Unilever - A Gaint in Trouble Essay

2660 Words 11 Pages
Abstract

A couple of years ago, it was unimaginable that Unilever, one of the world's largest consumer and personal goods company would get into any trouble. 2004 was clearly a very disappointing year for Unilever. Underlying sales growth was only 0.4%, with leading brands growth at 0.9%. The revenues declined from € 42.7 billion for the year 2003 to € 40.2 billion for the year 2004, a decline by 6%. In the background of these issues, Unilever abandoned its dual chairmen structure and Patrick Cescau was made Group Chief Executive of Unilever. The case discusses the decline of Unilever. The case also discusses the five-year "Path to Growth" strategy and its results. Details pertaining to its structural changes in the top
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This sales figure in 2004 was fairly close to the sales figure, Unilever had five years ago in 1999 of € 40.97 billion. The net profit was € 1.9 billion during fiscal year 2004, a decrease of 32.0% from fiscal 2003. Revenues from other operations were € 235 million in 2004, a decrease of 33.7% from fiscal 2003. The operating profits also declined from € 5.5 billion for the year 2003 to € 3.4 billion for the year 2004, a decline of 36% [Exhibit I]. The share prices of Unilever in NYSE (New York Stock Exchange) fell by more than 14% in the past five years and touched all time low in 2001 [Exhibit II]. At the end of 2004, Unilever had negative working capital; the current liability was € 14.70 billion, while the total current assets was only € 10.87 billion. And also Unilever in 2004 announced a write-down of € 650 million on its Slim-Fast foods .

Unilever came up with the "Path to growth" strategy in 2000 [Annexure 2], which set bold targets for top-line growth of 5% to 6% per annum. This strategy was loved by financial institutions, but is now being blamed for the bind that Unilever is in. At its core was slimming down Unilever's portfolio from about 1600 brands to just 400. This strategy helped Unilever to turn from a potpourri of brands into a fully functioning international food and consumer goods company. Again, this strategy was fêted by analysts and investors, but caused unforeseen and unpredictable problems

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