Unilever named Royal FrieslandCampina boss Hein Schumacher as its next chief executive officer, bringing forward Alan Jope’s replacement after strategy mishaps frustrated investors including Nelson Peltz.
(Bloomberg) — Unilever named Royal FrieslandCampina boss Hein Schumacher as its next chief executive officer, bringing forward Alan Jope’s replacement after strategy mishaps frustrated investors including Nelson Peltz.
The maker of Dove soap and Ben & Jerry’s ice cream is accelerating its leadership transition, and the new CEO will take over from Jope on July 1 instead of at the end of the year, following a one-month handover.
Schumacher, 51, has experience working at H.J. Heinz and grocer Royal Ahold NV. While an external candidate, he began his career at Unilever decades ago.
Schumacher’s appointment comes after a difficult period for Unilever and Jope. The departing CEO angered shareholders with a failed attempt to takeover the consumer healthcare unit of GSK Plc. Unilever is also having to grapple with the highest inflation in four decades, which has strained relationships between producers and supermarket clients.
The stock is trading at about the same level as when Jope became CEO at the start of 2019. The shares were little changed Monday morning.
Unilever has been facing pressure from one of the most-feared activist investors on Wall Street. Nelson Peltz built up a stake through his Trian fund and joined the board in the aftermath of the failed deal. Jope announced plans to depart in September and is leaving after 37 years.
Peltz welcomed Schumacher’s appointment Monday in a statement.
“Like all of my fellow Unilever directors, I strongly support Hein as our new CEO and look forward to working closely with him to drive significant sustainable stakeholder value,” the investor said.
Schumacher joined Unilever’s board as an independent director in June, just a month after Peltz obtained a seat.
‘Near-Death’
With a turnover of €11 billion ($12 billion), FrieslandCampina is around a fifth of Unilever’s size and is unlisted. Schumacher has been restructuring the company, selling part of its German business and closing plants in the Netherlands. In the first half of 2022, the company’s operating profit more than doubled, helped by a recovery in its infant nutrition business.
A longer-term issue has been dealing with the Dutch government’s proposals on cutting nitrogen emissions. Schumacher has been de-commoditizing the dairy business — building brands and developing milk-derived ingredients which in the long term could allow the group to reduce emissions without sacrificing farmers’ incomes.
Dealing with critical institutional shareholders like Terry Smith, who recently renewed his criticism of Unilever’s social-purpose agenda and communication investors, may come as a shock to Schumacher. Last year, Smith called Jope’s approach for the GSK unit a “near-death experience” and questioned why the company was trying to promote the sustainable ethos of brands such as Hellmann’s mayonnaise.
Analysts welcomed the appointment of an external chief executive, albeit one they did not know well since the Dutch dairy company isn’t publicly traded.
“Unilever needs a cultural and organizational shake up,” RBC analyst James Edwardes Jones said. “That said, we think it will be a while before any results materialize at Unilever. It usually takes about 18 months before we see evidence of improved execution.”
Jope has suffered a string of other challenges recently, including a dispute with subsidiary Ben & Jerry’s. The ice cream maker retained control over its social mission and in 2021 said it would no longer sell in the occupied Palestinian territories, upsetting Jerusalem and some of Unilever’s US shareholders. The dispute was settled confidentially in December.
Given Schumacher’s background in food, the appointment is likely to revive the debate over whether Unilever should split its foods business from its personal care lines, or at least sell off its ice cream division.
“Despite joining from a cooperative, Schumacher brings frontline experience at major blue-chip public companies and must presumably have made a favorable and immediate impression on the Unilever board,” said Martin Deboo, analyst at Jefferies. “He is a however a ‘foods guy’ with the immediate question for us where he stands on the relative attractiveness of Unilever’s food business.”
Under Jope, Unilever about two years ago chose a single base in the UK that streamlined its previous Anglo-Dutch structure. The company previously backed away from a plan to consolidate in Rotterdam amid opposition from UK investors. The company has maintained significant operations in the Netherlands since then, however.
–With assistance from Lisa Pham.
(Updates with analyst comments)
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