerned Unilever has not disclosed detailed plans but has made general indications. The company said 50 - 60 of its 300 factories would go and most of the job cuts would be made from European operations. However, job losses are also expected in the US as Unilever said its is considering the abandonment of its entire North American laundry division. The company is looking to make €2bn worth of divestments, and will be accompanying its radical cuts with a major restructuring programme, costing €3bn over four years. In an effort to improve its operating margins, Unilever's management teams will be merged so that the number of country offices is reduced from around 100 to about 25. This has already occurred in mainland Europe, where the slimming giant combined its Dutch and Belgian operations. This strategy will be complemented with reductions in the company's supply chain costs, as well as improved availability of its products to retailers. Unilever's encouraging financial results and radical plans were welcomed in the City where shares in the company closed up 4 per cent on Thursday night at £15.67 (€23.27). The personal care segment, which accounted for 27 per cent of total sales, performed particularly well in the second quarter results. Sales rose by 3.5 per cent to €2.86bn, compared to 2.6 per cent across all categories. Strong performance is likely to save many cosmetic brands from the cull. Company chief executive Patrick Cescau even singled out Dove, Axe and Sunsilk for special praise, saying that Unilever must use them as examples to follow. However, cosmetic brands like Prestige fragrances and Finesse & Aqua Net have faced the chop in recent years. The company insists that survival this time round will depend exclusively on growth potential. As such, Cescau said that even categories singled out as being important to the group's growth ambitions could face restructuring if growth fails to take place.