Unilever targets $1.12 billion savings in home, personal care pivot

Unilever Eyes $1.12 Billion Cost Savings in Personal and Home Care Strategy

Unilever's Strategic Overhaul and Financial Outlook

Cost Savings Initiative and Operating Model Changes

Nov 3 (Reuters) - Unilever will overhaul its operating model and cut €1 billion ($1.12 billion) in costs by the end of 2029, it said on Tuesday, as it sharpens its focus on home and personal care after splitting off its food business.

The savings, to be delivered through organizational simplification, process redesign and technology initiatives, will help address costs arising from the planned combination of Unilever's food business with McCormick, expected to complete by mid-2027.

Implementation Timeline and Market Structure

The new operating model, to be progressively implemented during 2027, will cluster Unilever's markets into six performance units led by regional presidents, with full profit-and-loss accountability. 

The owner of brands including Dove soap, Vaseline, Persil and Hellmann's mayonnaise said it would then report across three categories — beauty & personal care, home care, and other.

Market Performance and Share Trends

Unilever's shares, which are almost where they were at the start of this year, were down 0.6% at 1617 GMT, tracking a broader decline in the London stock market.

Leadership and Portfolio Focus

Under CEO Fernando Fernandez, who was promoted to the top job from finance chief last year, Unilever has been simplifying its portfolio to focus on beauty and personal care instead of its slow-growing food business. 

Fernandez agreed a deal earlier this year to merge the food division with US spice maker McCormick, having already spun off the ice cream business last year.

Reaffirmed Targets and Growth Projections

REAFFIRMS TARGETS

Unilever reaffirmed its medium-term targets of 4-6% annual underlying sales growth by value, with volume growth of at least 2%, and said it expected to perform in line with that algorithm in 2027.

Last week, Unilever reported underlying sales growth ahead of market estimates, driven by higher volumes but warned of price hikes due to a surge in costs linked to the Iran war. 

Upcoming Investor Event and Leadership Appointments

Unilever will host an investor event on Wednesday to give details of its strategy. New leadership appointments, spanning both central functions and its six regional units, take effect on January 1, 2027.

"The key tomorrow is proving recent HPC (Home & Personal Care) momentum is repeatable and broad-based, and laying out the building blocks for post-Foods earnings," Barclays said in a note, adding that the savings programme was another positive.

Additional Information

($1 = 0.8937 euros)

(Reporting by Raechel Thankam Job in Bengaluru, Alexander Marrow in London, additional reporting by Yamini Kalia; Editing by Shilpi Majumdar and Susan Fenton)