Unilever rushes to sell underperforming food labels as it focuses on ‘power brands’

Unilever will speed up the sale of its underperforming labels and focus on its 30 power brands, according to its chief executive.

Fernando Fernandez said the FTSE-100 company would act at a “faster pace” and that the firm has around €1bn (£840m) of brands in its Foods Europe division, which “don’t fit well” with its company’s portfolio.

The comments are his first since his appointment to the role two weeks ago after previous CEO Hein Schumacher was ousted after less than two years.

Schumacher was part-way through a wide-ranging “productivity programme,” which will cull thousands of jobs and spin off its ice cream arm, including the Ben & Jerry’s division.

Following a “full review” of separation options, the ice cream business will be incorporated in the Netherlands and continue to be headquartered in Amsterdam. However, it will have a triple listing of New York, London, and Amsterdam.

According to the Financial Times, Unilever’s board decided that CFO Fernandez was “better suited” to execute the turnaround plan.

“Every brand in our portfolio, every category in our portfolio, has to earn the right to remain in our portfolio. I don’t have any emotional engagement with any brand when it comes to portfolio management,” Fernandez told Barclays analyst Warren Ackerman.

“Time will tell what we do with our portfolio in the long run, but that’s the position at this stage,” Fernandez added.

In addition to the sales of Unox and Zwan last year, Fernandez said there was another £420m in smaller Unilever markets that the group did not believe it could scale and was likely to sell.

Unilever’s 30 power brands account for 70 per cent of its revenue.

In Unilever’s full-year results released last month, the consumer giant reported “exceptionally weak” guidance, according to analysts.

“The last set of results suggested that turnaround had stalled somewhat, with weak guidance and sales growth only likely to improve as the company passes on higher commodity costs,” Chris Beckett, head of equity research at Quilter Cheviot said.