One of the biggest shareholders in Unilever has said that he expects the giant consumer group to set out plans for a single unified company by the end of the year.
In what could be the most significant move for the Anglo-Dutch maker of Dove soap in a decade, the investor said he understood that Unilever’s board wanted to end the dual-listed structure so that it could become a simpler and more agile company.
The top ten shareholder told The Times: “I understand that a unified structure is the goal of the board, which is supported by shareholders.”
He said that Unilever last reviewed its dual status a decade ago and that the current convoluted ownership, in which the group has two legally separate parent companies in Britain and in the Netherlands, was not appropriate in a highly competitive consumer goods environment.
However, Paul Polman, the chief executive, said yesterday that the board and a team of experts were still assessing whether its dual structure could, or should, be changed. He said it was a very complicated process and that no decision had been taken. Mr Polman said that the board was likely to reveal the outcome of the review by the end of the year when the group is also expected to announce a possible sale or spin-off of its spreads divisions.
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Mr Polman was speaking as Unilever reported a solid first-half performance. Its underlying sales rose 3 per cent, which it said was ahead of the market. However, the uplift was a result of higher prices as Unilever’s volumes were flat.
The big talking point for shareholders, though, was the bigger-than-expected increase in the group’s operating margin which rose by 1.8 percentage points as Unilever cut costs faster. About €1 billion has been cut and the group is targeting €6 billion over the next three years, a substantial proportion of which will be reinvested in the business.
Mr Polman, who recently defended the company against an opportunistic £115 billion takeover bid by Kraft Heinz, said that Unilever was constantly trying to create strong innovations globally alongside “more relevant, local innovations”.
This need for agile innovation in a competitive market is the key reason why many shareholders have been calling for Unilever to simplify its business and shareholder structure.
A simpler company with a single class of shares could make it easier for Unilever, which makes products ranging from Knorr seasonings to Magnum ice cream lollies, to restructure its business and use its stock, which has been at record highs since the failed takeover attempt in February, to carry out large-scale transformative acquisitions.
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Mr Polman said yesterday that some options for its margarine spread unit, such as a possible spin-off, could potentially be easier to carry out if the company had a single structure.